Weekly Market Update for February 7, 2025
by Jared Plotz, Director of Research
Another sideways move for the markets left the major indices roughly unchanged versus a week ago. The S&P 500 declined -0.2% this week, while the Nasdaq fell -0.5%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.49%, down -6 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +3 bps at 4.33%. The recent reversal in longer-dated Treasury yields has helped fixed income securities, including Preferreds.
Uncertainty surrounding tariffs remains a key unknown for the markets and economists. Stocks fell a week ago after news that tariffs on Canada, Mexico, and China could take effect within days. Then early this week such tariffs on Canada and Mexico were delayed for a month, leading the markets to sigh in relief. The additional 10% tariff on Chinese goods went ahead as planned.
Job openings (JOLTS) for January came in at 7.6 million, a decline from over 8 million in December. Similarly, the employment report for January undershot the prior month. Employers hired a fewer-than-expected 143,000 workers; however, previous months were revised higher and the unemployment rate ticked down to 4.0%. Labor remains strong, with tight supply.
Earnings reports from the big technology companies continued this week. Equity portfolio holdings Google and Amazon announced higher-than-expected profits for Q4. Both companies told investors that they plan to spend heavily in 2025 to expand their data center businesses – with Google estimating investments of $75 billion and Amazon expecting $100 billion. The high values took some investors by surprise, though both companies noted that demand currently exceeds supply.
Next week brings quarterly results from a hodgepodge of companies, including McDonald’s, Humana, CVS Health, Deere, and Palo Alto Networks. On Monday, China’s retaliatory tariffs on some US goods should take effect, including tariffs on coal, LNG, oil, and larger machinery/cars. The NFIB Small Business Index is released Tuesday, CPI inflation on Wednesday, PPI inflation on Thursday, and retail sales for December on Friday. Declining inflation is hoped for by both stock and bond investors, as well as consumers.
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