Market news 31 jan
U.S. President Donald Trump announced tariffs
Stock Market Closes with Gains After a Volatile Session
The stock market ended the trading session on a positive note after a sharp decline and rapid recovery in the second half of the day. Major indices posted solid gains: the S&P 500 rose by 0.5%, the Nasdaq Composite increased by 0.3%, and the Dow Jones Industrial Average climbed by 0.4%. The small-cap Russell 2000 outperformed the others, surging by 1.1%.
Corporate Reports Drive Market Momentum
The market was supported by strong corporate earnings reports. Shares of International Business Machines (IBM) rose more than 12% following an annual free cash flow forecast that exceeded analysts' expectations. Similarly, Lam Research gained over 7% due to positive revenue forecasts, while Thermo Fisher Scientific strengthened by more than 6% after reporting better-than-expected financial results.
Consumer Spending Data Bolsters Economic Confidence
A positive signal for the market came from U.S. personal spending data, which increased by 4.2% in the fourth quarter, surpassing the projected 3.2%. This boosted investor confidence in the resilience of the economy despite macroeconomic risks.
Stock Corrections in Some Companies
However, not all companies performed well. Microsoft (MSFT) fell by more than 6% due to weaker-than-expected quarterly earnings. United Parcel Service (UPS) suffered an even sharper drop of 14% after forecasting annual revenue below market expectations.
Tariff Policy Impact on the Stock Market
Additional pressure on the market came from U.S. President Donald Trump's announcement of a 25% tariff on imports from Canada and Mexico. This move, aimed at combating illegal immigration and trade deficits, raised concerns among investors about worsening trade relations.
Mixed Macroeconomic Indicators
U.S. economic data presented mixed signals. Fourth-quarter GDP grew by 2.3%, below the expected 2.6%, while a decline in jobless claims to 207,000 indicated a strong labor market. At the same time, pending home sales volume dropped by 5.5%, marking the largest decline in five months.
Future Outlook: Key Events to Watch
Investors are awaiting Apple's earnings report, which will be released after market close. According to Bloomberg Intelligence, analysts expect S&P 500 earnings to grow by 7.5% year-over-year in the fourth quarter, the second-largest forecast in the past three years. Additionally, attention is focused on U.S. personal income and spending data, including the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index.
Major Deals and the Tech Sector
Amid active capital movement in the tech sector, OpenAI is in talks to raise $40 billion in funding, which could value the company at $340 billion. SoftBank is considering an investment of $15 billion to $25 billion, potentially supporting artificial intelligence development under the Stargate project. Microsoft, a major investor in OpenAI, continues to strengthen its collaboration.
Conclusion: Expectations and Risks
The market remains highly volatile, balancing between positive corporate earnings and macroeconomic risks. Key drivers for future movements include inflation data, Federal Reserve monetary policy prospects, and the evolving U.S. tariff situation. Investors continue to monitor corporate earnings reports and global economic events that could influence market direction in the coming weeks.