While 2025 has begun, the US stock market started with mixed results on January 14th. While the Dow Jones Industrial Average closed higher, the S&P 500 and NASDAQ indices declined. Various factors contributed to these mixed results. This report analyzes the major trends in the US stock market on January 14th and provides key information that investors should pay attention to.
1. Major Stock Index Movements
The major US stock indices closed as follows on January 14th:
Index | Closing Price | Change | % Change |
Dow Jones Industrial | 42,297.12 | +358.67 | +0.86% |
S&P 500 | 5,836.22 | +9.18 | +0.16% |
NASDAQ | 18,876.58 | -285.05 | -1.49% |
NASDAQ 100 | 20,784.73 | -62.85 | -0.3% |
The Dow Jones index closed higher, driven by gains in UnitedHealth Group (UNH). According to data released by CMS (Centers for Medicare & Medicaid Services), Medicare Advantage payments could increase by more than 4% next year, which positively impacted UnitedHealth Group's stock price.
Meanwhile, the S&P 500 index saw only modest gains, while the NASDAQ declined. The main cause of NASDAQ's decline is attributed to weakness in technology stocks. In particular, the NASDAQ 100 index fell 0.3%, reflecting weakness centered on technology stocks.
The rise in the Dow Jones and fall in NASDAQ suggests that investors have become more cautious toward the technology sector compared to defensive healthcare sectors. This is interpreted as being due to recent interest rate hikes and economic slowdown concerns.
For the S&P 500 index, while 13% of stocks recorded new highs, 46% hit new lows. This indicates an overall bearish market sentiment.
Meanwhile, the VIX volatility index rose 8.4% to 21.2, indicating increased market uncertainty. Additionally, Bitcoin, the leading cryptocurrency, fell 3.52%, showing strengthened risk-averse sentiment.
The NYSE U.S. 100 index rose 0.74%, while the NYSE FANG+ index fell 0.78%, showing mixed results.
2. Key Economic Indicators
Key U.S. economic indicators released on January 14th are as follows:
Economic Indicator | Current Value | Previous Value |
Unemployment Rate | 4.1% | 4.2% |
CPI (Month-over-Month) | 0.3% | 0.2% |
CPI (Year-over-Year) | 2.7% | 2.6% |
Manufacturing PMI | 49.4 | 49.7 |
10-Year Treasury Yield | 4.76% | - |
U.S. Dollar Index | 109.86 | - |
WTI Crude Oil Price | $77.82 | - |
Personal Income (MoM) | 0.3% | - |
Personal Spending (MoM) | 0.4% | - |
Current Account Deficit | $310.9 billion | $275 billion |
Q3 2024 GDP Growth | 3.1% | - |
Goods Trade Deficit | $102.9 billion | $98.3 billion |
Retail Inventories (MoM) | 0.3% | 0.2% |
New Home Sales (MoM) | 5.9% | -14.8% |
The unemployment rate decreased by 0.1 percentage points to 4.1%, indicating strength in the labor market. The Consumer Price Index rose 0.3% month-over-month but remains above the Fed's 2% target. The Manufacturing PMI fell below 50, indicating contraction and raising concerns about economic slowdown.
The 10-year Treasury yield reached 4.76%, reflecting investors' concerns about interest rate hikes. The U.S. Dollar Index remained strong at 109.86, putting pressure on U.S. companies' export competitiveness. WTI crude oil prices rose to $77.82 per barrel, impacting energy sector stocks and overall inflation expectations.
Personal income increased by 0.3% month-over-month, while personal spending rose by 0.4%, showing steady consumer spending growth. The current account deficit widened to $310.9 billion, reflecting increased trade deficits and reduced foreign investment inflows. Q3 2024 GDP growth maintained steady growth at 3.1%.
The goods trade deficit widened to $102.9 billion as imports growth outpaced exports. Retail inventories increased by 0.3% month-over-month, while new home sales rose by 5.9%.
Overall, economic indicators show mixed results. While the labor market remains strong, inflationary pressures persist and manufacturing activity is slowing. These conditions are increasing uncertainty about future economic growth.
3. Federal Reserve's Monetary Policy
On December 18th, the Federal Reserve lowered its benchmark interest rate by 0.25 percentage points to a range of 4.25%~4.50%. This marks the third rate cut in 2024. The Fed made this decision considering easing inflationary pressures and concerns about economic slowdown.
The Fed assessed that while economic activity continues to expand at a solid pace, labor market conditions are easing and inflation remains somewhat elevated. Accordingly, the Fed is expected to continue gradual rate cuts to normalize policy rates.
The Fed is also reducing its balance sheet holdings, which has the effect of improving market liquidity. However, in its December 18th announcement, the Fed suggested the possibility of slowing the pace of rate cuts in 2025. This created anxiety among investors and contributed to the stock market decline.
The rate cuts and potential slowdown in future rate cuts could have different impacts across economic sectors. For example, while rate cuts may be positive for growth stocks, they could negatively impact financial stocks. Investors should adjust their investment strategies considering these factors.
4. Major Corporate Earnings Announcements
Several companies announced their earnings on January 14th. Here are the major corporate earnings announcements:
Company Name | Ticker | EPS Estimate | Reported EPS |
WAFD, INC. | WAFD | $0.65 | - |
APPLIED DIGITAL CORPORATION | APLD | -$0.14 | - |
KAROOOOO LTD. | KARO | $0.37 | - |
CALAVO GROWERS, INC. | CVGW | $0.30 | - |
•
WAFD, INC.: A data center REIT, expected to see improved performance due to increased data center demand.
•
APPLIED DIGITAL CORPORATION: A Bitcoin mining company whose performance may be affected by cryptocurrency market volatility.
•
KAROOOOO LTD.: An online education platform company benefiting from post-pandemic growth in the online education market.
•
CALAVO GROWERS, INC.: An avocado production and distribution company whose performance may be affected by avocado price fluctuations.
Additionally, major financial institutions including Bank of America, First Horizon, Morgan Stanley, and PNC Financial Services Group are scheduled to report earnings. Investors expect these corporate earnings reports to provide insights into future economic outlook.
5. Political and International Situation
As former President Trump's chances of returning to power increase, investors are focusing on potential changes in trade policy. Trump is known to favor high tariffs, low tax rates, and relaxed regulations, which could be positive for certain industries but may increase overall economic uncertainty.
Trump's policies could raise concerns about increased U.S. government debt and accelerated inflation.
Historically, U.S. presidential election results have not significantly impacted long-term stock market performance, but they often cause short-term uncertainty. In particular, whether the incumbent party maintains control of the White House has been shown to affect market volatility.
Internationally, China's economic stimulus measures and geopolitical tensions are factors that could influence U.S. markets. While China's stimulus measures could positively impact the U.S. economy, geopolitical tensions could increase uncertainty.
6. Expert Opinions and Investment Strategies
Experts are offering various opinions on the recent market decline. Some experts express concerns about potential recession, arguing that the Fed's rate cuts came too late.
On the other hand, other experts question the Fed's aggressive rate cut policy, noting that long-term interest rates are rising despite stable employment markets and rate cuts. In particular, the 100bp rise in 10-year Treasury yields may reflect market skepticism about the Fed's rate cut decisions.
Some experts analyze that despite recent market declines, the possibility of recession remains low as the U.S. economy has not met the 'Sahm rule' criteria. The 'Sahm rule' indicates a high probability of recession when the 3-month moving average unemployment rate rises by more than 0.5 percentage points compared to the previous year.
Investors should adjust their investment portfolios considering various factors including the Fed's rate cut policy, economic indicators, and political and international situations.
7. Stocks to Watch
Company Name | Ticker | Reason for Interest |
Nvidia (NVDA) | NVDA | Leader in AI sector, recorded 171.2% growth in one year. Continued growth expected. |
Estee Lauder | EL | Global beauty industry leader with strong brand and stable growth. |
Polaris | PII | Recreational vehicle manufacturer expected to benefit from increased outdoor activities. |
Anheuser-Busch InBev | BUD | Global beverage company with stable revenue generation. |
Ambev | ABEV | Major Latin American beverage company with high growth potential. |
Conclusion
On January 14th, U.S. markets showed mixed results with the Dow Jones rising while the Nasdaq declined. Economic indicators show strength in the labor market, but inflation pressures and manufacturing slowdown remain concerns.
Investors should develop careful investment strategies considering the Fed's rate cut policy, political and international situations, and economic indicators. Additionally, they should pay attention to high-growth potential companies like Nvidia and Estee Lauder among the stocks to watch.
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