S&P Futures Up 0.1% in Wednesday Morning Trading. US equities finished higher Tuesday, led by tech, though breadth remained negative as equal-weight S&P trailed by ~140 bp. Asian markets were mostly higher, with Japan up over 1%, while several markets, including China, were closed for the holiday. European markets gained ~0.7%. Treasuries were steady to slightly firmer. The dollar index rose 0.2%. Gold was little changed, Bitcoin futures climbed 2.4%, and WTI crude fell 1%.
Markets are in a holding pattern ahead of major tech earnings and the FOMC decision today. AI remains in focus, with reports that MSFT and OpenAI are investigating whether DeepSeek improperly obtained OpenAI data. BABA unveiled a new AI model claiming superiority over DeepSeek, while ASML highlighted AI-driven demand with strong Q4 results. Tariff concerns linger ahead of the 1-Feb deadline for Canada and Mexico, while Trump 2.0 uncertainty persists after a judge temporarily halted his federal grant funding freeze.
No major US economic data is scheduled this morning. The Fed is expected to keep rates unchanged, with Powell likely avoiding signals on a March cut. Key focus will be on the Fed’s view of policy restrictiveness, the neutral rate, and potential economic impacts of Trump’s policies. Markets do not fully price in a 25 bp rate cut until summer.
Earnings Highlights:
- ASML: Jumped on strong Q4 orders, citing AI tailwinds.
- SBUX: NA comp decline was smaller than expected.
- SYK: Beat estimates with strength in Ortho, guided slightly above, announced sale of spinal implants business.
- PKG: Missed and guided below, citing slower volumes and higher costs.
- MANH: Fell sharply on softer FY25 guidance.
- FFIV: Beat and raised, citing hybrid multicloud and AI growth.
- QRVO: Beat estimates but faced scrutiny on transition and margins.
- NXT: Beat and raised, with strong bookings.
- LC: Dropped on disappointing origination guidance.
- CLX, NTAP, SYK: Announced CFO changes.
- BDX: Expanded buyback by 10M shares.
- KSS: Reportedly cutting ~10% of corporate headcount
US equities rebounded Tuesday (Dow +0.31%, S&P 500 +0.92%, Nasdaq +2.03%, Russell 2000 +0.21%), closing near session highs, after Monday’s AI-led selloff. The rally was driven by big tech, with NVDA trimming some of its 17% loss and AAPL extending gains. However, market breadth remained negative as the equal-weight S&P 500 underperformed the cap-weighted index by ~140 bp, reversing most of Monday’s 152 bp divergence. Other outperformers included software, steel, asset managers, IBs, and cruise lines (RCL). Laggards included airlines (JBLU), autos (GM), managed care, energy, utilities, rails, food/beverage, and REITs. Treasuries were mostly unchanged after Monday’s safe-haven rally. The dollar index climbed 0.5% on tariff headlines. Gold rose 1.1%, Bitcoin futures were flat, and WTI crude gained 0.8%.
The AI sector stabilized following Monday’s DeepSeek-driven selloff, as discussions shifted from US capex scrutiny and leadership concerns to efficiency-driven demand benefits (Jevons Paradox). There was also skepticism around DeepSeek’s cost claims and app functionality. White House assessing national security implications of DeepSeek amid claims of IP theft. Fed expected to leave rates unchanged on Wednesday, with Powell likely to be questioned on potential inflation impacts from Trump’s trade policies. Markets are pricing in a rate cut by mid-year.Tariff uncertainty continued, with Trump proposing a broad global tariff hike beyond the 2.5% previously discussed by Treasury Secretary Bessent, alongside specific duties on semis, pharma, steel, copper, and aluminum. He also reiterated threats against Canada and Mexico over auto production and halted federal aid disbursements, adding another layer of policy uncertainty.
In economic news, December durable goods orders fell 2.2% m/m vs. expectations for a small gain, marking the fourth decline in five months. However, core capital goods orders exceeded forecasts. January Conference Board consumer confidence missed estimates and weakened from December, with a notable narrowing in the labor-market differential. Richmond Fed manufacturing printed above forecasts but remained in contraction. November Case-Shiller and FHFA home price indices both rose m/m. The $44B auction of 7-year Treasury notes was well received, following Monday’s strong demand for 2- and 5-year auctions. Looking ahead, the FOMC decision is expected Wednesday, though the Fed is widely anticipated to hold rates steady. GDP, jobless claims, and pending home sales are due Thursday, followed by core PCE inflation, ECI, and Chicago PMI on Friday.
Company-Specific News by GICS Sector
Information Technology
- SAP (+0.9%): Beat Q4 expectations, but FY25 guidance midpoint slightly below consensus.
- CIEN (+4.9%): Upgraded to Overweight at JPM on valuation after Monday’s decline; analysts see limited DeepSeek impact.
- ADSK (+3.6%): Upgraded to Outperform at Mizuho; cited benefits from new transaction model improving revenue synergies.
- JNPR (-6.1%): Justice Department reportedly considering blocking acquisition by HPE.
Communication Services
- T (+0.5%): Q4 beat expectations, with Mobility postpaid net adds exceeding consensus and strong Fiber growth.
- VSCO (+1.5%): Upgraded to Overweight at Barclays; cited improving sales trends and reduced promotional activity.
Consumer Discretionary
- RCL (+12.0%): Q4 EPS beat, FY EPS and net yield guidance raised on accelerating bookings and strong pricing.
- GM (-8.9%): Q4 EPS and revenue exceeded estimates, but cautious sentiment on guidance due to potential tariff impacts. Analysts noted first quarter of variable profit from EVs, offset by ICE margin pressure.
- JBLU (-25.7%): Q4 revenue and OM slightly ahead, but Q1 RASM guidance disappointed.
Industrials
- RTX (+2.6%): Q4 beat but FCF missed; FY25 guidance largely in line. Demand for aircraft parts rose amid jet shortages.
- BA (+1.5%): Q4 EPS missed expectations, but backlog grew to $521B. CEO comments on 737 jet deliveries encouraged analysts.
- PCAR (-2.4%): Q4 revenue and earnings missed; analysts cited weaker truck and parts results, sequential GM declines.
Financials
- BHF (+14.8%): Reportedly seeking a sale, with private capital managers seen as likely bidders.
- IVZ (+9.0%): Q4 earnings and revenue beat; noted accelerating inflows from ETFs and APAC-managed strategies.
- SYF (-4.6%): Q4 EPS and NII missed; FY25 net revenue guidance mostly in line, but analysts flagged weaker credit trends.
- WAL (+2.2%): Beat expectations with stronger fee income.
Health Care
- PFE (+0.3%): FDA granted priority review to WELIREG for treating advanced pheochromocytoma and paragangliomas
- SGEN (-1.1%): Analysts noted valuation concerns following recent rally.
- SGRY (+21.2%): Bain Capital disclosed a non-binding acquisition proposal at $25.75/share.
Materials
- NUE (+0.9%): Strong Q4 earnings but underwhelming Q1 guidance.
- GGG (-3.0%): Q4 revenue and earnings missed, with industrial demand slowing globally.
Real Estate
- ARE (+1.1%): FFO ahead of estimates, reaffirmed guidance.
Utilities & Energy
- NEP (-25.1%): Announced strategic shift, suspending distributions indefinitely and focusing on reinvestment; EBITDA guidance missed.
Consumer Staples
- KMB (+0.5%): Margins weaker than expected, offset by strong organic growth and a dividend hike.
Eco Data Releases | Wednesday January 29, 2025
S&P 500 Constituent Earnings Announcements | Wednesday January 29, 2025
Data sourced from FactSet Research Systems Inc.
