Stocks Climb on Solid Tech Earnings Results

The S&P 500 Index ($SPX) (SPY) today is up +0.45%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.56%.  March E-mini S&P futures (ESH25) are up by +0.43%, and March E-mini Nasdaq futures (NQH25) are up by +0.56%. 

Stock indexes today are moderately higher on some strong technology earnings reports.  International Business Machines is up more than +11% after forecasting full-year free cash flow above consensus.  Also, Lam Research is up more than +4% after reporting stronger-than-expected Q2 revenue and forecasting Q3 revenue above consensus.  In addition, Tesla is also up more than +3% after forecasting a sales recovery this year. 

On the negative side, Microsoft is down more than -5% after reporting lower-than-expected Q2 earnings.  Also, United Parcel Service is down more than -15% after forecasting full-year revenue below consensus. 

Today's US economic news was mixed for stocks after Q4 GDP rose less than expected, but weekly initial unemployment claims fell more than expected.

US Q4 GDP rose +2.3% (q/q annualized), weaker than expectations of +2.6%.  Q4 personal consumption rose +4.2%, stronger than expectations of +3.2%. The Q4 core PCE deflator rose +2.5%, right on expectations.

US weekly initial unemployment claims unexpectedly fell -16,000 to 207,000, showing a stronger labor market than expectations of an increase to 225,000.

Earnings season is in full swing as companies report Q4 earnings results.  The market will look for Apple's earnings results after the close today for market direction.  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 17% for a -25 bp rate cut at the next FOMC meeting on March 18-19.

Overseas stock markets today are higher.  The Euro Stoxx 50 rallied to a 24-year high and is up +0.76%.  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 +0.25%.

Interest Rates

March 10-year T-notes (ZNH25) today are up +8 ticks.  The 10-year T-note yield is down -2.4 bp to 4.504%.  Mar T-notes today rallied to a 6-week high, and the 10-year T-note yield fell to a 6-week low of 4.841%.  T-note prices are climbing today on positive carryover from rallies in European government bonds.  Today's US economic news was mixed for T-notes as Q4 GDP rose less than expected, but weekly jobless claims fell more than expected. 

European government bond yields today are moving lower.  The 10-year German bund yield is down -7.0 bp to 2.513%.  The 10-year UK gilt yield fell to a 4-week low of 4.537% and is down -6.8 bp to 4.553%.

Eurozone Jan economic confidence rose +1.5 to 95.2, stronger than expectations of 94.1.

Eurozone Q4 GDP was unchanged q/q and rose +0.9% y/y, weaker than expectations of +0.1% q/q and +1.0% y/y.

As expected, the ECB cut the deposit facility rate by -25 bp to 2.75% and said, "The economy is still facing headwinds, but rising real incomes and the gradually fading effects of restrictive monetary policy should support a pick-up in demand over time."

ECB President Lagarde said, "The conditions for a recovery in the Eurozone remain in place.  While the labor market has softened over the recent months, it continues to be robust, with the unemployment rate staying low."

Swaps are discounting the chances at 32% for a -25 bp rate cut by the ECB at the March 6 policy meeting.

US Stock Movers

International Business Machines (IBM) is up more than +11% to lead gainers in the S&P 500 and the Dow Jones Industrials after forecasting a full-year free cash flow of $13.5 billion, above the consensus of $12.92 billion. 

Las Vegas Sands (LVS) is up more than +9% after reporting Q4 net revenue of $2.90 billion, better than the consensus of $2.86 billion. 

Lam Research (LRCX) is up more than +4% after reporting Q2 revenue of $4.38 billion, above the consensus of $4.30 billion, and forecast Q3 revenue of $4.35 billion-$4.95 billion, stronger than the consensus of $4.33 billion. 

Tesla (TSLA) is up more than +3% after unveiling plans to start robotaxi operations and forecast a sales recovery this year.

Arista Networks (ANET) and Broadcom (AVGO) are up more than +6% following positive AI investment commentary from Meta Platforms and Microsoft.

Thermo Fisher Scientific (TMO) is up more than +5% after reporting Q4 revenue of $11.40 billion, stronger than the consensus of $11.29 billion. 

Meta Platforms (META) is up more than +1% after reporting Q4 revenue of $48.39 billion, stronger than the consensus of $46.98 billion. 

PulteGroup (PHM) is up more than +1% after reporting Q4 revenue of $4.92 billion, above the consensus of $4.66 billion. 

Microsoft (MSFT) is down more than -5% to lead losers in the Dow Jones Industrials after reporting Q2 cloud revenue of $40.9 billion, below the consensus of $41.1 billion. 

United Parcel Service (UPS) is down more than -15% to lead losers in the S&P 500 after forecasting 2025 revenue of $89 billion, well below the consensus of $94.9 billion. 

ServiceNow (NOW) is down more than -10% after reporting Q4 adjusted revenue of $2.95 billion, weaker above the consensus of $2.96 billion, and forecast full-year subscription revenue of $12.64 billion-$12.68 billion, below the consensus of $12.87 billion. 

Comcast Corp (CMCSA) is down more than -9% to lead losers in the Nasdaq 100 after reporting it lost -139,000 domestic broadband customers in Q4, a bigger decline than the consensus of -94,769.

Cigna Group (CI) is down more than -8% after reporting Q4 adjusted operating EPS of $6.64, weaker than the consensus of $7.82, and forecast full-year adjusted operating EPS of at least $29.50, well below the consensus of $31.50. 

Caterpillar (CAT) is down more than -4% after it warned that revenues would be "slightly lower" in 2025 due to demand concerns.

Tractor Supply Co (TSCO) is down more than -3% after reporting Q4 comparable sales rose +0.6%, weaker than the consensus of +1.19%. 

Levi Strauss (LEVI) is down more than -2% after forecasting full-year net revenue to fall -1% to -2%, below the consensus of a +1.8% increase.

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).