01/13/2025 Summary of the US Stock Market

The US stock market showed mixed results on January 13, 2025, as falling rate-cut expectations weighed on equities, while bargain hunting supported a modest rebound.

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Major Indices:

• S&P 500 Index: Rose 0.2%, with gains in 7 out of 11 sectors, supported by energy and financial stocks.
• Dow Jones Industrial Average: Climbed 0.9%, led by strong performance in the banking sector.
• Nasdaq Composite: Dropped 0.4%, driven by declines in technology stocks.
• 10-Year Treasury Yield: Rose to 4.77%, reflecting ongoing inflation concerns.

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Key Market Drivers:

1. Rising Treasury Yields:
   Concerns over persistent inflation led to higher bond yields.
   • Adam Turnquist (LPL Financial): "With the 10-year yield potentially reaching 5%, significant equity gains may be difficult until yields stabilize."
2. Upcoming CPI Data:
   Investors are awaiting Wednesday's Consumer Price Index (CPI) report, which is expected to show core inflation rising 0.2% month-over-month and 3.3% year-over-year.
   • Chris Larkin (E*Trade): "Even with softer inflation data, the Fed is unlikely to cut rates this month, though strong earnings could ease market pessimism."
   • Will Compernoll (FHN Financial): "If core CPI aligns with expectations, it could support a recovery in bond markets."
3. Earnings Season Begins:
   Major banks will kick off earnings season this week, with analysts forecasting a 4.7% swing in stock prices post-results—one of the largest on record.
   • Gina Martin (Bloomberg): "Analysts may have been overly pessimistic in cutting earnings estimates."
   • Cali Cox (Ritholtz Wealth Management): "Aggressive estimate cuts could lead to surprises that stabilize markets."

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Sector Highlights:

• Energy: Benefited from rising oil prices, with energy stocks leading gains.
• Technology: Experienced declines, with challenges for major players:
  • Apple (AAPL): Reported a 5% decline in Q4 iPhone sales (Counterpoint Research).
  • NVIDIA (NVDA): Faced rumors of order cuts due to server overheating and chip communication issues.
• Retail:
  • Lululemon (LULU): Raised Q4 revenue guidance.
  • Moderna (MRNA): Revised 2025 sales outlook lower.

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Global Highlights:

1. China Trade Surplus: Reached a record $1.46 trillion in 2024, as exporters accelerated shipments ahead of potential Trump-era trade policy reinstatements.
2. Semiconductor Investment: Global top 10 semiconductor firms cut CapEx by 2% in 2024, except for AI-focused chips.
3. EV Adoption in China: Electric vehicle sales surged 40%, while internal combustion engine vehicle sales dropped 17%.
4. UK Antitrust Case: Apple faced a £2.7 billion class-action lawsuit in the UK over excessive fees.

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Conclusion:

The US stock market remains on edge, balancing inflation concerns with optimism over earnings season. Investors are closely monitoring upcoming CPI data and corporate results for direction. Rising Treasury yields continue to challenge the market, while strong sector performances, such as in energy, provide pockets of support.