S&P 500 and Nasdaq Approach Record Highs as Global Earnings Season Kicks In High Gear

Alexander Garcia
21 Jan, 2025
Miami

Stock market indexes in New York extended gains of the session in late afternoon, and bond yields edged higher amid rate path uncertainty. 

The S&P 500 index gained 0.7%, and the Nasdaq Composite jumped 0.4% as investors looked ahead to the release of key earnings this week and the Federal Reserve's rate decisions. 

The Federal Reserve is widely anticipated to hold rates steady at the end of a two-day meeting on January 28, but investors are still holding out for rate cuts totaling 100 basis points in 2025. 

Investors have raised expectations of earnings growth for the fourth quarter of 2024 after retailers generally confirmed a strong holiday season and banks reported blowout earnings. 

3M, Charles Schwab, and D.R. Horton advanced after the companies released their earnings, and investors looked ahead to the release of earnings from Netflix, American Airlines Group, United Airlines, Abbott Laboratories, and Johnson & Johnson.

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.6% to 6,030.30, the Nasdaq Composite rose 0.3% to 19,687.59, and the Russell 2000 index inched up by 1.5% to 2,309.94. 

The yield on 2-year Treasury notes edged higher to 4.27%, 10-year Treasury notes inched down to 4.57%, and 30-year Treasury bonds declined to 4.81%.

WTI crude oil decreased $0.90 to $75.55 a barrel, and natural gas prices edged down 2 cents to $3.79 a thermal unit.

Gold decreased by $17.81 to $2,727.41 an ounce, and silver rose by $0.02 to $30.58. 

The dollar index, which weighs the US currency against a basket of foreign currencies, increased by 0.09 to 109.05 and traded at a two-year high. 

 

U.S. Stock Movers 

D.R. Horton Inc. gained 3.9% to $153.35 in pre-market trading after the home builder posted a 1% decrease in revenue in the fiscal first quarter 2025 ending in December. 

Net income plunged 11% from a year ago to $844.9 million, and diluted earnings per share eased to $2.61 from $2.82 a year ago.

The company closed sales of 19,059 homes, while net sales orders amounted to 17,837 homes. 

D.R. Horton repurchased 6.8 million shares of common stock for $1.1 billion and paid cash dividends totaling $128.5 million.

The home builder declared a quarterly cash dividend of 40 cents per share payable on February 14 to shareholders on record February 7. 

Costco Wholesale Co edged up 0.1% to $944.50 after the membership warehouse club operator's workers' union of 18,000 workers voted to strike at the end of January if management fails to meet their demands. 

Costco recently reported $254 billion in annual revenue and $7.4 billion in net profits, which is a 135% increase since 2018.

 

European Passenger Car Sales Flat In 2024, UK Jobless Rate Jumps to Multi-Month High 

European markets struggled to stay above the flatline in Tuesday's trading, and bond yields edged lower, tracking the yields on the U.S. Treasury notes. 

Benchmark indexes in Paris, Frankfurt, and London lacked direction as investors reviewed the latest jobless report in the UK, construction update, and passenger car sales in the EU. 

Market sentiment in the eurozone has been weak amid a list of worries hobbling enthusiasm as investors reviewed the latest batch of corporate results. 

The incoming U.S. presidential administration has delayed placing trade tariffs on manufactured goods from the EU, Canada, China, and Asia to February, but the looming uncertainty continues to weigh on the market. 

 

Eurozone Construction Decline Halted after 10-Month Slide

In the euro area, construction output in November 2024 rose by 1.4% from a year ago and by 0.9% in the European Union, boosted by construction of buildings.

Compared to October 2024, construction in the currency bloc expanded by 1.3%, according to data released by Eurostat on Monday. 

Construction activity was higher in Italy and Spain, but slower in France and Germany.

On an annual basis, the highest increases in construction were recorded in Spain, Bulgaria, and Belgium, while the largest decreases were observed in Romania, Poland, and Slovenia.

 

EU Car Sales Barely Advanced in 2024

The passenger car market in the European Union expanded by 5.1% in December 2024, the European Automobile Manufacturers' Association reported on Tuesday.

Vehicle sales rebounded from a 1.9% decline in November, following the strength in Spain and France, two of the largest markets in the region.

Sales rose sharply in Spain by 28.8%, in France by a modest 1.5%, but fell in Germany by 7.1% and in Italy by 4.9%.

Battery electric car sales in December fell by 10.2% to 144,367 units and held its market share steady around 15.9%, due to significant decreases in sales in Germany by 38.6% and France by 20.7%.  

Petrol car sales dropped by 1.8% to 269,260 units, and the diesel car market declined by 15%.

Plug-in hybrid car sales rose by 4.9%. 

Hybrid-electric car sales increased 33.1% in December, with market share expanding to 33.6% from 26.5% a year ago, exceeding petrol car registrations for the fourth consecutive month.

For the full year 2024, overall car sales rose annually by 0.8% to 10.6 million units, and the battery-powered vehicle market share was 13.6%.

 

UK Unemployment Rate Highest Since May 2024

The UK unemployment rate in the three months to November was estimated at 4.4%, the highest level since May 2024, and above the 4.3% recorded for the three-month period to October, the Office for National Statistics showed on Tuesday.

Wage growth in the third quarter remained high, but falling vacancies signal a decrease in pay pressures.

Average earnings excluding bonuses climbed 5.6% in the three months to November from a year ago, slightly faster than the forecast of 5.5%. 

Earnings, including bonuses, also rose 5.6% annually, which was in line with expectations set by some economists. 

 

Europe Indexes and Yields

The DAX index edged higher by 0.2% to 21,041.52; the CAC-40 index rose 0.5% to 7,770.95; and the FTSE 100 index edged higher by 0.2% to 8,548.29. 

The yield on 10-year German bonds decreased to 2.49%, French bonds eased to 3.29%, the UK gilts declined to 4.66%, and Italian bonds edged lower to 3.61%.

The euro was higher at $1.03; the British pound inched higher to $1.22; and the U.S. dollar was lower at 91.06 Swiss cents.

Brent crude decreased $0.34 to $79.44 a barrel, and the Dutch TTF natural gas fell by €2.10 to €49.83 per MWh.

 

Europe Stock Movers

Banks led gainers in trading on European exchanges after bond yields edged lower and the euro and the pound stabilized near two-year lows. 

Barclays gained 0.8% to 294.15 pence, HSBC advanced 0.1% to 826.30 pence, UniCredit decreased 0.5% to €42.87, BNP Paribas declined 0.2% to €62.83, and Societe Generale fell 0.6% to €62.83. 

Essentra PLC declined 0.7% after the engineering company reported trading and share buyback updates.

The company estimated flat sales and reiterated its previous operating earnings outlook. 

Premier Foods jumped nearly 3% to 184.33 pence after the food products maker estimated annual profit near the top end of the range estimated by analysts. 

 

Japan Indexes Struggled to Rise In Cautious Trading Amid Worries Related to Trade, Economy, and Rate Path 

Benchmark indexes in Tokyo lost early momentum after domestic economic growth and corporate earnings worries dominated market sentiment. 

The Nikkei 225 declined 0.3%, and the TOPIX edged down a fraction after an early rally in the market failed to broaden beyond tech stocks. 

Export-sensitive stocks led gainers after the newly appointed U.S. presidential administration delayed the promised implementation of additional and tougher tariffs to February. 

Despite the delay, Japanese corporations are bracing for a sharp escalation in U.S. trade barriers, and large automotive and electronics companies are ramping up supply chain diversification away from China to Vietnam, Mexico, India, and the ASEAN region. 

Moreover, market sentiment was muted ahead of the Bank of Japan's rate decision at the end of the policy meeting next week, and last week policy officials signaled the possibility of the increase in the reference rate to 0.5%, the highest since the 2008 global financial crisis. 

The yen weakened to 156.75 against the U.S. dollar, as currency traders estimated that the Bank of Japan will delay its first rate cut in 2025 after the ending of spring wage negotiations in March. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average decreased 0.3% to 39,027.98, and the broader TOPIX index declined 0.03% to 2,713.50. 

Tokyo Electron increased 1.4% to ¥27,035.0, Advantest Corp. gained 0.8% to ¥9,440.0, and Disco Corp., the precision tool maker for semiconductor production, jumped 5.8% to ¥9,440.0. 

Nintendo Co. Ltd. advanced 1.6% to ¥9,044.0, and the game console maker struggled to erase an 8% decline last week after the company delayed the release of the Switch 2 console. 

Metaplanet Inc. dropped 14.2% to ¥4,235.0 after the bitcoin-centric company soared 30% in the previous two trading days. 

Metaplanet has catapulted 24-fold in the last 52 weeks of trading after the company restructured its diverse operations and focused on bitcoin-related activities in Japan. 

 

China and Hong Kong Indexes Advanced, Country Garden Resumed Trading After 9-Month Suspension 

Stock market indexes in China lacked direction, but foreign investors bid up stocks in Hong Kong in the hopes of improving relations with the U.S. 

The Hang Seng index jumped as much as 1%, and the mainland-focused CSI 300 index edged slightly higher. 

Tech stocks, electric vehicle makers, and residential property developers advanced in Hong Kong trading after the newly appointed U.S. presidential administration delayed the ban on TikTok by 75 days. 

Investors remained cautious amid uncertainties about the possible additional and tougher trade barriers targeting manufactured goods made by China-owned companies.

Investors are hoping that the electric vehicle makers, shipping companies, solar panel and component makers, and renewable energy products companies will be able to find ways to sustain recent export growth in 2025. 

 

China Stock Movers 

The Hang Seng index increased 0.9% to 20,103.25, and the mainland-focused CSI 300 index gained 0.02% to 3,830.57. 

Residential property developers traded higher after Country Garden Holdings resumed trading following a nine-month suspension. 

Country Garden Holdings jumped 23% to HK $0.60 after the embattled property developer released a proposal to restructure its $11 billion of liabilities to foreign investors. 

Longfor Group Holdings gained 2.8% to HK $10.16, China Resources Land advanced 1.9% to HK $23.85, China Vanke Co. Ltd. soared 10.1% to HK $5.45, and Henderson Land Development decreased 0.4% to HK $22.45. 

BYD increased 1.6% to HK $279.40, Li Auto advanced 4.9% to HK $93.80, and Geely Automobile Holding jumped 2.9% to HK $14.72.