A Packed Week: Earnings Season Kicks Off
The first earnings season of 2025 is underway, promising a flurry of market-moving events. The spotlight this week is on U.S. investment banks and major corporations as they unveil their latest results. With many stocks trading near record highs, expectations are elevated, leaving little room for disappointment. Here’s a detailed look at the week ahead:
Big Earnings to Watch
Wednesday, January 15
JPMorgan (JPM)
Citigroup (C)
Wells Fargo (WFC)
Goldman Sachs (GS)
BlackRock (BLK)
Thursday, January 16
Bank of America (BAC)
Morgan Stanley (MS)
Why This Matters
The S&P 500 is expected to post a 12% earnings jump this season, driven by banks capitalising on high-interest rates and robust net interest margins. However, even minor signs of caution or underperformance could lead to significant share price declines.
Spotlight on Earnings Reports
JPMorgan, Goldman Sachs, Wells Fargo, Citigroup: These financial giants will provide insights into how they’re leveraging improved net interest margins and the resurgence of IPO activity.
UnitedHealth (UNH): As a bellwether for the healthcare sector, UnitedHealth’s report will reveal how healthcare providers are performing amid ongoing sector challenges.
Key Economic Data to Watch
U.S. Inflation Data:December’s Consumer and Producer Price Index reports will shape expectations for future interest rate moves.
Headline Inflation: Expected to rise 2.9% YoY in December, up from 2.7% in November.
Month-on-Month Prices: Projected to increase 0.3%, maintaining the pace from November.
Core Inflation: Estimated at 3.3% YoY, marking five consecutive months of steady core readings.
Retail Sales: A critical indicator of consumer spending trends.
Housing Starts: A barometer of the housing market’s health and construction activity.
European Inflation: EU core inflation is expected to rebound by +0.5% MoM in December, while annual CPI is forecast to remain steady at 2.7%, providing a key signal for European Central Bank policy.
December Jobs Report: Market Impacts
The U.S. economy added 256,000 jobs in December, exceeding expectations of 155,000. The unemployment rate fell to 4.1%, underscoring the labour market's resilience. However, the stronger-than-expected data rattled markets, raising concerns about interest rate policy.
Key Impacts:
Stocks tumbled while Treasury yields surged, reflecting reduced odds of Fed rate cuts in 2025.
Wage growth was modest at +3.9% YoY, alleviating fears of wage inflation.
Sector Highlights: Health care, hospitality, and retail were strong performers.
Market Reactions:
Dow Jones: -1.6% (~700 points)
S&P 500: -1.5%
Nasdaq: -1.6%
All year-to-date gains were erased, amplifying concerns about prolonged high rates.
Movers & Shakers
Apple (AAPL)
Performance: ▼ 2.41% to $236.85
What Happened: Apple’s iPhone shipments in China fell 6% YoY in early 2025, according to analyst Ming-Chi Kuo. Design challenges and limited eSIM support have dampened demand, leading to supply chain concerns.
Insurance and Utilities
California Wildfires: Insurers like Mercury (▼ 20%) and Allstate (▼ 5.6%) were hit hard, with projected damages exceeding $20 billion. Utilities such as Edison International (▼ 19%) also faced sharp declines.
Constellation Brands (STZ)
Performance: ▼ 17.09% to $181.81
What Happened: Constellation Brands lowered its fiscal 2025 growth outlook despite beating Q3 earnings expectations. Weak wine and spirits sales (-14%) and cautious consumer spending weighed on confidence.
Walgreens Boots Alliance (WBA)
Performance: ▲ 27.55% to $11.76
What Happened: Walgreens posted stronger-than-expected earnings and revenue of $39.46 billion, beating analyst forecasts. While a $265 million net loss highlighted turnaround challenges, cost-cutting measures, including 1,200 store closures, reassured investors.
What to Watch This Week
Tuesday, January 14
Ocado (OCDO.L): Q4 results follow a strong Q3 with 15.5% revenue growth, but concerns linger about its Technology Solutions business. Updates on robotics expansion will be pivotal.
Wednesday, January 15
Goldman Sachs (GS): Q4 earnings are expected to reflect inflation concerns and Federal Reserve rate policy. Investors will focus on dealmaking trends and 2025 outlooks.
Vistry (VTY.L): After a challenging 2024 with multiple profit warnings, Vistry will update investors on delayed projects and recovery strategies.
Thursday, January 16
TSMC (TSM): The semiconductor giant’s Q4 results will be critical for gauging the health of the tech sector, particularly given its ties to Apple and Nvidia.
Antofagasta (ANTO.L): Copper production updates will be in focus as the miner navigates global supply challenges and demand uncertainties.
Takeaway
This week’s earnings and economic data will shape market sentiment for 2025. The strong December jobs report suggests the Fed could maintain higher rates for longer, heightening the importance of the inflation report on January 15. Investors should stay vigilant as volatility looms large.
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Note
Prices and figures quoted were correct at the time of writing.
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