01/21/2025 Summary of the US Stock Market

The U.S. stock market closed higher today, driven by stronger-than-expected corporate earnings and easing Treasury yields.

 

Key Market Drivers:

• Policy Context: President Donald Trump, on his first day in office, refrained from announcing immediate tariffs on China or Europe, easing investor fears of a potential trade war.
• Bond Yields: The recent surge in Treasury yields showed signs of stabilization, further supporting equities.

Major Indices:

• S&P 500: +0.9% → 6,049.24
• Dow Jones Industrial Average: +1.2% → 44,025.81 (+537.98 points)
• Nasdaq Composite: +0.6% → 19,756.78
• Russell 2000: +1.8% → 2,317.97

Sector Highlights:

• Industrials: The sector led gains, with 3M (MMM) rising 4.2% after outperforming earnings expectations.
• Energy: Stocks like Vistra surged 8.5% after evacuation orders were lifted at a company facility in California.
• Technology: Oracle's shares climbed 7.2%, buoyed by its involvement in a $500 billion AI infrastructure initiative.
• Small-Cap Stocks: Benefiting from Trump's protectionist trade stance, small-cap companies outperformed, with the Russell 2000 advancing strongly.
• Electric Vehicles: EV stocks faced selling pressure amid concerns over potential shifts in policy direction under the new administration.

Corporate Developments:

• Walgreens Boots Alliance: Shares plunged 9.2% following a U.S. Department of Justice lawsuit regarding alleged unlawful prescription practices.
• Moderna: The company's stock rose 5.4%, supported by a $590 million government award for bird flu vaccine development.
• Netflix: After hours, the company reported record-breaking subscriber growth for the quarter, sending its shares higher.
• United Airlines: Delivered upbeat earnings and guidance, contributing to positive investor sentiment.

Economic and Policy Updates:
President Trump’s initial actions included revoking electric vehicle mandates and declaring a national energy emergency to expand domestic fossil fuel production. These moves signal a sharp departure from the policies of the previous administration.

Analyst Commentary:

• Mohit Kumar (Jefferies International): “Expectations of less burdensome tariffs and regulatory rollbacks are a tailwind for risk assets.”
• Kelly Cox (Ritholtz Wealth Management): “It’s time to distinguish whether tariff-related speculation is grounded or just noise.”
• Craig Johnson (Piper Sandler): “Trump’s pro-business policies could further fuel equity markets.”
• Max Kettner (HSBC): “Recent inflation data is a game changer, creating a ‘Goldilocks’ environment for risk assets.”
• Matt Maley (Miller Tabak): “While Trump’s policy news is critical, earnings season and forward guidance remain key factors for market direction.”

Treasury Yields:
The 10-year Treasury yield dropped 7 basis points to 4.56%, reflecting a stabilizing bond market.

Additional Developments:

• 3M (MMM): Reported earnings that exceeded expectations.
• MicroStrategy (MSTR): Approved a 30x increase in its common stock issuance limit.
• United Airlines (UAL): Delivered strong earnings, beating analyst expectations.

The market’s strong performance reflects cautious optimism as investors navigate a mix of corporate earnings and new policy directions under the Trump administration.