Morning Market Wrap: The Fed Stays Steady, Big Earnings & a Focus on GDP
Where We Stand
After a whirlwind Wednesday, the trading day starts with a few main points that investors will keep in mind:
- Fed Holds the Line – The FOMC kept the federal‑funds target at 4.25%–4.50%. No surprises, no new policy moves, and the statement was almost a sorry copy‑paste from December.
- No Warning Bells – Chair Powell framed the comment as a “cleanup” and stressed that the policy is in a “very good place.” He’ll keep options open until we see real inflation progress or a labor‑market hiccup.
- “Play for Time” – With fiscal uncertainties stacked high, the Fed’s main goal is to keep the market calm while its policy stance remains flexible.
Essentially, the first meeting of 2025 barely nudges the outlook forward. The “Fed put” that wore risk assets like a safety blanket is gone. Depending on how the data plays out, equities might feel a little bumpier, but steady growth and solid earnings should keep them rolling forward.
Earnings in Focus
- Tesla fell short on both revenue and profit. Even though the stock bounced back after trading outside hours, Powell had to call out a 30% cut in growth expectations for the year.
- Microsoft hit a snag after missing the cloud revenue forecast.
- Meta slid after a weaker Q1 outlook.
Other notable plays: Apple is gearing up for post‑close reporting, while Intel, Visa, UPS, and Mastercard are set to release their numbers as well.
What About Europe?
Riksbank delivered a 25‑bp cut that market already priced in. They hinted at a tentative approach, suggesting at least one more cut in the first half of the year. Meanwhile, the BoC cut rates but ended quantitative tightening, sending a mixed signal amid looming US tariffs. The loonie rose briefly but lost traction as trade risks tipped back into the spotlight.
Policy Outlook Ahead
Today’s big headline will be the ECB’s first decision of the year. Lagarde is expected to cut the deposit rate by 25 bp, with another cut slated for the March meeting. Her focus remains on data‑driven, step‑by‑step changes, but with growth remaining weak and inflation danger below 2%, it’s very likely rates will slip below neutral by mid‑year.
Data to Watch
- US & Eurozone Q4 GDP starts (initial reads).
- Weekly US jobless claims (next week’s release aligns with the January payroll data).
- Eurozone unemployment report for December.
These figures should confirm that the eurozone economy is still in a slow‑roll, while the US remains the stronger performer.
Corporate Highlights Today
Apple’s earnings close will give us a clearer view of its AI experiment and demand slowdown in China. Intel, Visa, UPS, and Mastercard will also drop fresh numbers, adding depth to today’s earnings profile.
Stay tuned for the next wave of data and corporate updates – it’s a busy day for investors looking to catch any smooth ride or bump ahead.
