U.S. and Global Markets Trade Sideways as Earnings and Rate Decisions Take Center Stage, Fed Pauses Rate Cuts

Alexander Garcia
29 Jan, 2025
Miami

Stock market indexes deepened losses of the session after the Federal Reserve held rates steady and cautioned about elevated inflationary forces. 

The S&P 500 index decreased 0.8%, and the Nasdaq Composite declined 1.2% after the Federal Reserve cited, "inflation remains somewhat elevated."

Market indexes accelerated losses after the release of the policy committee's decision, amid worries that interest rates are likely to stay higher for longer.

The Federal Reserve held rates steady after cutting rates after three meetings in a row, and the fed funds rate range was left unrevised between 4.25% and 4.50% at the end of a two-day meeting today. 

The U.S. economy has been growing at a healthy clip over the last four years; labor market conditions have moderated, but employers are still adding jobs at a healthy clip. 

Moreover, wages are still rising at a faster pace than overall inflation, driving an increase in real consumer income and supporting the increase in consumer spending. 

However, the U.S. economy is likely to face higher inflation, largely driven by looming Trump tariffs and labor shortages created by the nationwide crackdown on illegal immigrants.

Persistent inflation in the service sector is also adding pressures to inflationary forces. 

In addition, chaotic presidential administration and weak cabinet appointments are likely to negatively impact consumer confidence and support possible federal government shutdowns in the months ahead. 

On the economic front, the U.S. goods trade deficit soared to $1.2 trillion in 2024, slightly higher than the previous record of $1.06 trillion in 2022, the U.S. Census Bureau reported Wednesday. 

December exports decreased 4.5% from a year ago to $167.5 billion, and imports rose 3.9% to $289.6 billion. 

The international goods trade deficit expanded by 18% to $122.1 billion from the revised $103.5 billion in November. 

Microsoft, Starbucks, F5, ASML, Lockheed Martin, General Motors, Royal Caribbean, Logitech, and SAP reported better-than-expected results, and investors are awaiting the release of earnings updates from Tesla and Meta Platform. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.2% to 6,057.09, the Nasdaq Composite edged down 0.4% to 19,669.30, and the Russell 2000 index was up 0.2% to 2,288.86.

The yield on 2-year Treasury notes edged lower to 4.20%, 10-year Treasury notes dropped to 4.53%, and 30-year Treasury bonds eased to 4.77%.

WTI crude oil decreased $0.49 to $73.27 a barrel, and natural gas prices edged lower by $0.01 to $3.12 a thermal unit.

Gold rose by $4.43 to 2,758.05 an ounce, and silver edged up by $0.11 to $30.50.

The dollar index, which weighs the US currency against a basket of foreign currencies, gained 0.40 to 108.27 and traded at a two-year high.

 

U.S. Stock Movers 

Nvidia declined 2.2% to $126.14 and struggled to advance amid continued rout in the artificial intelligence-related stocks after the emergence of a cheaper chatbot alternative from China that does not rely on expensive chips made by the company. 

T-Mobile US jumped 7.6% to $238.0 after the cellular telephone service provider reported stronger-than-expected results in its latest quarter. 

Danaher Corp declined 5% to $235.20 after the medical and industrial products maker estimated possible revenue decline in the current quarter. 

Starbucks jumped 2.6% to $103.09 after the coffeehouse chain reported better-than-expected results, but same-store sales decreased in the quarter. 

 

Sweden Trimmed Rates Fifth Consecutive Meeting, Spain's GDP Growth Surpassed Expectations 

Stock market indexes in Europe advanced, and investors reviewed the latest corporate earnings updates. 

Benchmark indexes in Frankfurt and London advanced, but they struggled to stay above the flatline in Milan and Paris. 

Sweden's central bank lowered its policy rate for the fifth time in a row at the end of its policy meeting today, reflecting the weakening inflationary forces. 

The Riksbank trimmed its benchmark rate by 25 basis points to 2.25%, citing inflation decreasing to 2% and ongoing economic weakness. 

The central bank lowered its rates for the sixth time since May, totaling 175 basis points, and the policy committee signaled one more possible rate cut in the first half. 

Spain's economy expanded at a faster-than-anticipated pace in the fourth quarter, the National Statistics Institute reported Wednesday. 

GDP expanded at an annual pace of 3.5% in the fourth quarter, matching the rate of growth in the previous quarter. 

For the full year 2024, Spain's economy expanded at 3.2%, ahead of its eurozone peers. 

 

Europe Indexes and Yields

The DAX index moved higher by 0.4% to 21,505.42; the CAC-40 index fell 0.4% to 7,865.95; and the FTSE 100 index advanced by 0.02% to 8,535.75. 

The yield on 10-year German bonds inched higher to 2.48%, French bonds declined to 3.28%, the UK gilts moved down to 4.58%, and Italian bonds edged lower to 3.61%.

The euro was flat at $1.04; the British pound was flat at $1.24; and the U.S. dollar was higher and traded at 90.60 Swiss cents.

Brent crude decreased $0.57 to $76.95 a barrel, and the Dutch TTF natural gas was higher by €0.17 to €49.91 per MWh.

 

Europe Stock Movers

Logitech gained 0.4% to CHF 82.68 after the Swiss computer accessories maker posted mixed earnings for the third quarter of fiscal year 2025.

Atlas Copco Group plunged 3.5% to 180.40 krona after the Swedish industrial manufacturer posted earnings for the fourth quarter ending in December.

LVMH eased 0.6% to €750.6 after the luxury goods retailer posted a slight revenue decline for the full year 2024 ending in December.

Revenue declined 2% to €84.68 million from €86.15 million; net profit moved down to €12.55 million from €15.17 million a year ago, driven by a 36% plunge in wine and spirits sales.

The company proposed to pay a dividend of €7.50 per share on April 28.

Remy Cointreau SA edged down 2.8% to €58.20 after the French alcohol beverages distributor posted lower earnings for its third quarter ending in December.

Sales in the Americas and Asia-Pacific declined, reflecting tougher market conditions in China, while Southeast Asia sales rebounded.

In the first nine months of 2024-25, the company reported sales of €787.8 million, down 17.8% on an organic basis.

The overall performance includes an organic decline of 21.5% in the third quarter, or 20.6% as reported.

Akzo Nobel NV traded flat at €60.52 after the Dutch paints and performance coatings maker posted mixed earnings for the fourth quarter ending in December.

Tele2 edged up 0.6% to 115.20 krona after the Swedish streaming TV and networking company posted strong earnings for the fourth quarter ending in December.

Lonza Group AG traded flat at CHF594.60 after the Swiss pharmaceutical and nutrition products provider posted mild earnings for the year ending in December.

WH Smith Plc gained 5.7% to 1,258 pence after the British books and travel retailer posted growth for the 21-week period to January 25.

Comparable sales surged 3% in North America, driven by new product categories and additional stores at Orlando. Florida and Portland, Oregon, airports.

 

India Indexes Trimmed Weekly Losses after Bajaj Auto and TVS Motor Results

Stock market indexes in Mumbai edged higher and trimmed weekly losses, and the rupee hovered near the record low.

The Sensex and Nifty indexes advanced more than 0.3%, and consumer goods makers led the decliners in early trading. 

Bajaj Auto and TVS Motor advanced after reporting better-than-expected quarterly results, and Colgate Palmolive, Cipla, Hindustan Zinc, and Arvind Ltd. were in focus after the release of their quarterly results. 

Investor sentiment has turned cautious amid a confluence of multiple domestic and foreign headwinds, and they have lowered domestic earnings growth expectations. 

Bond yields in the U.S. are likely to stay elevated and above 5% in 2025 and 2026, lowering the attractiveness of risky stock investing abroad. 

Moreover, urban consumer spending growth has fallen off, as they struggle to pay debt accumulated over the last five years. 

Stretched valuations in the stock market have also kept investors on the defensive, limiting appetite for increasing exposure to high-growth stocks. 

In overnight trading, the S&P 500 index and the Nasdaq Composite rebounded after investors debated the impact of a cheaper Chinese alternative for chatbots, possibly limiting demand for high-priced chips made by U.S. companies. 

 

Stock Indexes and Bond Yields

The Sensex index increased by 0.3% to 76,143.02, and the Nifty index advanced by 0.3% to 23,031.10.

On the Mumbai stock exchange, 10 stocks traded at their 52-week highs, and 93 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched lower to 6.7%, and the Indian rupee hovered near a record and traded at 86.58 against the U.S. dollar.

The gold price increased by 0.07% to ₹80,344 per ten grams, and silver fell by 0.02% to ₹91,030 per kilo.

Crude oil rose by 0.7% to ₹6,386 per barrel, and natural gas fell by 0.9% to ₹267.9 per thermal unit.

 

Stock Movers

Bajaj Auto increased 2.6% to ₹8,614.40 after the 2- and 3-wheeler maker reported better-than-expected earnings in the December quarter. 

The company said its electric vehicle turned profitable, following the sustained demand. 

TVS Motor Company gained 7% to ₹2,501.0 after the two-wheeler vehicle maker reported better-than-expected December quarter results.

Hyundai Motor decreased 0.1% to ₹1,622.85 after the passenger carmaker reported a 19% decline in profit in the December quarter. 

Hindustan Zinc Ltd. advanced 1% to ₹433.55 after the mining company reported a 32% rise in net income in the latest quarter. 

Cipla Ltd. inched up 0.3% to ₹1,425.60 after the generic pharmaceutical company reported nearly a 49% jump in profit in the December quarter.