Jay Woods:
Good morning. I'm Jay Woods, Chief Global Strategist at Freedom Capital Markets and long-term member of the New York Stock Exchange. I'll be filling in for the great Michael Reinking this week, and you are listening to Market Storylines. A big thanks to everyone for tuning in as we record this Thursday morning. Let's get to this week's biggest developments.
So as we entered the week, there were more questions than answers. We were coming off the best week for the major indices since the election, and we were wondering could we keep this momentum going? The S&P had fallen 5.5% from its recent highs, while the Nasdaq and Dow each fell over 7%. The first catalyst for the rebound was a string of earnings from the financials as JP Morgan, Goldman Sachs, Morgan Stanley all traded to new highs on great results and optimism that merger and M&A activity was to rise.
This past week, all eyes on Washington and President Trump's inauguration. Would there be any sweeping tariff reform that could upset this market? Could there be sweeping announcements of job cuts that could upset the labor force? Well, the answer to those questions after the first few days was no. The market rallied on Wednesday to see the S&P climb to new highs at 6,100, Treasury yields declined, and the price of oil also fell. Both items, music to the ears of investors. So where do we go from here? Let's look at next week.
Next week we'll get the Fed's first meeting of the year. Now, no one anticipates a cut at this time, but it will be that press conference that sets the tone for upcoming meetings and the possibility of future rate cuts. After PPI and CPI data came in slightly softer than anticipated, as well as unemployment that remains near historic lows, there is optimism, hope basically, that two more cuts still may be on the table sometime later this year. Let's see how Jerome Powell navigates this press conference, and then if President Trump weighs in at all. Unlike his predecessor, who kept to the sidelines when it came to Fed activity, President Trump's always been an advocate for lower rates and isn't afraid to chime in. So let's see if anything he says may rattle this market.
Most importantly, next week there's a slew earnings. We're getting back to basics. How are these companies growing? In fact, next week is the busiest week on the earnings calendar. So let's focus on those highlights. On Tuesday, we hear from two companies that had a rough go of it in 2024, but they have new leadership at the helm and they're trying to turn things around in Starbucks and Boeing. On Wednesday, we get the first of the Mag-7 stocks reporting; results from Tesla, Microsoft, and Meta. You may recall seeing some of those CEOs in Washington at the inauguration last week. Some great names there. Now they get to be front and center and talk about their own quarterly results.
On Thursday, we'll get Apple. Of the Magnificent 7 stocks, it's the worst performer of the year so far, and hopes its results can turn things around. Watch to see how the iPhone cycle affected their bottom line for any new product launches, especially when it relates to AI. Thursday also brings us two of the biggest financial stocks that trade right here behind me at the New York Stock Exchange; MasterCard and Visa. Both stocks are trading at or near all-time highs. Let's see how higher rates are affecting their bottom line. And we will also get a glimpse as to how resilient the American consumer remains to be in their spending habits. So that could be an interesting tell to watch them.
Finally, we get some of the biggest stocks in the energy field report on Friday. We get ExxonMobil, we get Chevron, we get Phillips; all trade right here behind me. Let's see if there are any concerns over this new drill, baby, drill narrative coming from the Trump administration and what the recent dip in the price of oil could do to their bottom line. So between possible Washington headlines, Fed speak and earnings season, there's a little something for everything as we head into next week.
So now I just want to say thank you to everyone for spending time with us today. Remember, you can watch Market Storylines on tvnyse.com or the NYSE YouTube channel. And when you go to that YouTube channel, please click Subscribe so you can watch us every single week. You can also listen every Friday on Inside the ICE House podcast feed. But for now, thank you for joining me. I'm Jay Woods, and we will talk to you again soon.
Speaker 2:
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