January 14, 2025

The hot topic this week is jobs. We received the U.S. JOLTs report, which came in below estimates at 7.1 million job openings, right near a 5-year low. The ADP report came in below estimates at 41k. In the fourth quarter, overall employers announced the largest number of job cuts since 2008. Initial jobless claims remained low at 208k, and that is likely the real-time indicator that is helping markets feel somewhat confident. Banks are also storming the headlines this week, with earnings reports from J.P. Morgan, Delta, Wells Fargo, Goldman Sachs, and Morgan Stanley expected. 

Source: https://www.jhinvestments.com/market-intelligence 

Topics of the Week:

Strong Corporate Earnings: Companies are showing impressive profit growth, continuing a streak of quarters with double-digit increases. This is a positive sign for the overall stock market. 

Healthy Economic Activity: The U.S. economy (measured by Gross Domestic Product or GDP – the total value of goods and services produced) continues to show solid growth. This economic strength, combined with a weaker U.S. dollar, is helping boost earnings for American companies operating internationally.

 

What We Are Watching:

Earnings Concentration: A significant portion of overall earnings growth is still driven by a handful of large technology firms. While this is positive for those companies, it means that the broader market's performance can be influenced heavily by a few players. 

Cooling Job Market: A gradual slowdown in job growth could potentially impact consumer spending if not managed carefully. This is an area we are monitoring closely as consumer spending is a key driver of the economy.

 

Index Data & Market Performance 

 

Data as of Market Close 1.11.25 

source: gemini.google.com*

In Focus

President Donald Trump recently proposed a one-year cap of 10% on credit card interest rates, with a target implementation date of January 20, 2026. While he has publicly pressured credit card companies to comply, several significant hurdles make its immediate adoption unlikely. Despite the January 20 goal, the proposal currently remains a policy intent rather than a finalized rule.

Key Reports

Tuesday – CPI, New Residential Sales

Wednesday – PPI

Thursday – Initial Jobless Claims, U.S. Import and Export Price Indexes

Friday - Housing Market Index

What's Trending

Profits Marching Despite Tariffs

One potential earnings headwind, which has been with us for a couple of quarters now, is the additional cost of tariffs. Companies have done such a spectacular job managing tariffs thus far, expanding margins over the last four quarters, that this should not be particularly worrisome. The overall effective tariff rate is not expected to move much from the 10% to 11% range it’s been in over the last three months. And even if the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) are ruled illegal by the Supreme Court, the Trump administration is expected to put them back on promptly, using a different legal authority. So, with solid and steady economic growth, strong AI-fueled technology earnings, a weak dollar, and manageable and stable tariffs, corporate America has an excellent opportunity to deliver low-teens earnings growth. 

 

Disclosures

*The data for the total returns of the S&P 500, Dow Jones 30, and NASDAQ Composite are compiled and published by several financial news outlets, index providers, and government/academic sources.

Based on typical financial data providers and the search results, here are the likely sources for this data:

  • S&P Dow Jones Indices (S&P Global): This is the official index calculator for the S&P 500 and the Dow Jones Industrial Average (DJIA). They publish index data, including total returns, in daily, weekly, and monthly reports/commentary.
  • Nasdaq Global Indexes: They are the official index calculator for the NASDAQ Composite. They also publish fact sheets and performance reports with total return data.
  • Financial News Agencies and Publications: News outlets like The Associated Press (AP) and financial publications like Investopedia regularly report on the daily, weekly, and year-to-date (YTD) returns of these major U.S. indexes.
  • Federal Reserve Economic Data (FRED) / St. Louis Fed: FRED, maintained by the Federal Reserve Bank of St. Louis, is a public resource that often includes daily closing levels for indices like the S&P 500, which can be used to calculate returns.
  • Financial Data Platforms (e.g., Bloomberg, YCharts, MSCI): Professional and commercial financial data providers often republish or calculate returns based on the official index data for their clients.