The stock market is in good form coming into the final session of the week with the S&P 500 perched at a record high north of 6,100. Stocks of all shapes and sizes have been a part of this week’s advance, which looks like it will stall a bit at today’s open.
Currently, the S&P 500 futures are down 10 points and are trading 0.2% below fair value, the Nasdaq 100 futures are down 32 points and are trading 0.2% below fair value, and the Dow Jones Industrial Average futures are down 100 points and are trading 0.3% below fair value.
Disappointing guidance from Dow component Boeing (BA) and Texas Instruments (TXN) has attracted some blame for the lack of buying interest, yet it is fair to say that there is a festering sense that the market may be due for a consolidation period given the scope of recent gains. Since their lows on January 13, the S&P 500 and Nasdaq Composite are up 6.0% and 6.5%, respectively.
Those are big moves in front of a big week next week that will feature earnings reports from Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Tesla (TSLA), and Amazon.com (AMZN), as well as the FOMC meeting, the release of the Advance Q4 GDP Report, and the Fed’s preferred inflation gauge in the form of the PCE Price Index.
Market participants, therefore, can’t be blamed for cooling their jets, waiting to see if the positive momentum will be sustained by next week’s developments that will also have some bearing on the direction of travel for the Treasury market.
The 10-yr note yield is unchanged today at 4.64%, but up slightly for the week, which has contained plenty of tariff talk but no definitive action (or reaction) of worrisome magnitude.
President Trump highlighted yesterday for listeners at the World Economic Forum the possibility of tariffs for companies that don’t manufacture their products in the U.S. while dangling a carrot of a lower tax rate for companies that do. He also made some waves with his comment that he will demand interest rates come down immediately.
Bloomberg notes that the president later told reporters that he knows more about interest rates than Fed Chair Powell, that he will speak to him “at the right time,” and that he believes the Fed will listen to him.
If nothing else, that view just raised the interest level in Fed Chair Powell’s press conference following the January 29 FOMC policy decision.
So, next week looms large for the capital markets, as it will help determine if the large gains seen over the past two weeks can stay or get asked to leave.
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Originally Posted January 24, 2025 – Next week looms large
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