The futures markets are slightly in the red this morning ahead of the Federal Open Market Committee (FOMC) meeting decision later this afternoon. Most investors believe that no change in interest rates will occur when the Federal Reserve releases its decision later today, but many will be eager to learn more about the potential for further rate cuts over the course of the year. The market is currently pricing in two additional interest rate cuts by the end of 2025, and traders will look toward Chairman Jerome Powell’s press conference later today for any insight into the Fed’s thinking. Overall, these factors suggest a weak start to the trading day.
The stock market started positively yesterday, following a rout on Monday. This was triggered by the breaking news story that a company in China had developed an artificial intelligence (AI) model called DeepSeek, which is said to cost less to run than comparable models, and scared many traders in the market about the future of the participants in AI infrastructure growth. Technology companies largely led the way higher on Tuesday, bouncing back from severe declines on Monday. The major market indices trended upward and ended near their daily highs. Overall, the S&P 500 increased 55 points (up 0.92%), the NASDAQ rose 392 points (up 2.03%), and the Dow Jones Industrial Average, which had largely escaped Monday’s damage, was higher by 137 points (up 0.31%). Market breadth was somewhat narrow, as decliners outpaced advancers by a 1.3-to-1.0 ratio. Technology equities were amongst the best performers on the day, while consumer staples stocks were amongst the weakest. Altogether, most sectors ended the day in the red despite the indexes’ advance.
In commodity news, oil prices rebounded a bit following Monday’s sell-off as traders bought the oversold energy source. Elsewhere, U.S. Treasury bond were bought and yields largely declined, signaling a move into the safe haven asset. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index, declined yesterday following a massive rise on Monday, suggesting traders were less concerned about market volatility on Tuesday.
Several economic reports will be released in the days ahead. These include pending home sales and initial jobless claims on Thursday. On Friday, personal income and personal consumption expenditures as well as the Personal Consumption Expenditures Price Index for December will be reported. These reports should give some insight into how the consumer is faring. Elsewhere, several hundred companies will report fourth-quarter results and give guidance for 2025 in the days ahead. - John E. Seibert III
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
