Market Data as of Week Ending: 1/24/2025 unless noted otherwise
Stock prices rose as the S&P 500 Index reached a new record high during the week. Investors were focused on the new Trump administration and quarterly earnings as economic data was sparse. Less than 20% of companies in the S&P 500 have reported, but the fourth quarter earnings season is off to a strong start, with 80% beating earnings expectations and a blended growth rate of 12.7%. Large companies rotated back into a leadership position outperforming their small and mid-sized counterparts. Growth outperformed value across the size spectrum, largely due to underperformance in the energy, materials, and utilities sectors. Energy was the only major economic sector that did not end the week with a gain, as earnings growth expectations have been cut for companies in the energy sector. Communication services, health care, and industrials were the top-performing sectors. Foreign developed and emerging markets were positive for the week and outperformed domestic equities.
Bond market volatility calmed down last week with a small increase in the 10-year Treasury yield, ending the week at 4.63%, and the 2-year Treasury was unchanged at 4.27%. The quiet period for the Fed leading into the January meeting and a light schedule of economic data contributed to a much-needed respite for bond markets. Performance was positive across all bond segments, with notable strength in lower-quality bonds as high-yield corporate bonds outperformed across the curve. Government bonds lagged as investors embraced risk assets. Investment-grade and high-yield corporate bond yields fell, ending the week at 5.36% and 7.45%, respectively.
Economic data for the week was lighter than normal as the Fed convenes for their January policy meeting. The Fed is largely expected to take a pause on policy rate cuts in this meeting, and since there will be no Summary of Economic Projections, investors will be focused on Fed Chair Powell’s comments. Jobs data came in weaker than expected as initial jobless claims were slightly higher than expected at 223,000 and continuing claims were 1.9 million, the highest level since November 2021. S&P Global PMI data for the U.S. showed mixed results. The manufacturing figure came in higher than expected, as it increased from 49.4 to 50.1, whereas services came in lower than expected, down from 56.8 to 52.8. In aggregate, the composite PMI slowed to 52.4 in January 2025, down from December’s 55.4, to signal the weakest expansion in nine months. Existing home sales increased for the third consecutive month to a seasonally adjusted annualized rate of 4.38 million units in December, the most since February 2024. The final reading on consumer sentiment was revised lower to 71.1 in January from a preliminary reading of 73.2 and meaningfully lower than the 74.0 in December.