The stock market rally showed strong, broad-based gains, with the major indexes all trading around their 50-day lines. A tame CPI inflation report fueled the gains, sending Treasury yields tumbling. Strong earnings from banks such as Goldman Sachs, JPMorgan Chase, as well as bullish results from Taiwan Semiconductor Manufacturing and upbeat preliminary sales from Intuitive Surgical.
Stock Market Rise To Key Levels
The stock market rose solidly, with the Nasdaq back above the 50-day moving average and the S&P 500 flirting with that key level. Relatively tame inflation data was the big catalyst as Treasury yields tumbled from 52-week highs. Bank earnings, Taiwan Semiconductor and more also fueled market gains. Many leading stocks from a variety of groups flashed buy signals.
Inflation, Economic Data Cool
Two key inflation reports showed that the disinflation trend still looks to be intact, though there's been scant progress lately. The core consumer price index rose a softer-than-expected 0.2% in December and 3.2% from a year ago. The core producer price index for final demand was unchanged. So was the PPI's broad measure of health care services inflation, which feeds into the Fed's primary inflation rate, the core PCE price index. After the CPI and PPI, Wall Street forecast a 0.2% rise in the core PCE price index, holding core inflation at 2.8%. Firming inflation would have been a problematic backdrop for President-elect Trump's plans to impose tariffs, cut taxes and step up deportations. In reality, the economy looks to be cruising in second gear. S&P Global said fourth-quarter GDP is tracking at 1.9% after December retail sales moderated to a 0.4% rise, a touch below estimates and down from a revised 0.8% in November.
Bank Giants Rally On Earnings, Outlooks
Goldman Sachs, Morgan Stanley and Bank of America earnings more-than doubled from last year to beat estimates, while BlackRock, JPMorgan Chase and Wells Fargo saw EPS gains range from 23% to 66%. Citigroup delivered a strong profit vs. a year-earlier loss, and also announced a $20 billion stock buyback program. Broad bank drivers in Q4 included investment banking and capital markets revenue growth, as well as increased fee and lending income. Analysts forecast 2025 net interest income and margins will grow, while a looser regulatory environment should also bolster bank performance throughout the year. JPM stock broke out, Goldman moved up toward a buy point while Wells Fargo, Morgan Stanley and BofA triggered early entries. Citigroup is extended a three-year highs while BlackRock is trying to regain key support.
TSMC Tops Q4 Views, Guides Up
Taiwan Semiconductor Manufacturing beat Q4 views with a 53% EPS gain as revenue swelled 36% to $26.88 billion, thanks to strong sales of chips for artificial intelligence. The world's largest contract chipmaker guided up on Q1 sales, while 2025 capex spending plans also topped expectations. TSM stock and shares of major chip-gear makers surged on the news. TSMC's customers include top fabless semiconductor firms such as Apple, AMD, Broadcom and Nvidia.
Intuitive Surgical Soars On Q4 Sales
The robotic surgical systems maker reported preliminary fourth-quarter revenue of $2.41 billion vs forecasts of $2.2 billion. The 25% gain would be the third straight quarter of accelerating growth. Intuitive Surgical installed 493 da Vinci systems in Q4, including 174 new da Vinci 5 robotic surgery systems. That comprised about two-thirds of the revenue beat and topped projections by 19%, an analyst said. Intuitive Surgical also said the number of procedures using da Vinci systems climbed by 19%, topping forecasts for 16.9%. For 2025, the company projects 13% to 16% procedure growth. Share gapped up to a new high.
UnitedHealth Falls On Mixed Results
The managed-care insurer and health services giant beat fourth-quarter earnings views with a near-11% gain, even as it missed on revenue and costs ran higher than expected. UnitedHealth stuck by its 2025 earnings outlook, despite predicting that its medical care ratio, or benefit costs as a percentage of premiums, rises 150 basis points vs. 2024. UNH stock tumbled on the outlook. Other managed-care stocks including Centene, Elevance Health, Cigna and Humana fell modestly. That suggests investors think UnitedHealth faces a greater level of regulator and political uncertainty since the assassination of UnitedHealthcare division CEO Brian Thompson in December.
Why This IBD Tool Simplifies The Search For Top Stocks
Trendy Apparel Retailers Guide Up
Lululemon, Abercrombie & Fitch, Urban Outfitters and American Eagle released positive Q4 updates. Lululemon lifted its earnings and revenue guidance ahead of FactSet forecasts, while Urban Outfitters reported a 10% increase in revenue for the two-month holiday period ending in December. American Eagle noted that Q4 comparable sales are tracking ahead of its prior forecast, and lifted its operating profit outlook modestly. Abercrombie & Fitch raised its Q4 and full-year sales estimates, but only enough to match analyst expectations. Meanwhile, headline retail sales rose 0.4% in December, the Census Bureau reported Thursday, less than the 0.6% gain that economists expected. November retail sales were revised up to 0.8%, from the initial reading of 0.7% growth.
Target guided up on Q4 sales, but left profit targets unchanged.
Medical Conference A Mixed Bag
News out of the J.P. Morgan Healthcare Conference proved to be a mixed bag for biopharma and medtech stocks. The conference kicked off with Johnson & Johnson announcing a $14.6 billion takeover of Intra-Cellular Therapies, a big bet on mental-health drugs. Meanwhile, Eli Lilly said it would buy an experimental cancer drug from privately held Scorpion Therapeutics. The up-front payment plus future milestone payments could total $2.5 billion. In preannouncement news, NeoGenomics, BridgeBio Pharma, ARS Pharmaceuticals, Harmony Biosciences and Axsome Therapeutics offered promising preliminary fourth-quarter reports. Regeneron Pharmaceuticals announced $305 million in sales of its high-dose Eylea, missing forecasts. But the eye drug's standard dose generated $1.19 billion in U.S. sales. Moderna, on the other hand, crashed 17% on Monday after slashing its outlook for 2024 and 2025 and announced an expanded cost-cutting initiative.
In Brief
Eli Lilly expects Q4 revenue of $13.5 billion, about $400 million below the low end of its previous guidance. That includes $3.5 billion from type 2 diabetes medicine Mounjaro and $1.9 billion from weight-loss drug Zepbound. All three measures missed analyst consensus. Lilly did guide to $58 billion-$61 billion in 2025 sales, narrowly above projections and signaling 32% growth at the midpoint vs. 2024 guidance. But Lilly stock tumbled.
Novo Nordisk fell to a 17-month low Friday as its diabetes fighter Ozempic and weight-loss injection Wegovy were named Friday as among the next batch of prescription drugs facing Medicare price negotiations.
United Rentals will buy rival H&E Equipment Services for $4.8 billion, including $1.4 billion in debt, or $92 a share. The company paused its share repurchase plan but said the deal won't affect dividends. United Rentals shares rose strongly while HEES spiked.
Planet Fitness reported 19.7 million members in 2024, up 18 million from 2023. Same-club sales grew by 5%. Those gains came amid the first price increase for new members in over 25 years. Rival Life Time Group guided higher on Q4. Both fitness stocks cleared buy points.
