Stock Market Update Friday January 24, 2025
Stock Market Update Friday January 24, 2025 Equities ended the session with a slight pullback, as the S&P 500 slipped 0.3%, though it managed to close the shortened trading week up just over 1%. The Nasdaq 100 (QQQ) declined by 0.6%, while the Russell 2000 (IWM) dipped 0.3%. Among the notable outperformers were Disney (DIS), United Airlines (UAL), Verizon (VZ) (boosted by earnings), and Broadcom (AVGO). On the downside, Texas Instruments (TXN), American Express (AXP), NVIDIA (NVDA), and Intuitive Surgical (ISRG) weighed on the broader market following earnings-related weakness.
Away From Stocks: Treasurys saw modest strength, with yields on the 10-year and 30-year notes each retreating by two basis points to 4.63% and 4.85%, respectively. In the commodities space, WTI crude remained relatively unchanged, trading just below $75 per barrel. Meanwhile, gold extended its rally, closing at $2,771 per ounce—within 1% of its October high. Bitcoin climbed above the $105,000 mark, reflecting continued resilience in digital assets, while the CBOE Volatility Index (VIX) dropped below 15 for the first time in 2025, signaling muted market volatility.
On December 13, 2024, our proprietary algorithm issued a sell alert for the Russell 2000 IWM ETF, indicating widespread selling in the stock market. This was followed by a hawkish FOMC meeting on December 18, 2024, during which Jerome Powell made the following statements:
On Inflation and Rate Cuts: Powell highlighted that the "slower pace of cuts for next year" reflects both higher-than-expected inflation this year and an expectation that inflation will remain elevated moving forward. This signals a more gradual reduction in rates, with the possibility that the path to the Fed's neutral rate could be longer and more deliberate than previously anticipated. On Economic Forecasts and Policy Impact: Powell also noted that some Fed participants have started to incorporate the potential economic impact of policy changes into their forecasts, but with significant variation. He explained that "some people did, some did not, and others did not disclose their stance", highlighting internal differences within the Fed on how to model future policy effects. This uncertainty suggests a less cohesive forward guidance on rate cuts, adding to investor caution. Powell reiterated the importance of data dependence and a meeting-by-meeting approach. Fed Funds futures now predict only one rate cut in 2025, a change from the previous expectation of 2-3 cuts before the December FOMC meeting. This adjustment indicates a move towards a more hawkish approach, influenced by the Fed's updated inflation outlook and a slower strategy for easing rates.
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