The S&P 500 Index ($SPX) (SPY) today is up +0.67%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.32%. March E-mini S&P futures (ESH25) are up by +0.71%, and March E-mini Nasdaq futures (NQH25) are up by +1.41%.
Stocks are moving higher today, with the Dow Jones Industrials posting an 8-week high. Strong earnings and solid forecasts from technology companies support stock gains today. Apple is up more than +1% after forecasting a stronger-than-expected outlook. Also, Atlassian is up more than +16% after reporting stronger-than-expected Q2 revenue and raising its full-year revenue estimate. In addition, AbbVie is up by more than +6% after reporting Q4 adjusted EPS above consensus and forecasting stronger-than-expected 2025 adjusted EPS.
Stock indexes maintained their gains after today's US economic news showed Dec personal spending rose more than expected and the Dec core PCE price index, the Fed's preferred inflation gauge, was in line with estimates.
On the negative side, Walgreens Boots Alliance is down more than -13% after suspending its quarterly dividend to conserve cash and strengthen its balance sheet. Also, PPG Industries is down more than -5% after reporting weaker-than-expected Q4 adjusted and forecasting 2025 adjusted EPS below consensus.
Also weighing on stocks are expectations that President Trump will impose a 25% tariff on imports from Canada and Mexico on Saturday, citing the flow of fentanyl and large trade deficits with both countries.
US Dec personal spending rose +0.7% m/m, stronger than expectations of +0.5% m/m. Dec personal income rose +0.4% m/m, right on expectations.
The US Dec core PCE price index, the Fed's preferred inflation gauge, rose +0.2% m/m and +2.8% y/y, right on expectations.
The US Q4 employment cost index rose +0.9%, right on expectations.
The US Jan MNI Chicago PMI rose +2.5 to 39.5, weaker than expectations of 40.0.
Hawkish Fed comments today were negative for stocks and bonds. Fed Governor Bowman said, "I would like to see progress in lowering inflation resume before we make further adjustments to the fed funds target range." Also, Chicago Fed President Goolsbee said he has "comfort" that US inflation is on a path to 2%, but it makes sense to slow the pace or rate reductions as the Fed nears the neutral rate.
Earnings season is in full swing as companies report Q4 earnings results. According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.
The markets are discounting the chances at 17% for a -25 bp rate cut at the next FOMC meeting on March 18-19.
Overseas stock markets today are higher. The Euro Stoxx 50 rallied to a fresh 24-year high and is up +0.18%. China's Shanghai Composite Index did not trade today and will be closed through next Tuesday for the week-long Lunar New Year holiday. Japan's Nikkei Stock 225 closed up +0.15%.
Interest Rates
March 10-year T-notes (ZNH25) today are down -2 ticks. The 10-year T-note yield is up +0.8 bp to 4.525%. March T-notes today are under pressure from a rally in stocks, which curbed safe-haven demand for government debt. Also, hawkish Fed comments today from Fed Governor Bowman and Chicago Fed President Goolsbee weighed on T-notes when they signaled a gradual approach to cutting interest rates. T-notes are also under pressure due to concern that President Trump will impose a 25% tariff on goods from Canada and Mexico, which could boost inflation and be hawkish for Fed policy.
Losses in T-notes are limited due to carryover support from today's rally in European government bonds. Also, inflation concerns eased after the US Q4 employment index and the Dec core PCE price index, the Fed's preferred inflation gauge, were in line with estimates.
European government bond yields today are moving lower. The 10-year German bund yield fell to a 3-1/2 week low of 2.455% and is down -5.7 bp to 2.462%. The 10-year UK gilt yield dropped to a 6-week low of 4.517% and is down -3.4 bp to 4.526%.
ECB Dec 1-year inflation expectations increased to a 5-month high of +2.8% from +2.6% in Nov, stronger than expectations of +2.7%. The Dec 3-year inflation expectations were unchanged from Nov at +2.4%, right on expectations.
German Dec retail sales unexpectedly fell -1.6% m/m, weaker than expectations of no change and the biggest decline in 2 years.
The German Jan unemployment rate unexpectedly rose +0.1 to a 4-year high of 6.2%, showing a weaker labor market than expectations of no change at 6.1%.
Swaps are discounting the chances at 22% for a -25 bp rate cut by the ECB at the March 6 policy meeting.
US Stock Movers
Apple (AAPL) is up more than +1% after reporting Q1 revenue of $124.3 billion, above the consensus of $124.1 billion, and forecast Q2 sales to grow in the low-to mid-single digits.
Eastman Chemical (EMN) is up more than +7% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of $1.87, stronger than the consensus of $1.57.
Atlassian (TEAM) is up more than +16% to lead gainers in the Nasdaq 100 after reporting Q2 revenue of $1.29 billion, better than the consensus of $1.24 billion, and raised its full-year revenue estimate to up +18.5% to +19.0% from a previous estimate of +16.5% to +17.0%.
AbbVie (ABBV) is up by more than +6% after reporting Q4 adjusted EPS of $2.16, better the consensus of $2.13, and forecast 2025 adjusted EPS of $12.12-$12.32, the midpoint above the consensus of $12.13.
Baker Hughes (BKR) is up more than +5% after reporting Q4 revenue of $7.36 billion, better than the consensus of $7.07 billion.
Vertex Pharmaceuticals (VRTX) is up more than +5% after receiving FDA approval for its non-opioid analgesic Journavx to treat moderate-to-severe acute pain in adults.
Charter Communications (CHTR) is up more than +3% after reporting Q4 adjusted Ebitda of $5.80 billion, stronger than the consensus of $5.72 billion.
LPL Financial Holdings (LPLA) is up more than +1% after reporting Q4 total net new assets of $157.3 billion, well above the consensus of $106.1 billion.
Visa (V) is up more than +1% after reporting Q1 adjusted EPS of $2.75, better than the consensus of $2.66.
Deckers Outdoor (DECK) is down more than -16% to lead losers in the S&P 500 after forecasting full-year net sales of $4.90 billion, below the consensus of $4.93 billion.
Walgreens Boots Alliance (WBA) is down more than -13% after suspending its quarterly dividend to conserve cash and strengthen its balance sheet.
WW Grainger (GWW) is down more than -7% after forecasting 2025 net sales of $17.6 billion-$18.1 billion, weaker than the consensus of $18.17 billion.
PPG Industries (PPG) is down more than -5% after reporting Q4 adjusted EPS of $1.61, weaker than the consensus of $1.65, and forecast 2025 adjusted EPS of $7.75-$8.05, well below the consensus of $8.69.
Colgate-Palmolive (CL) is down more than -4% after reporting Q4 net sales of $4.94 billion, weaker than the consensus of $4.97 billion, and forecast 2025 organic sales to climb +3% to +5%, the midpoint below the consensus of +4.41%.
Chevron (CVX) is down more than -4% to lead losers in the Dow Jones Industrials after reporting Q4 adjusted EPS of $2.06, weaker than the consensus of $2.11.
Occidental Petroleum (OXY) is down more than -2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $45.
Autoliv (ALV) is down more than -2% after reporting Q4 sales of $2.62 billion, weaker than the consensus of $2.73 billion.
Earnings Reports (1/31/2025)
AbbVie Inc (ABBV), Aon PLC (AON), Broadridge Financial Solutions (BR), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Colgate-Palmolive Co (CL), Crown Castle Inc (CCI), Eaton Corp PLC (ETN), Exxon Mobil Corp (XOM), Franklin Resources Inc (BEN), LyondellBasell Industries NV (LYB), Phillips 66 (PSX), Revvity Inc (RVTY), WW Grainger Inc (GWW).
