Stock Rally Pauses Near Highs; S&P 500 Climbs 2% Weekly

New York, January 22, 2025 - A relentless rally in the stock market took a breather near all-time highs, but the S&P 500 still headed for its best start to a presidential term since Ronald Reagan took office in 1985.

Market Highlights:

* S&P 500: -0.2%
* Nasdaq 100: -0.5%
* Dow Jones Industrial Average: -0.2%
* Russell 2000: Unchanged
* Bloomberg Magnificent 7 Total Return Index: -0.4%

Factors Impacting the Market:

* A sell-off in chipmakers weighed on trading.
* President Trump's positive stance on economic policies and lower taxes buoyed sentiment.
* The dollar is set for its largest weekly decline since July 2023.
* The MOVE Index of expected Treasury volatility hit its lowest level since mid-December.

Corporate News:

* Nvidia led losses in semiconductor stocks, with Texas Instruments posting a disappointing forecast.
* Meta Platforms announced plans to invest up to $65 billion in artificial intelligence projects in 2025.
* Cryptocurrency-linked firms rallied after Trump's executive order favoring the industry.

Economic Data:

* US consumer sentiment declined for the first time in six months.
* Business activity growth slowed slightly, but companies remained upbeat.

Bond Market:

* Bonds rose amid the drop in consumer sentiment and a pullback in business activity growth.
* The yield on 10-year Treasuries fell two basis points to 4.62%.

Commodities:

* Oil was poised for its first weekly decline of the year.
* Gold rose 0.7% to $2,773.66 an ounce.

Analysis:

* Chris Iggo of AXA Investment Managers believes Trump's policies have not negatively impacted financial markets.
* David Lefkowitz of UBS Global Wealth Management expects periodic concerns but views dips as buying opportunities.
* Bret Kenwell of eToro notes cautious optimism among investors, with a focus on cash and AI stocks.
* Jeffrey Roach of LPL Financial attributes the dip in consumer sentiment to near-term inflation stickiness.
* Economists expect the Fed to hold rates steady next week and cut twice later in the year.

Looking Ahead:

* Earnings season begins next week, with four Magnificent Seven companies expected to report slower sales.
* The Fed's next policy meeting is scheduled for January 30-31.
* Investors will monitor developments in the US-China trade war.