Weekly Market Report: February 7th, 2025
Last week markets took in a large slate of 4Q earnings reports, a full economic calendar, and several policy maker narratives on the speaking circuit. Some of the mega cap names (AMZN, TSLA, GOOGL) lagged last week pulling growth stocks down slightly more than value stocks. U.S. equity markets were down slightly for the week while developed international (+0.47%) and emerging markets (+1.12%) notched respectable gains thanks in part to a slight decline in the USD of 0.30%. Oil closed the week down 2.1% but the broader commodity markets (+0.23%) were up with healthy rallies in metals, both industrial and precious as well as grain contracts.
Market Anecdotes
- Last week took the S&P 500 to 62% of the way through fourth quarter earnings reports with blended top and bottom-line growth of 16.4% and 5.2%, respectively. Beat rates and margins have been as expected with earnings but revenues have been below the norm.
- Tariff tax narratives again factored negatively into financial markets with Trump announcing he plans to issue more tariffs this week with most studies estimating a minor reduction to U.S. GDP of 0.5% (announced tariffs only) and a boost to CPI of 0.7%.
- Inflation expectations of the financial markets and consumers are closely monitored by the FOMC through various financial market metrics and survey data, both of which have risen due to growth expectations, tariff risks, and stubborn prices.
- UST Secretary Bessent spoke out last week against tariffs and reiterated the administration’s focus on lowering the 10yr UST yield, reigning in fiscal deficits to 3%, increasing oil production by 3 mbpd, and generating 3% GDP growth.
- The Fed speaking circuit was packed last week with thirteen appearances and a clear tone of ‘wait and see’ given the healthy labor market and above target inflation at this time.
Economic Release Highlights
- January Payrolls (143,000 vs 168,000) were slightly below forecast but within the consensus range of 125,000-225,000. The Unemployment Rate fell one tick to 4.0%. Average Hourly Earnings were above forecast for both MoM (0.5% vs 0.3%) and YoY (4.1% vs 3.8%) readings.
- The December JOLT Survey registered 7.6M openings, below the spot forecast of 8.0M and the consensus range of 7.8M-8.14M.
- January ISM Services Index fell short of the spot forecast (52.8 vs 54.0) and toward the low end of the consensus range.
- January ISM Manufacturing Index came in slightly above the spot forecast (50.9 vs 49.5) but was within consensus range.
- The February UofM Consumer Sentiment fell from January’s 71.1 reading to 67.8, well below the spot consensus estimate of 72.0 and the forecast range of 69.0-73.1. One year inflation expectations surged from 3.3% to 4.3% on the month.
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