WEEKLY MARKET RECAP – JANUARY 24, 2025

The major U.S. stock indexes posted their second consecutive week of gains, with a Thursday rally pushing the S&P 500 to a new record high, surpassing its peak from seven weeks ago. The Dow and NASDAQ also gained around 2% for the week but remained about 1% below their respective record highs set last month.

Optimism increased slightly as another round of quarterly earnings reports was released. By Friday, fourth-quarter net income for S&P 500 companies was projected to grow by 12.7% compared to the same period last year. If realized, this would represent the highest quarterly earnings growth in three years, according to FactSet.

Japanese government bond yields rose on Friday after the Bank of Japan raised interest rates to their highest level since 2008. The central bank increased its short-term policy rate from 0.25% to 0.50% as part of its ongoing effort to combat deflation and revitalize the country’s economy following decades of stagnation.

According to a University of Michigan survey released on Friday, U.S. consumer sentiment declined in January, marking its first drop in six months. More respondents indicated concerns about rising inflation and unemployment compared to the previous month.

The price of U.S. crude oil fell over 3% this week, breaking a streak of four consecutive weekly gains. By Friday afternoon, oil was trading at approximately $74 per barrel, down from a recent peak of more than $80 on January 15. Year to date, oil prices remained up by about 5%.

High interest rates continued to impact the U.S. housing market in 2024, as existing home sales fell to their lowest annual level since 1995. The National Association of Realtors reported that 4.06 million homes were sold in 2024, a decline of less than 1% from 2023.

The U.S. Federal Reserve is widely expected to leave interest rates unchanged following its two-day meeting set to conclude on Wednesday. While the Fed cut rates by a full percentage point during its final three meetings of 2024, the outlook for further cuts remains uncertain due to mixed signals on inflation. Markets will closely watch post-meeting remarks from Fed Chair Jerome Powell for any insights.

The U.S. government’s initial estimate of fourth-quarter GDP, scheduled for release on Thursday, is anticipated to show that the economy continued its solid growth trajectory. This follows annualized growth rates of 3.1% in the third quarter and 2.0% in the second quarter of last year.