U.S. and Global Markets React to Corporate Results Amid Rate Path Uncertainties

Alexander Garcia
20 Feb, 2025
Miami

Stock market indexes on Wall Street stayed below the flatline after Walmart's guidance and rate path uncertainties compounded market anxieties. 

The S&P 500 index declined 0.6%, and the Nasdaq Composite dropped 0.8%, and the latest meeting of minutes showed members of the rate-setting committee agreed that inflation needs to weaken further before they can trim rates again. 

The Federal Open Market Committee's stance was widely perceived as the Fed delaying the rate cut to the second half, and investors dialed down expectations of additional rate cuts to one from three. 

Market sentiment was further dented after Walmart lowered its revenue growth estimate in the current fiscal year, after same store sales slowed. 

Initial weekly jobless claims increased by 5,000 to 219,000 in the week ending on February 15, the Department of Labor reported Thursday. 

Continuing claims, which lag by one week, edged up 24,000 to 1.87 million, confirming that the labor market conditions remain strong.

 

U.S. Commodities, Currencies, Indexes, Yields

The S&P 500 index decreased 0.5% to 6,113.34, the Nasdaq Composite edged down 0.6% to 19,932.84, and the Russell 2000 index was down 0.8% to 2,276.24.

The yield on 2-year Treasury notes edged lower to 4.26%, 10-year Treasury notes decreased to 4.52%, and 30-year Treasury bonds declined to 4.74%.

WTI crude oil increased $0.46 to $72.59 a barrel, and natural gas prices edged lower by $0.27 to $4.12 a thermal unit.

Gold increased by $1.87 to $2,937.55 an ounce, and silver edged up by $0.38 to $33.09.

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased 0.19 to 106.98 and traded at a two-year high.

 

Stock Movers 

Walmart Inc. dropped 6% to $97.62 after the retailer's weak guidance for the current fiscal year overshadowed strong results in the latest quarter. 

The company guided fiscal 2026 revenue growth to slow to between 3% and 4%. 

Klaviyo Inc. declined 8.5% to $43.06 after the CRM software developer reported better-than-expected fourth quarter results, but the company's current quarter outlook fell short of expectations. 

IMAX Corp. declined 3% to $26.41 after the advanced movie theater technology company's earnings failed to meet market expectations. 

Alibaba Group Holding jumped 11% to $140.57 after the Chinese e-commerce giant reported a rise in revenue and earnings in the fourth quarter, driven by a 13% increase in revenue in the third quarter. 

Shake Shack soared 11.5% to $124.35 after the fast food company's fourth quarter results met preliminary results announced in mid-January. 

The company guided revenue in the current quarter to range between $326.5 million and $330.9 million, and the company's guidance came ahead of market expectations despite the ongoing challenges linked to wildfires in Los Angeles. 

Builders FirstSource, Inc. gained 1.6% to $147.06 after the company's earnings were ahead of analysts' expectations, but revenue fell short. 

 

European Markets Attempt to Rebound, Danish Economic Growth Accelerated

European stock market indexes attempted to rebound after falling sharply in the previous session amid growing worries about profitability for the automobile industry and global trade uncertainties. 

Benchmark indexes in Frankfurt, Paris, Milan, and London edged higher in choppy trading as investors reviewed the latest batch of earnings. 

Mercedes Benz Group, Renault, Airbus SE, Accor, Indivior, Aegon, Anglo American, and Schneider Electric were in focus after they reported financial results. 

Investors have retained optimism and bid up stocks in 2025 despite the growing uncertainty related to U.S. economic growth and economic policy and mediocre U.S. presidential administration. 

European companies are looking for ways to tap markets in Brazil, India, China, and the ASEAN region amid rising trade barriers and policy uncertainties in the U.S. 

Closer to home and on the economic front, Germany's producer price inflation slowed to an annual pace of 0.5% in January from 0.8% in the previous month, according to an update from Destatis on Thursday. 

Denmark's economy advanced 1.6% in the fourth quarter, higher than the upwardly revised 1.3% growth in the previous quarter. 

On an annual basis, the Danish economy in the fourth quarter expanded a solid 4.1% following an upwardly revised 3.8% in the previous quarter, Statistics Denmark reported Thursday.

For the full-year 2024, economy expanded at an annual pace of 1.85%, matching the 1.9% increase in 2023. 

 

Europe Indexes and Yields

The DAX index increased by 0.5% to 22,543.39, the CAC-40 index edged higher 0.6% to 8,158.04, and the FTSE 100 index declined by 0.2% to 8,697.46. 

The yield on 10-year German bonds inched higher to 2.55%, French bonds increased to 3.24%, the UK gilts moved up to 4.63%, and Italian bonds edged lower to 3.63%.

The euro increased to $1.04; the British pound was higher at $1.26; and the U.S. dollar was lower and traded at 90.18 Swiss cents.

Brent crude increased $0.13 to $76.22 a barrel, and the Dutch TTF natural gas was higher by €0.49 to €47.55 per MWh.

 

Europe Stock Movers

Airbus SE decreased 1.1% to €167.08 after the aviation company delayed the release of the A350 air freight model to 2027, and the company's results fell short of market expectations.  

Renault SA decreased 2.9% to €49.71, and the French passenger car maker reported a 3.6% increase in operating profit in 2024.

Mercedes-Benz Group dropped 1.8% to €60.06 after the German luxury automaker reported a 41% decline in annual earnings in its car division and announced a new plan to cut costs. 

Schneider Electric SE advanced 5.6% to €260.40, and the French electric equipment maker forecast a larger-than-expected increase in margin in 2025, and the company reported record annual sales and earnings.  

Accor SA fell 2.2% to €47.39 after the French hotel group said net income in 2024 declined to €610 million from €633 million a year ago.

Anglo American plc surged 4.4% to 2,474.0 pence despite the UK-based mining company taking a write-down for its struggling De Beers unit and posting a decline in net income. 

Aegon Ltd. decreased 8.5% to €5.93 after the Dutch insurance company reported weaker-than-expected full-year results. 

 

Japan's Indexes Extended Losses Second Consecutive Session

Stock market indexes in Tokyo closed down on Thursday, extending losses in the previous session amid worries of additional U.S. tariffs on Japanese exports. 

The Nikkei 225 stock average decreased 1.2%, and the broader TOPIX fell 1.3% amid new tariff headwinds.

Stock market indexes headed lower for the second consecutive day after the U.S. president proposed to impose additional tariffs on key Japanese industries and pillars of exports—automobiles, pharmaceuticals, and semiconductor products. 

Market sentiment was defensive ahead of the release of inflation data on Friday, and investors are estimating that consumer price inflation has accelerated in January, setting the stage for another rate increase in March. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 1.2% to 38,678.04, and the broader TOPIX dropped 1.3% to 2,734.60. 

Shiseido decreased 0.1% to ¥2,667.0 and trimmed the previous session's surge of 12% after the London, UK-based Independent Franchise Partners acquired a 5.2% stake in the company. 

Hino Motors decreased 5.7% to ¥482.0, 

Yokohama Rubber fell 6.6% to ¥3,352.0, despite the company reporting record results and lifting its 2025 sales outlook. 

Yokohama estimated 2025 global sales to increase 11% to $7.74 billion. and 2.7% rise in business profit of $876.2 million.

Revenue increased to ¥1.09 trillion from ¥985.33 billion, profit surged to ¥74.92 billion from ¥67.23 billion, and earnings per share climbed to ¥466.57 from ¥418.31 a year ago.

For fiscal 2025, the company estimated revenue growth of 11.4% to ¥1.22 trillion, and an 8.8% profit increase to ¥81.5 billion.

The company’s dividend for year 2024 includes the previously distributed interim dividend of ¥46 per share and a proposed year-end dividend of ¥52 per share, payable from March 31.

If approved, the annual dividend for fiscal 2024 will be ¥98 per share.

For fiscal 2025, the company plans to pay an annual dividend of ¥102 per share, comprising an interim dividend of ¥48 per share and a year-end dividend of ¥54 per share, and representing the fifth consecutive increase in the annual dividend.

 

China Tech Stocks Deepen Losses, PBOC Holds LPR In February 

Stock market indexes in China and Hong Kong dropped for the second consecutive session amid worries about stretched valuations and ongoing trade tensions with the U.S. 

The Hang Seng index declined 1.5% and the mainland-focused CSI 300 index dropped 0.3%, as investors pulled back after a rally in tech stocks over the last  five week.

The Hang Seng Tech Index jumped to a five-month high and rebounded from the low in late January after the success of the affordable artificial intelligence chatbot Deep Seek raised hopes that more companies would be able to implement advanced technology. 

The success of the Deep Seek reversed the outflow of foreign funds, as investors speculated about the possible rise in earnings growth for leading tech companies. 

However, the market rally came to a halt this week as investors began questioning stretched valuations of tech companies amid a lack of solid evidence of earnings growth.

The People's Bank of China held its loan prime rates for the fourth month in a row in February.

The one-year loan prime rate was held at 3.1%, while the five-year rate was unrevised at 3.6%, the reference rate for mortgage lending. 

Both reference rates for consumer and housing loans are now at record lows, since these rates were dropped in October and July last year.

Moreover, market sentiment was defensive after the members of the U.S. rate-setting committee demanded the emergence of solid evidence of a decline in inflation amid policy uncertainties and cited the inflation outlook. 

The U.S. Federal Reserve paused its rate-cutting campaign in January after cutting rates three times in a row since September. 

 

China Indexes and Stocks

The Hang Seng index decreased 1.5% to 22,591.58, and the mainland-focused CSI 300 index fell 0.3% to 3,928.90. 

Bilibili Inc. decreased 5.2% to HK $154.90, and the technology company is scheduled to release earnings later today. 

Alibaba Group Holding fell 2.6% to HK $120.90, and the e-commerce company is expected to deliver a strong increase in revenue and earnings, driven in part by the surge in cloud services. 

Meituan decreased 6.6% to HK $156.60, Tencent Holdings dropped 2.5% to HK $485.20, and Baidu Inc fell 3.3% to HK $85.50.