Posted by:
Comments:
Post Date:
Table of Contents
Equities Rise on Strong Start to Corporate Earnings Season
Equity markets finished the holiday-shortened trading week higher boosted by corporate earnings and investor optimism on the new administration’s potential pro-growth policies. Global equities (represented by the MSCI All Country World Index) were up 2.08% while domestic stocks (represented by the S&P 500 Index) were up 1.76%.
Quarterly Earnings
Now past the second week of quarterly earnings with approximately 16% of S&P 500 companies reporting, the blended earnings growth rate is 12.7%, compared to analyst expectations coming into earnings season of 11.8% according to FactSet. If the earnings growth of 12.7% persists, it would be the highest S&P 500 earnings growth rate in three years.
S&P Global Flash PMI Indices
S&P Global’s release of their flash PMI indices for January showed slowed growth in business activity for the month, however, remaining in expansion territory. Services PMI continued its growth during the month but at a slower rate than December while the manufacturing sector reached expansion territory for the first time in six months. Input costs and selling prices rose across both sectors, a sign of caution of potential rising inflationary pressures.
US Real Estate Market
While the National Association of Realtors reported a rise in existing home sales of 2.2% for the month of December, sales for the full year fell less than 1%, the lowest level since 1995 as higher interest rates and record-high home prices weighed on the US real estate market.
In the News
Media headlines last week were mostly centered around the inauguration of President Trump and the load of executive orders he signed. Political developments the market generally reacted positively to included Trump’s call for a review of US trade policies and the focus on investment in AI-infrastructure.
Looking Forward
This week the US Federal Reserve holds their first policy-setting meeting of 2025 which concludes on Wednesday. The Fed is widely expected to keep rates steady following a cumulative percentage point cut in the last three meetings of 2024. The initial estimate of US Q4 GDP is also slated to be released this week. Economists generally expect another solid growth rate for the quarter following annual growth rates of 3.1% and 2.0% from the past two quarters.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
Financial planning and Investment advisory services offered through Diversified, LLC. Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.