Weekly Market Update for January 24, 2025
by Jared Plotz, Director of Research
Markets started the week off closed on Monday in observance of Martin Luther King Jr. Day. The holiday also happened to be shared this year by Inauguration Day, which the incoming administration used to sign a flurry of executive orders and to promote ongoing business and trade developments. Tariff chatter was softer at the margin, though negotiations on trade policy will likely remain dynamic in the coming weeks. The S&P 500 rose +1.7%, while the Nasdaq increased +1.6%. The 10-Year Treasury, an interest rate indicator, closed the week at 4.62%, unchanged from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended down -2 bps at 4.28%.
There was no clear direction from economic data points this week; however, CEO outlooks are becoming more optimistic as companies look to increase business investments. Prologis – one of the largest lessors of industrial warehouses – noted strong post-election leasing activity. Transportation companies noted higher railroad volumes and improving passenger airline demand. Media company Netflix generated record new sign-ups and a large jump in advertising revenues. And financial services company Charles Schwab highlighted increasing account openings as well as trading activity. All of this suggests business and consumer confidence is robust.
This week, OpenAI (in which Microsoft holds a significant interest) launched Operator, an AI agent that can perform web browsing tasks autonomously. Microsoft had already revealed $80 billion in targeted AI spending. Additionally, portfolio company Meta (Facebook) shared that it plans to invest $60-65 billion in capital expenditures in 2025, up from about $38 billion last year. Then, coinciding with Inauguration Day, technology companies OpenAI, Oracle, and Softbank announced a JV partnership to fund an initial investment of $100 billion in AI infrastructure, and potentially as much as $500 billion over the next four years. On the back of this positive news for AI players, we have recently begun trimming some positions to manage rising individual equity weights in portfolios.
Looking ahead to next week, many of the big technology companies’ earnings are on tap. This includes the likes of Microsoft, Meta (Facebook), Tesla, Apple, and Amazon. These should provide a good look into advertising trends, as well as capital investments, particularly data center spending. The Federal Reserve meets on Wednesday. Though no change to benchmark rates is expected, Chairman Powell’s Q&A commentary could impact Treasury yields and Preferred securities. Then on Friday, the first reading of U.S. fourth-quarter GDP will be released. Economists are forecasting that the economy expanded by 2.3%, which would be the 11th consecutive quarter of real (inflation-adjusted) growth.
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