S&P futures are down 2.4% Monday morning, with Nasdaq futures off 3.5%, following last week’s rally where the S&P hit a new ATH. Asian markets were mixed, with the Nikkei and Shenzhen Composite lagging, while Hong Kong outperformed. European markets are down ~1.5%. Treasuries rallied across the curve, the dollar index is down 0.1%, gold slipped 0.3%, Bitcoin futures fell 5.5%, and WTI crude is up 0.4%.
Key Drivers
- Chinese AI Startup Buzz: DeepSeek’s open-source AI models rival US counterparts at lower costs, raising concerns about US tech concentration risks and intensifying US-China tech tensions.
- Tariff Volatility: Colombia agreed to Trump’s migrant demands, while reports suggest Mexico and Canada could face tariffs as soon as February 1.
- China Data: Manufacturing PMI fell back into contraction.
Big Week for Earnings
~40% of S&P 500 market cap reports this week, including four Mag 7 names. NVDA fell sharply amid DeepSeek concerns, while AMZN reportedly shifted Prime Video spending priorities. AAPL brought in Kim Vorrath to address AI and Siri issues. Activist pressure mounts on X-US with calls for CEO removal and exploration of broader takeout talks.
Economic Calendar Highlights
- Monday: New home sales.
- Tuesday: Durable goods, Conference Board consumer confidence, Richmond Fed manufacturing.
- Wednesday: FOMC decision (policy expected unchanged).
- Thursday: Q4 GDP (first estimate), initial claims, pending home sales.
- Friday: Core PCE inflation, ECI, Chicago PMI.
Other Notable Developments
- FT reported BHP has cooled on pursuing a bid for NGLOY.
- Treasury to issue $183B in 2-, 5-, and 7-year notes this week.
US equities closed lower on Friday, with the Dow (-0.32%), S&P 500 (-0.29%), Nasdaq (-0.50%), and Russell 2000 (-0.30%) all declining, though stocks finished off session lows. Despite Friday’s drop, the S&P 500 posted its second consecutive week of gains, driven by strong big tech performance, as the cap-weighted index outperformed the equal-weight index week-to-date. Asian markets were mostly higher overnight, led by Greater China, Australia, and South Korea, while Japan lagged. European markets rose ~0.8%. Treasuries were firmer across the curve. The dollar index fell 0.5%, with the yen firmer after the BoJ’s 25 bp rate hike. Gold rose 0.5%, Bitcoin futures gained 1.7%, and WTI crude edged up 0.1%.
Investors focused on upcoming earnings next week, with ~40% of the S&P 500’s market cap set to report, including major names like MSFT, META, AAPL, AMZN, and TSLA. Overseas, the Eurozone flash composite PMI for January unexpectedly moved into expansion territory, with manufacturing showing improvement but still in contraction.
Economic Data
- January S&P flash manufacturing PMI beat estimates, returning to expansion for the first time since June.
- Flash services PMI missed expectations, hitting its lowest level since April.
- Final January University of Michigan consumer sentiment dropped to 71.1 (-2.1 points), while 1-year inflation expectations remained at 3.3%.
- December existing home sales slightly beat expectations, marking the fastest pace since February 2022.
Company News by GICS Sector
Information Technology
- Texas Instruments (TXN): Q4 beat but Q1 guidance was mixed, with revenue largely in line and EPS below expectations due to softer gross margins. Most industrial segments remain weak, but China strength was highlighted. (-7.5%)
- 3D Systems (DDD): Surged on news of a remote spare part printing collaboration with Daimler. (+26.6%)
Health Care
- Intuitive Surgical (ISRG): Q4 EPS beat expectations with gross margin strength. However, valuation concerns and 2025 outlook uncertainty tempered sentiment. (-4.0%)
- Novo Nordisk (NVO): Boosted by positive early-stage trial data for a GLP-1 injectable, showing 22% weight loss over 36 weeks. Analysts were positive on the study’s implications. (+8.5%)
Industrials
- Boeing (BA): Issued a negative Q4 preannouncement, citing strike-related costs, government project losses, and layoff expenses.
- CSX (CSX): Missed Q4 expectations, with higher-than-expected OR and weaker revenue per unit. Management flagged H1 2025 headwinds from export coal benchmarks and fuel prices. (-2.9%)
Financials
- American Express (AXP): Q4 earnings and revenue were slightly above consensus. Member spending and card fee growth were positives, but FY25 guidance was in line with expectations. (-1.4%)
- Twilio (TWLO): Rose sharply on a positive Q4 preannouncement and an improved 2025 FCF outlook. Analysts highlighted revenue growth acceleration and favorable positioning in AI. (+20.1%)
Consumer Discretionary
- Dana Inc. (DAN): Preliminary Q4 EBITDA exceeded expectations, and FY25 guidance was above the Street. Efficiency improvements helped offset weakening vehicle demand. (+14.9%)
- Electronic Arts (EA): Lowered FY25 bookings guidance due to weaker-than-expected momentum in Global Football, leading to a mid-single-digit decline projection. (-16.7%)
Consumer Staples
- McCormick (MKC): Q4 EPS beat expectations, driven by consumer and flavor solution segments. FY25 guidance was light but in line with expectations given FX headwinds.
Communication Services
- Verizon (VZ): Q4 earnings slightly exceeded consensus, with wireless retail postpaid net adds hitting a five-year high. However, FY25 guidance was slightly mixed. (+0.9%)
Materials
- CF Industries (CF): Downgraded to underweight at JPMorgan due to expectations of rising domestic natural gas prices, a critical input for nitrogen fertilizers. (-7.5%)
- GE Vernova (GEV): Downgraded to neutral at Guggenheim, citing reduced upside to valuation following a strong performance (+233% since March). (-3.9%)
Energy
- WTI Crude: Settled up 0.1% in quiet trading after Trump called on OPEC+ to lower prices.
Eco Data Releases | Monday January 27, 2025
S&P 500 Constituent Earnings Announcements | Monday January 27, 2025
Data sourced from FactSet Research Systems Inc.
