January 30th Market Overview

Happy Thursday.

Green across the board today despite a mixed bag of tech earnings and a weaker GDP print. Market breadth is healthy.

Ten of eleven sectors are up. This suggests folks are ignoring growth concerns in
AI sector. Cloud and chip stocks are still under pressure. The Fed's steady hand yesterday is boosting market confidence. But, trade policy uncertainty still feeling like a bad fever dream.

China names crushing it on DeepSeek AI hype this week.

Honeybook - the company my wedding photographer use’s for her bookings/invoicing, is doing 10k giveaways to small business owners. 

Let's dig in...

Executive Summary

• Market breadth is strong. Ten of 11 S&P sectors are up today. This defies a weak GDP report and mixed tech earnings.
  

• Cloud computing and AI investments face scrutiny. $MSFT's Azure growth missed estimates at 31%. $IBM revealed $5B in AI-related revenue.
  

• $UPS will cut $AMZN delivery volume by over 50% by 2026. This is a historic shift and the largest-ever reduction with its biggest customer.
  

• In 2024, the U.S. economy grew 2.8%. This shows resilience despite a Q4 slowdown to 2.3% growth amid rising policy uncertainty.

Market Overview

Key Market Drivers

1. Tech Earnings Divergence: $META beats with $48.39B revenue while $MSFT Azure's 31% growth disappoints, highlighting split performance in tech sector. $TSLA rises 4% despite missing estimates, supported by growth outlook.
   

2. Economic Momentum Slows: Q4 GDP growth of 2.3% against 2.6% forecast marks significant deceleration from Q3's 3.1% pace. Full-year 2024 growth settles at 2.8%, down from 2023's 2.9%.
   

3. Fed's Cautious Stance: FOMC removes language about progress on inflation from statement while maintaining rates at 4.25-4.5%. Powell cites need to evaluate new administration's economic policies.
   

4. Trade Policy Shifts: Commerce Secretary nominee signals preference for "across the board" tariffs, particularly targeting Canada, Mexico, and China relationships. Semiconductor export controls under review.

Stock Spotlight

• $META: Up 2% after beating expectations with Q4 revenue of $48.39 billion versus $47.04 billion expected. Company reports AI-driven advertising improvements and strong engagement metrics across platforms.

• $MSFT: Down 6% as Azure cloud growth of 31% missed 31.1% consensus estimate. CFO warns of AI capacity constraints through Q3, signaling potential growth limitations.

• $IBM: Surged 11.5% as generative AI business exceeds $5 billion. CEO Arvind Krishna notes "clients globally continue to turn to IBM to transform with AI," with book of business up $2B quarter-over-quarter.

• $NVDA: Declined 3% as Trump administration considers additional restrictions on chip exports to China, potentially affecting the company's largest international market.

Big Name Updates

• $UPS: ▼ 13.9% on plans to reduce Amazon delivery volume by 50% by 2026. Company announces $1 billion efficiency initiative to offset volume reduction from its largest customer.

• $CMCSA: ▼ 11.9% after losing 139,000 broadband subscribers and 311,000 cable users in Q4. Company shifting strategy to focus on mobile wireless business amid competitive pressures.

• $LAS: ▲ 11% following strong Singapore casino results and positive signals from China's economic recovery. Performance triggers sector-wide gains among casino operators.

• $WHR: ▼ 15.6% after Q4 revenue of $4.14 billion misses $4.24 billion estimate. Company forecasts full-year adjusted earnings of $10 per share versus $11.60 expected.

Other Notable Company News

• Toy sector shows resilience as $MAT and $HAS gain 6% and 7% YTD. Industry data reveals stabilizing global sales, with building sets showing strongest growth.

• Goldman Sachs maintains June and December rate cut forecast, citing expected "meaningful" decline in year-over-year core PCE inflation.
  

• Casino stocks extend gains with $WYNN ▲ 6% and $MGM ▲ 1%, boosted by Las Vegas Sands' positive Asian market outlook.
  

• Forbes rate “Better Sleep” as best App to help people fall asleep
  

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Sector Watch

Bond Market

The central bank removed "inflation has eased" from its statement. It replaced it with "inflation remains somewhat elevated." This hawkish tone suggests rates could stay higher for longer than markets expected. It directly impacts bond market sentiment. Goldman Sachs still expects two 25-basis-point cuts in June and December 2025.

Policy Watch

Trade tensions rise. Commerce Secretary nominee Howard Lutnick wants a full tariff strategy. In the Senate hearing, Lutnick endorsed "across the board" tariffs over targeted ones. He connected them to AI export controls. This stance suggests higher trade restrictions, especially on:

• Semiconductor controls targeting China's AI development

• Expanded tariffs on Canadian and Mexican imports

• New measures affecting automotive and technology sectors

• Enhanced export restrictions on advanced computing chips, directly impacting $NVDA and peers
  

What to Watch

1. Apple Earnings After Hours (5:00 PM EST): Wall Street eyes iPhone performance amid concerns

• Analysts expect slower China growth due to mounting competition from $HUAW and local brands

• Services revenue projected at $23.35B, marking potential record quarter

• Vision Pro launch guidance critical as $AAPL enters new product category with $3,499 headset

• Focus on AI strategy after $GOOG, $MSFT, and $META highlighted significant investments

2. December PCE Report (Friday, 8:30 AM EST): Fed's preferred inflation gauge

• Consensus expects core PCE at 0.2% month-over-month, down from November's 0.3%

• Year-over-year core rate forecast at 3.0% versus previous 3.2%

• Data crucial for Fed's rate decision timeline given Powell's emphasis on needing "greater confidence" in inflation trend

3. Amazon Q4 Results (Feb 6, After Hours): Market seeks clarity following $UPS bombshell

• AWS growth target of 13% after $MSFT Azure disappointment

• Impact of reduced $UPS partnership on delivery costs and Prime efficiency

• Capital expenditure outlook for AI infrastructure after $META and $MSFT detail aggressive spending