Stocks surged, clocking in their best week since the November presidential election and moving into the green year-to-date. The S&P 500 (SPX) was up by 2.91% for the week, while the Dow Jones Industrial Average (DJIA) jumped by 3.69%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) rose by 2.45% and 2.85%, respectively. The rally broadened to include all S&P 500 sectors as Treasury yields reversed their previous climb, removing some pressure from both the more leveraged sectors and the ones with higher valuations.
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Better-than-expected Core CPI data eased fears of a reacceleration in inflation, firming rate-cut expectations, and encouraging investors, who rushed in to buy the dip. At the same time, reports that any potential tariff implementation would likely be gradual, in addition to reports that President-elect Trump spoke with Chinese President Xi, relieved worries over a potential spike in inflation due to tariffs. The strong start to the earnings season further lifted investor sentiment.
The nation’s largest banks kicked off the Q4 2024 earnings season with a bang. According to FactSet, S&P 500 earnings are projected to have grown 12.5% year-over-year in the fourth quarter, marking the fastest expansion since Q4 2021. The Financials sector is expected to lead this growth with an estimated 47.5% surge, followed by the Communication Services and Technology sectors with increases of 20.7% and 13.9%, respectively.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» January’s S&P Global Manufacturing PMI and Services PMI (preliminary readings) – Friday, 01/24 – PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions, as the direction and rate of change in the PMIs usually precede changes in the overall economy.
» December’s Existing Home Sales Change – Friday, 01/24 – This report measures the sales volumes and prices of existing single-family homes, condos, and co-ops nationwide. Existing homes account for over 90% of total home sales in the country. This report provides insights into the health of the housing market, which has significant implications for economic activity throughout the U.S.
» January’s Michigan Consumer Sentiment Index and UoM 5-year Consumer Inflation Expectations (preliminary readings) – Friday, 01/24 – These reports portray the results of a monthly survey of consumer confidence levels and consumers’ views of long-term inflation in the United States. The level of confidence affects consumer spending, which contributes about 70% of the U.S. GDP. The inflation expectations index is used as a component of the Fed’s Index of Inflation Expectations calculations.
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