WEEKLY MARKET UPDATE 1/10/2025

Stocks have become increasingly interest rate sensitive as the week’s economic and inflation data have continued to come in higher than expected.  Friday’s jobs report for December was particularly strong with nonfarm payrolls rising 256K, significantly higher than consensus estimates around 150K-160K, while the unemployment rate ticked down to 4.1%.  Good economic news, however, has become bad news for markets as expectations for more interest rate cuts from the Federal Reserve continue to decline and markets have now pushed out the next rate cut to October. 

As a result, interest rates have steadily climbed and the yield on the 10-year US Treasury is now flirting with 4.8%, its highest levels since October 2023, which has broadly pressured stocks.  Markets are also digesting the approaching earnings season and headlines surrounding Trump 2.0 policies.  Next week will be a busy week as investors will get the consumer price index (CPI) and retail sales for December as well as earnings from the major banks (JPMorgan, Citigroup, Goldman Sachs, etc.).

WALL STREET EXPECTATIONS

Despite the recent stock market weakness, Wall Street is overwhelmingly bullish on 2025.  Per data from Bloomberg (see chart below), the average Wall Street price target on the S&P 500 is roughly 6,600 or about 12% higher for the year.  However, it is worth noting that since 2000 the average annual Wall Street S&P 500 target has never been negative, so investors should take these forecasts with a grain of salt.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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