Stock Market Update

[BRIEFING.COM] Today's market showed a positive bias, with investor sentiment buoyed by several key developments related to tariffs and their potential impact on inflation and corporate earnings growth. Specifically, Canada was granted a 30-day reprieve from tariff actions, while China’s latest retaliatory measures appear more symbolic than substantial

Market expectations were high that President Trump would engage in talks with Chinese President Xi Jinping today; however, those discussions did not materialize.

The S&P 500 logged a 0.7% gain and the Nasdaq Composite jumped 1.4%.

Significant contributions to the market's performance were from large-cap stocks, with Alphabet (GOOG 207.71, +5.07, +2.5%) standing out, rising 2.5% to a fresh 52-week high before reporting earnings. Other stocks with notable gains included Palantir Technologies (PLTR 103.83, +20.09, +24.0%), which surged 24.0% following strong earnings results, and Spotify (SPOT 621.77, +72.69, +13.2%), up 13.2% after posting better-than-expected numbers.

On the downside, some earnings reports weighed on stock prices, with Dow component Merck (MRK 90.74, -9.05, -9.1%) dropping 9.1%, Estee Lauder (EL 69.47, -13.30, -16.1%) falling 16.1%, and PepsiCo (PEP 143.49, -6.78, -4.5%) retreating 4.5%, following disappointing results in their latest earnings reports.

The overall upside bias in stocks was also helped by the decline in rates following the December JOLTS - Jobs Openings Report, which showed a stark drop in openings to 7.600 million versus an upwardly revised 8.156 million (from 8.098 million) in November.

The 2-yr yield, at 4.24% before 10:00 ET, dropped five basis points from yesterday to 4.22%.

The decline in job openings was interpreted as an indication of a softening labor market, with employers posting fewer job listings than in previous months. This shift did not significantly alter market expectations regarding future rate cuts. Nonetheless, it does align with the prevailing sentiment that the Federal Reserve’s next policy move is likely to be another rate reduction.

• Dow Jones Industrial Average: +4.7% YTD
• S&P Midcap 400: +3.1% YTD
• Russell 2000: +2.7% YTD
• S&P 500: +2.7% YTD
• Nasdaq Composite: +1.8% YTD

Reviewing today's economic data:

• December Factory Orders -0.9% (Briefing.com consensus -0.3%); Prior was revised to -0.8% from -0.4%
  • The key takeaway from the report is that the weakness in factory orders was concentrated in the volatile transportation equipment space; otherwise, there was a modest pickup in order activity.
• December JOLTS - Job Openings 7.600 mln; Prior was revised to 8.156 mln from 8.098 mln

Looking ahead to Wednesday, market participants receive the following economic data:

• 7:00 ET: Weekly MBA Mortgage Index (prior -2.0%)
• 8:15 ET: January ADP Employment Change (Briefing.com consensus 155,000; prior 122,000)
• 8:30 ET: December Trade Balance (Briefing.com consensus -$98.0 bln; prior -$78.2 bln)
• 9:45 ET: Final January S&P Global U.S. Services PMI (prior 52.8)
• 10:00 ET: January ISM Services (Briefing.com consensus 53.9%; prior 54.1%)
• 10:30 ET: Weekly crude oil inventories (prior +3.46 mln)