The S&P 500 Index ($SPX) (SPY) Friday closed down -0.29%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.58%. March E-mini S&P futures (ESH25) are down -0.36%, and March E-mini Nasdaq futures (NQH25) are down -0.62%.
On Friday, stocks gave up an early advance and posted moderate losses on some negative earnings results. Texas Instruments closed down more than -7% to lead chipmakers lower after forecasting a weaker-than-expected Q1 EPS. Also, HCA Healthcare closed down more than -4% after reporting Q4 EPS below consensus. In addition, CSX Corp closed down more than -2% after reporting Q4 revenue below consensus.
Stocks initially moved higher on Friday, with the S&P 500 posting a new record high and the Nasdaq 100 posting a 5-week high. Stocks found support on President Trump's softening approach toward tariffs. Thursday evening, Trump told Fox News that he would "rather not" use tariffs against China, the world's second-largest economy. President Trump has also held back from imposing tariffs on Europe, though he warned of tariffs against Canada and Mexico.
Friday's US economic news was mixed for stocks after the Jan S&P manufacturing activity and Dec existing home sales rose more than expected, but Jan consumer sentiment unexpectedly declined.
The US Jan S&P manufacturing PMI rose +0.7 to 50.1, stronger than expectations of 49.8 and the fastest pace of expansion in 7 months.
The University of Michigan US Jan consumer sentiment index was revised downward by -2.1 to 71.1, weaker than expectations of no change at 73.2.
US Dec existing home sales rose +2.2% m/m to a 10-month high of 4.24 million, stronger than expectations of 4.20 million.
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 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.
Overseas stock markets on Friday settled mixed. The Euro Stoxx 50 rose to a 24-year high and closed up +0.04%. China's Shanghai Composite Index closed up +0.70%. Japan's Nikkei Stock 225 fell from a 2-1/2 week high and closed down -0.07%.
Interest Rates
March 10-year T-notes (ZNH25) Friday closed up +3 ticks. The 10-year T-note yield fell -1.8 bp to 4.626%. T-notes pushed higher Friday on comments from President Trump, who appears to have softened his approach toward tariffs on China when he said that he would "rather not" use tariffs against China. Trump's comments on the lack of tariffs on China eased inflation concerns and supported T-note prices. However, negative carryover from Friday's decline in 10-year German bunds to a 1-week low limited gains in T-note prices. Friday's US economic news was mixed for T-notes after Jan S&P manufacturing activity and Dec existing home sales rose more than expected, but Jan consumer sentiment unexpectedly declined.
European government bond yields on Friday were mixed. The 10-year German bund yield rose to a 1-week high of 2.595% and finished up +1.9 bp to 2.569%. The 10-year UK gilt yield fell -0.7 bp to 4.629%.
The Jan Eurozone S&P manufacturing PMI rose +1.0 to 46.1, stronger than the expectations of 45.4. Also, the Jan Eurozone S&P composite PMI rose +0.6 to 50.2, stronger than the expectations of 49.7 and the highest level in 5 months.
Swaps are discounting the chances at 97% for a -25 bp rate cut by the ECB at its January 30 policy meeting.
US Stock Movers
Weakness in chip stocks Friday weighed on the overall market, led by a -7% fall in Texas Instruments (TXN) to lead losers in the S&P 500 and Nasdaq 100 after forecasting Q1 EPS of $0.94-$1.16, weaker than the consensus of $1.17. Also, Microchip Technology (MCHP) closed down more than -5%, and Analog Devices (ADI) closed down more than 4%. In addition, Nvidia (NVDA) closed down more than -3% to lead losers in the Dow Jones industrials, and Intel (INTC), NXP Semiconductors NV (NXPI), and ON Semiconductor (ON) closed down more than -3%. Finally, ARM Holdings Plc (ARM), Lam Research (LRCX), and Applied Materials (AMAT) closed down more than -2%.
CF Industries Holdings (CF) closed down more than -7% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $75.
Mohawk Industries (MHK) closed down more than -4% after Zelman said the company's rollout of a new ERP system has seen complications and has hindered the company's ability to take orders, invoice customers, ship products, and collect payments.
HCA Healthcare (HCA) closed down more than -4% after reporting Q4 EPS of $5.63, weaker than the consensus of $6.15.
Airbnb (ABNB) closed down more than -4% on signs of insider selling after an SEC filing showed CEO Chesky sold $5.12 million shares on Tuesday.
Intuitive Surgical (ISRG) closed down more than -3% after forecasting a full-year gross profit margin of 67% to 68%, below the consensus of 68.6%.
CSX Corp (CSX) closed down more than -2% after reporting Q4 revenue of $3.54 billion, weaker than the consensus of $3.57 billion.
American Express (AXP) closed down more than -1% after reporting Q4 total expenses of $13.1 billion, above the consensus of $12.88 billion.
Twilio (TWLO) closed up more than +20% after reporting preliminary Q4 revenue growth of about +11% y/y, stronger than the consensus of +8% y/y.
Middleby Corp (MIDD) closed up more than +16% after the Wall Street Journal reported that Garden Investments has built a 5% position in the company and plans to push for changes that could boost the stock and will seek board seats.
Southwest Gas Holdings (SWX) closed up more than +3% after Ladenburg Thalmann & Co initiated coverage of the stock with a recommendation of buy and a price target of $84.
Welltower Inc (WELL) closed up more than +3% after Bank of America Global Research raised its price target on the stock to $221 from $190.
Meta Platforms (META) closed up more than +1% after CEO Zuckerburg said the company's 2025 capex will be $60 billion-$65 million, well above the consensus of $51.31 billion.
Oshkosh Corp (OSK) closed up more than +1% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $113.
United Airlines Holdings (UAL) closed up more than +1% after TD Cowen raised its price target on the stock to $165 from $142.
Tapestry (TPR) closed up more than +1% after Citigroup raised its price target on the stock to $85 from $60.
Earnings Reports (1/27/2025)
Alexandria Real Estate Equities (ARE), AT&T Inc (T), Brown & Brown Inc (BRO), Nucor Corp (NUE), W R Berkley Corp (WRB).
