Stocks March Higher as Netflix and Oracle Soar

The S&P 500 Index ($SPX) (SPY) today is up +0.49%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.19%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.10%.  March E-mini S&P futures (ESH25) are up +0.52%, and March E-mini Nasdaq futures (NQH25) are up +1.2%. 

Stocks today extended Tuesday's gains, with the S&P 500, the Dow Jones Industrials, and the Nasdaq 100 posting 5-week highs.  Strength in technology stocks is leading the overall market higher today, with Netflix up more than +13% after reporting better-than-expected Q4 earnings results.  Also, Oracle is up more than +6%, adding to Tuesday's +6% jump, as the company teams up with Softbank Group and Open AI to form a $100 billion joint venture to fund artificial intelligence infrastructure. 

Stocks also have carryover support from Monday when President Trump stopped short of imposing new tariffs on China and Europe during his first day in office.  However, Trump ordered his administration to address unfair trade practices globally and outlined plans to impose tariffs of 25% on Canadian and Mexican goods on February 1.  Late Tuesday, Trump also said he was considering a 10% tariff on all goods from China.

US MBA mortgage applications rose +0.1% in the week ended January 17, with the purchase mortgage sub-index up +0.6% and the refinancing mortgage sub-index down -2.9%.  The average 30-year fixed rate mortgage fell -7 bp to 7.02% from 7.09% in the prior week.

Earnings season is in full swing as companies report Q4 earnings results.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings to grow 7.5% y/y in Q4, the second-highest pre-season forecast in the past three years.

The markets are discounting the chances at 1% for a -25 bp rate cut at the January 28-29 FOMC meeting.

Overseas stock markets today are mixed.  The Euro Stoxx 50 rallied to a 24-year high and is up +1.09%.  China's Shanghai Composite Index fell to a 1-week low and closed down -0.89%.  Japan's Nikkei Stock 225 rose to a 1-1/2 week high and closed up +1.58%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +2 ticks.  The 10-year T-note yield is down -1.2 bp to 4.564%.  Mar T-notes today are slightly higher on carryover support from a rally in 10-year German bunds today to a 2-week high.  T-notes also have support on expectations that President Trump will take a more measured approach to tariffs, which calmed concerns his policies would increase inflation. 

Today's stock rally is limiting the upside in T-notes.  Also, supply pressures are weighing on T-notes as the Treasury will auction $13 billion of 20-year T-bonds later today. 

European government bond yields today are lower.  The 10-year German bund yield fell to a 2-week low of 2.483% and is down -0.6 bp to 2.504%.  The 10-year UK gilt yield dropped to a 2-1/2 week low of 4.565% and is down -0.3 bp to 4.588%.

ECB President Lagarde said the ECB isn't lowering interest rates too slowly and will maintain its measured approach to easing monetary policy.

ECB Governing Council member Escriva said another 25 bp cut in interest rates by the ECB at next week's policy meeting is "very probable."

ECB Governing Council member Knot said market expectations for interest rate cuts by the ECB in January and March "are reasonable."

In its monthly report today, the Bundesbank said, "In the first quarter of 2025, the German economy is unlikely to emerge from its long period of stagnation."

Swaps are discounting the chances at 99% for a -25 bp rate cut by the ECB at its January 30 policy meeting.

US Stock Movers

Netflix (NFLX) is up more than +13% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 EPS of $4.27, better than the consensus of $4.18, and reporting Q4 streaming paid membership of 301.63 million, stronger than the consensus of 290.93 million. 

Oracle (ORCL) is up more than +6%, adding to Tuesday's +6% jump, as it will team up with Softbank Group and Open AI to form a $100 billion joint venture that will fund artificial intelligence infrastructure. 

Seagate Technology Holdings Plc (STX) is up more than +8% after reporting Q2 adjusted EPS of $2.03, better than the consensus of $1.87.

Travelers Cos (TRV) is up more than +4% to lead gainers in the Dow Jones Industrials after reporting Q4 core EPS of $9.15, well above the consensus of $6.59.

TE Connectivity Plc (TEL) is up more than +7% after reporting Q1 adjusted EPS of $1.95, better than the consensus of $1.89.

Procter & Gamble (PG) is up more than +3% after reporting Q2 net sales of $21.88 billion, stronger than the consensus of $21.55 billion.

Aptiv Plc (APTV) is up more than +3% after the company's board approved a plan to separate its electrical distribution systems business. 

United Airlines Holdings (UAL) is up more than +2% after reporting Q4 adjusted EPS of $3.26, stronger than the consensus of $3.05, and forecast Q1 adjusted EPS of 75 cents-$1.25, well above the consensus of 56 cents. 

Agilysys (AGYS) is down more than -20% after cutting its 2025 revenue forecast to about $273 million from an October forecast of $280 million-$285 million.

Textron (TXT) is down more than -5% to lead losers in the S&P 500 after forecasting 2025 adjusted EPS of $6.00-$6.20, weaker than the consensus of $6.39. 

Johnson & Johnson (JNJ) is down more than -3% to lead losers in the Dow Jones Industrials after reporting Q4 MedTech sales of $8.19 billion, weaker than the consensus of $8.23 billion.

Ford Motor (F) is down more than -3% after Barclays downgraded the stock to equal weight from overweight. 

Fifth Third Bancorp (FITB) is down more than -2% after reporting Q4 average deposits of $167.24 billion, below the consensus of $168.55 billion.

Elevance Health (ELV) is down more than -1% after Stephens downgraded the stock to equal weight from overweight. 

Earnings Reports (1/22/2025)

Abbott Laboratories (ABT), Amphenol Corp (APH), Discover Financial Services (DFS), GE Vernova Inc (GEV), Halliburton Co (HAL), Johnson & Johnson (JNJ), Kinder Morgan Inc (KMI), Procter & Gamble Co/The (PG), Steel Dynamics Inc (STLD), TE Connectivity PLC (TEL), Teledyne Technologies Inc (TDY), Textron Inc (TXT), Travelers Cos Inc/The (TRV).