The S&P 500 Index ($SPX) (SPY) Wednesday closed down -0.47%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.24%. March E-mini S&P futures (ESH25) are down by -0.53%, and March E-mini Nasdaq futures (NQH25) are down by -0.36%.Â
Stocks settled moderately lower on Wednesday after the Fed kept interest rates unchanged as expected, but its hawkish post-meeting statement hinted at an extended pause in rate cuts.  Some negative corporate earnings results also weighed on stocks Wednesday, with Packaging Corp closing down more than -9% after forecasting Q1 EPS below consensus. Also, Danaher closed down more than -9% after reporting weaker-than-expected Q4 adjusted EPS. In addition, Lennox International closed down more than -8% after forecasting full-year free cash flow below consensus.
On the positive side, Starbucks rose more than +8% after reporting better-than-expected Q1 net revenue. Also, ASML Holding NV closed up more than +4% to lead chip stocks higher after reporting better-than-expected Q4 order bookings as the artificial intelligence boom boosted demand for its chipmaking machines.Â
As expected, the FOMC voted unanimously to keep the fed funds target range unchanged at 4.25%-4.50% and, said inflation remains "somewhat elevated" and removed a reference to inflation having made progress toward their 2% goal. The post-FOMC statement also removed language noting that labor market conditions have generally eased, saying instead that "the unemployment rate has stabilized at a low level" and "labor market conditions remain solid."Â
Fed Chair Powell said economic activity has continued to expand at a solid pace, and "with our policy stance significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance."
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 on Wednesday after the close 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 20% for a -25 bp rate cut at the March 18-19 FOMC meeting.
Overseas stock markets Wednesday settled higher. The Euro Stoxx 50 closed up +0.67%. China's Shanghai Composite Index did not trade Wednesday 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) Wednesday closed down -2.5 ticks. The 10-year T-note yield rose +2.3 bp to 4.555%.  Mar T-notes Wednesday gave up an early advance and turned lower after the Fed kept interest rates unchanged with a hawkish post-meeting statement. T-notes remained lower on hawkish comments from Fed Chair Powell, who said the economy continues to expand at a solid pace and the Fed does not need to be in a hurry to cut interest rates.Â
European government bond yields Wednesday moved higher.  The 10-year German bund yield rose +1.8 bp to 2.583%. The 10-year UK gilt yield rose +0.7 bp to 4.621%.
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) closed 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.Â
Danaher (DHR) closed down more than -9% after reporting Q4 adjusted EPS of $2.14, weaker than the consensus of $2.16.
Nvidia (NVDA) closed down more than -4% to lead losers in the Dow Jones Industrials and Nasdaq 100 after Bloomberg reported that Trump administration officials are said to consider expanding restrictions on Nvidia chip sales to China.Â
Moderna (MRNA) closed down more than -9% after Goldman Sachs downgraded the stock to neutral from buy, and TD Cown cut its price target on the stock to $35 from $55.Â
Lennox International (LII) closed down more than -8% after forecasting full-year free cash flow of $650 million to $800 million, the midpoint below the consensus of $771.8 million.Â
MSCI Inc (MSCI) closed down more than -5% after reporting Q4 operating revenue of $743.5 million, weaker than the consensus of $748.5 million.
Datadog (DDOG) closed down more than -3% after Stifel downgraded the stock to hold from buy with a price target of $140.
Manhattan Associates (MANH) closed down more than -24% after forecasting 2025 adjusted EPS of $4.45-$4.55, well below the consensus of $4.91.
Chip stocks rose Wednesday after ASML Holding NV reported quarterly bookings well above estimates. As a result, ASML Holding NV (ASML) closed up more than +4%. Also, Advanced Micro Devices (AMD) and Marvell Technology (MRVL) closed up more than +2%. In addition, KLA Corp (KLAC) and Applied Materials (AMAT) closed up more than +1%.Â
F5 Inc (FFIV) closed up more than +11% 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.Â
Starbucks (SBUX) closed up more than +8% to lead gainers in the Nasdaq 100 after reporting Q1 net revenue of $9.40 billion, above the consensus of $9.31 billion.Â
T-Mobile US (TMUS) closed up more than +6% after reporting Q4 new phone customers of 903,000, better than the consensus of 865,000.
Henry Schein (HSIC) closed up more than +4% after the Wall Street Journal reported that KKR had built a large stake in the company.Â
General Electric (GE) closed up more than +2% after Bernstein raised its price target on the stock to $232 from $209.
Norfolk Southern (NSC) closed up more than +1% after reporting Q4 adjusted EPS of $3.04, better than the consensus of $2.96.
Earnings Reports (1/30/2025)
A O Smith Corp (AOS), Altria Group Inc (MO), Apple Inc (AAPL), Arthur J Gallagher & Co (AJG), Avery Dennison Corp (AVY),Baker Hughes Co (BKR), Blackstone Inc (BX), Cardinal Health Inc (CAH), Caterpillar Inc (CAT), Cigna Group/The (CI), Comcast Corp (CMCSA), Deckers Outdoor Corp (DECK), Dover Corp (DOV), Dow Inc (DOW), Eastman Chemical Co (EMN), Gen Digital Inc (GEN), Hartford Financial Services Gr (HIG), Intel Corp (INTC), International Paper Co (IP), KLA Corp (KLAC), L3Harris Technologies Inc (LHX), Marsh & McLennan Cos Inc (MMC), Mastercard Inc (MA), Northrop Grumman Corp (NOC), Parker-Hannifin Corp (PH), PPG Industries Inc (PPG), PulteGroup Inc (PHM), Quest Diagnostics Inc (DGX), ResMed Inc (RMD), Roper Technologies Inc (ROP), Sherwin-Williams Co/The (SHW), Southwest Airlines Co (LUV), Thermo Fisher Scientific Inc (TMO), Tractor Supply Co (TSCO), Trane Technologies PLC (TT), United Parcel Service Inc (UPS), Valero Energy Corp (VLO), Visa Inc (V), Weyerhaeuser Co (WY).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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