Stock Market Update

[BRIEFING.COM] You can't win 'em all -- or so the saying goes, and the stock market didn't win today. Following gains in each of the three prior sessions this week, which culminated in a record closing high for the S&P 500 on Thursday, the S&P 500 and the other indices fell prone to some selling interest in Friday's session.

The losses were modest in scope, relative to the gains registered recently, and they were paced by the mega-cap cohort, which will be the center of earnings reporting attention next week when Apple (AAPL 222.78, -0.91, -0.4%), Microsoft (MSFT 444.06, -4.39, -1.0%), Meta Platforms (META 647.49, +18.33, +2.9%), Amazon.com (AMZN 234.85, -2.90, -1.2%), and Tesla (TSLA 406.58, -3.58, -0.9%) share their quarterly results. The Vanguard Mega-Cap Growth ETF (MGK) was down 0.6%.

META outperformed the group today, however, after announcing a $60-65 billion capex plan for 2025 that will focus on its AI growth initiatives.

That was some palliative news in the early going that helped mitigate the guidance disappointments from Texas Instruments (TXN 185.52, -15.09, -7.5%) and Boeing (BA 176.03, -2.96, -1.7%), but ultimately it wasn't enough to keep the semiconductor group, or the broader market, healthy. The Philadelphia Semiconductor Index declined 1.9%.

There were some individual standouts like Twilio (TWLO 136.23, +22.83, +20.1%), which impressed with its guidance at its Investor Day, but today was largely a day of consolidation after a run that saw the S&P 500 and Nasdaq Composite gain 6.0% and 6.5%, respectively, from their lows on January 13.

The consolidation interest clipped Dow component American Express (AXP 321.37, -4.50, -1.4%), which posted better-than-expected results on robust customer spending activity, and was up 9.8% for the year coming into today's session. It also squelched some of the excitement surrounding the year's first big IPO, as natural gas exporter Venture Global (VG 24.00, -1.00, -4.0%) stumbled out of the gate.

Some of the market's growth vigor was tempered following the preliminary January S&P Global US Services PMI, which showed a notable deceleration to 52.8 from 56.8 in December, and a weaker-than-expected consumer sentiment reading for January that was pressured by unemployment and inflation concerns.

Those reports took precedence in the Treasury market over a better-than-expected Existing Home Sales Report for December and helped drive Treasury yields lower. The 2-yr note yield settled one basis point lower at 4.27% while the 10-yr note yield, which had climbed to 4.66% earlier in the day, settled one basis point lower at 4.63%.

The U.S. Dollar Index (-0.5% to 107.48) also went lower today, as the greenback lost ground against most major currency pairs. The yen (USD/JPY -0.1% to 155.89) was a focal point after the Bank of Japan raised its key policy rate by 25 basis points to 0.50% and communicated a bias to hike again if the economy evolves as expected. Still, it was the euro (EUR/USD +0.8% to 1.0495) that shined today.

Within the S&P 500, it was the utilities (+1.1%) and communication services (+1.1%) sectors that shined brightest and the information technology (-1.1%) and energy (-1.0%) sectors that lost their luster.

Overall, six sectors finished higher and five sectors ended the day lower.

• S&P Midcap 400: +4.9% YTD
• Dow Jones Industrial Average: +4.5% YTD
• S&P 500: +3.7% YTD
• Russell 2000: +3.5% YTD
• Nasdaq Composite: +3.3% YTD

Reviewing today's economic data:

• The preliminary January S&P Global US Manufacturing checked in at 50.1 (an expansion reading) versus the final reading of 49.4 for December. The preliminary January S&P Global US Services PMI decelerated to 52.8 from 56.8 in December.
• The final University of Michigan Index of Consumer Sentiment for January slipped to 71.1 (Briefing.com consensus 73.0) from the preliminary reading of 73.2. The final reading for December was 74.0. In the same period a year ago, the index stood at 79.0.
  • The key takeaway from the report is that sentiment weakened as concerns about unemployment and inflation picked up.
• Existing home sales increased 2.2% month-over-month in December to a seasonally adjusted annual rate of 4.24 million (Briefing.com consensus 4.21 million) from an unrevised 4.15 million in November. Sales were up 9.3% from the same period a year ago, which was the largest increase since June 2021. On an annual basis, existing home sales in 2024 (4.06 million) dropped to their lowest level in nearly 30 years at the same time the median sales price reached a record high.
  • The key takeaway from the report is that home sales picked up in December despite higher mortgage rates, marking the third straight month of year-over-year gains with more inventory on the market than the same period a year ago.