S&P 500 Faces Pressure Amid Mixed Earnings and Job Claims Data

S&P 500 faces a mixed trading day as initial jobless claims rise, indicating labor market weakness. The Dow reaches a 6-week high, while chip stocks weigh on broader market sentiment.

Date: 25-01-2025

AI Rating: 5

Market Overview

The S&P 500 is experiencing a decline of -0.05%, contrasting with the Dow Jones, which has reached a 6-week high. The overall sentiment appears mixed due to the downward pressure from chip stocks and a rise in bond yields. The report mentions a significant increase in weekly unemployment claims, showing a weaker labor market. The jobless claims rose by +6,000 to 223,000, exceeding expectations of 220,000, and the continuing claims rose by +46,000 to a 3-year high of 1.899 million.

Earnings Reports and Expectations

As the earnings season progresses, analysts have forecasted a year-over-year earnings growth of 7.5% for the S&P 500 in Q4. This figure represents the second-highest pre-season earnings estimate in the past three years, which may provide a positive outlook for companies reporting results. However, mixed performances from specific companies, particularly in the semiconductor sector, may stir market volatility.

Company Performances

The report highlights significant downward movements for several companies’ stock prices, primarily in the semiconductor industry. ARM Holdings is down over -6%, while Micron Technology, ASML Holding, and Applied Materials are each down more than -3%. Furthermore, Electronic Arts and American Airlines Group reported disappointing earnings and forecasts, causing their stock prices to plummet by more than -15% and -6%, respectively.

On the contrary, there are positive movements in certain companies' stocks; GE Aerospace reported adjusted EPS of $1.32, exceeding the consensus of $1.04, and has initiated a $7 billion stock buyback. Union Pacific and Northern Trust also reported stronger-than-expected earnings per share, further elevating their stock prices.

Impact on Stock Prices

With mixed earnings reports and concerning labor market indicators, there is a potential for stock prices to be negatively affected, particularly for those companies that have reported lower-than-expected earnings or disappointing guidance. Conversely, companies that exceed earnings expectations could see a favorable response from the market, reflected in their stock prices.

Stocks: AAL AMD AMAT ASML EA FCX GE GNRC KLAC MU NTRS NVDA PLXS UNP VEEV