Stocks Slip as FOMC Pauses on Rate Cuts

The S&P 500 Index ($SPX) (SPY) today is down -0.28%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.33%.  March E-mini S&P futures (ESH25) are down by -0.29%, and March E-mini Nasdaq futures (NQH25) are down by -0.37%. 

Stocks are under pressure today on risk-off sentiment amid today’s FOMC meeting.  Some negative earnings results are also weighing on stocks today, with Packaging Corp down more than -9% after forecasting Q1 EPS below consensus.  Also, Danaher is down more than -8% after reporting weaker-than-expected Q4 adjusted EPS.  In addition, Lennox International is down more than -7% after forecasting full-year free cash flow below consensus.

On the positive side, chip stocks are climbing today, with ASML Holding NV up more than +5% after reporting better-than-expected Q4 order bookings as the artificial intelligence boom boosted demand for its chipmaking machines. 

The FOMC kept its fed funds target range unchanged at 4.25%-4.50%, as expected.  However, policymakers noted that inflation “remains somewhat elevated.” 

US MBA mortgage applications fell -2.0% in the week ended Jan 24, with the purchase mortgage sub-index down -0.4% and the refinancing mortgage sub-index down -6.8%.  The average 30-year fixed rate mortgage was unchanged from the prior week at 7.02%.

Earnings season is in full swing as companies report Q4 earnings results.  Megacap technology stocks begin reporting earnings this week, with Microsoft, Meta Platforms, and Tesla reporting today and Apple reporting on Thursday.  According to Bloomberg Intelligence, analysts estimate S&P 500 earnings grew by +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 after today’s FOMC meeting.

Overseas stock markets today are higher.  The Euro Stoxx 50 is up +0.75%.  China’s Shanghai Composite Index did not trade today and will be closed through next Tuesday for the week-long Lunar New Year holiday.  Japan’s Nikkei Stock 225 closed up +1.02%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +2 ticks.  The 10-year T-note yield is down -0.2 bp to 4.530%.  Mar T-notes today are sllightly higher on some positive carryover from strength in European government bonds.  Also, short-covering boosted T-note prices ahead of the results of the FOMC meeting later this afternoon. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -0.2 bp to 2.563%.  The 10-year UK gilt yield is down -1.9 bp to 4.595%.

Eurozone Dec M3 money supply rose +3.5% y/y, weaker than expectations of 3.9% y/y.

The German Feb GfK consumer confidence index fell -1.0 to -22.4.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at Thursday’s policy meeting.

US Stock Movers

Packaging Corp (PKG) is down more than -9% to lead losers in the S&P 500 after forecasting Q1 EPS of $2.21, below the consensus of $2.38. 

Danaher (DHR) is down more than -8% after reporting Q4 adjusted EPS of $2.14, weaker than the consensus of $2.16.

Nvidia (NVDA) is down more than -4% to lead losers in the Dow Jones Industrials on concern that the rise of China’s AI startup DeepSeek may curb demand for advanced chips from AI companies as cheaper and more efficient techniques may be the future of AI development. 

Datadog (DDOG) is down more than -5% to lead losers in the Nasdaq 100 after Stifel downgraded the stock to hold from buy with a price target of $140.

Lennox International (LII) is down more than -7% after forecasting full-year free cash flow of $650 million to $800 million, the midpoint below the consensus of $771.8 million. 

MSCI Inc (MSCI) is down more than -5% after reporting Q4 operating revenue of $743.5 million, weaker than the consensus of $748.5 million.

Moderna (MRNA) is down more than -1% after Goldman Sachs downgraded the stock to neutral from buy. 

Manhattan Associates (MANH) is down more than -23% after forecasting 2025 adjusted EPS of $4.45-$4.55, well below the consensus of $4.91.

Chip stocks are climbing today after ASML Holding NV reported quarterly bookings well above estimates.  As a result, ASML Holding NV (ASML) is up more than +5%.  Also, Advanced Micro Devices (AMD) is up more than +2%, and GlobalFoundries (GFS), KLA Corp (KLAC), and Applied Materials (AMAT) are up more than +1%. 

T-Mobile US (TMUS) is up more than +8% to lead gainers in the Nasdaq 100 after reporting Q4 new phone customers of 903,000, better than the consensus of 865,000.

F5 Inc (FFIV) is up more than +10% to lead gainers in the S&P 500 after reporting Q1 net revenue of $76.5 million, well above the consensus of $715.1 million and forecast Q2 revenue of $705 million-$725 million, stronger than the consensus of $703.7 million. 

Starbucks (SBUX) is up more than +5% after reporting Q1 net revenue of $9.40 billion, above the consensus of $9.31 billion. 

Henry Schein (HSIC) is up more than +5% after the Wall Street Journal reported that KKR has built a large stake in the company. 

Norfolk Southern (NSC) is up more than +4% after reporting Q4 adjusted EPS of $3.04, better than the consensus of $2.96.

Automatic Data Processing (ADP) is up more than +3% after reporting Q2 revenue of $5.00 billion, better than the consensus of $4.97 billion.

VF Corp (VFC) is up more than +2% after reporting Q3 revenue from continuing operations of $2.83 billion, above the company’s previous projection of $2.70 billion-$2.75 billion. 

Earnings Reports (1/29/2025)

Ameriprise Financial Inc (AMP), Automatic Data Processing Inc (ADP), CH Robinson Worldwide Inc (CHRW), Corning Inc (GLW), Danaher Corp (DHR), General Dynamics Corp (GD), Hess Corp (HES), International Business Machine (IBM), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS), Lennox International Inc (LII), Meta Platforms Inc (META), Microsoft Corp (MSFT), MSCI Inc (MSCI), Nasdaq Inc (NDAQ), Norfolk Southern Corp (NSC), Otis Worldwide Corp (OTIS), Progressive Corp/The (PGR), Raymond James Financial Inc (RJF), ServiceNow Inc (NOW), Teradyne Inc (TER), Tesla Inc (TSLA), T-Mobile US Inc (TMUS), United Rentals Inc (URI), Waste Management Inc (WM), Western Digital Corp (WDC).