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1.

Nvidia earnings preview: Options markets signal 7% move

2025-02-21 16:39:23 by Seana Smith from Yahoo Finance Video

Nvidia (NVDA) will be reporting fourth quarter earnings next week on Wednesday, February 26. To discuss what options markets are predicting ahead of the tech giant's results, BayCrest managing director of equity derivatives David Boole joins Morning Brief. According to Boole, options markets anticipate approximately 7% stock price volatility following the announcement — a moderate projection compared to recent quarters. This suggests that Nvidia's quarterly results report, while still significant, matters "a little bit less than it used to," Boole explains. Though a 7% movement would translate to roughly $240 billion in market capitalization fluctuation, Boole points out this is only 2.5 times Nvidia's typical daily volatility. "It's a big event, but I'm starting to think that it might not be a one-day surge like it used to," he tells Yahoo Finance, while acknowledging the results will likely "set the stage" for the stock's trajectory in the following month. Watch the full video above for further insights into his outlook on DeepSeek's impact on Nvidia's results. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. This post was written by Angel Smith

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2.

CEO confidence hits 3-year high amid optimism on labor market, economy

2025-02-20 15:45:36 by Josh Schafer from Yahoo Finance

Chief executives haven't been this confident in their business outlook in three years. 

Data released Thursday showed the Conference Board's measure of CEO confidence increased by nine points in the first quarter of 2025 to a reading of 60, its highest level in three years. The Conference Board added that the move above 50 indicates a shift from "cautious optimism" to "confident optimism" among business leaders.

The survey included responses from 134 US CEOs and was conducted between Jan. 27 and Feb. 10.

“The improvement in CEO Confidence in the first quarter of 2025 was significant and broad-based,” Stephanie Guichard, senior economist of global indicators at the Conference Board said in the release. “All components of the Measure improved, as CEOs were substantially more optimistic about current economic conditions as well as about future economic conditions — both overall and in their own industries." 

A positive outlook on the labor market helped contribute to the upbeat attitude among CEOs, with 73% of CEOs planning to grow or maintain the size of their workforce over the next 12 months. Executives also noted labor shortages continued to ease with more respondents reporting "no or little problems hiring."

However, there were signs of the "low hire, low fire" environment that economists have used to describe the current labor market dynamic. The share of CEOs expecting to expand their workforce over the next year fell to 32%, down from 40% last quarter, while the share planning no change in total employment rose to 41%, up from 34%. 

Broadly though, executives expressed upbeat confidence in both the current and future economic outlook, with 44% of CEOs reporting that economic conditions were better than six months ago, from just 20% last quarter. And 56% of CEOs expect economic conditions to improve over the next six months, compared to just 33% in the prior quarter.

“CEOs also reported an easing of concerns regarding a range of business risks,” said Roger W. Ferguson, Jr., the vice chairman of the Business Council and chair emeritus of the Conference Board. “Compared to Q4 2024, fewer CEOs ranked cyber threats, regulatory uncertainty, financial and economic risks, and supply chain disruptions as high-impact risks. The one exception was geopolitical instability, which 55% of CEOs in Q1 saw as a high-impact risk to their industry — up from 52% last quarter.”

Thursday's upbeat sentiment from corporate leaders runs counter to how consumers have reported feeling in recent surveys. In February, the University of Michigan's consumer sentiment survey hit a seven-month low amid concerns about higher inflation over the next year.

The Conference Board's own measure of consumer confidence in February is due out Tuesday, Feb. 25.

NurPhoto via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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3.

The 2025 stock market rally isn't just about the 'Magnificent 7'

2025-02-18 16:02:32 by Josh Schafer from Yahoo Finance

Nearly half of the companies in the S&P 500 (^GSPC) are outperforming the index to start the year, a stark reversal from the last two years of narrow market leadership where investors struggled to find winning stocks outside of large-cap technology. 

About a month and a half into 2025, 46% of companies in the S&P 500 are outperforming the index itself. That's above the roughly 30% seen in each of the last two years, which had been the lowest percentage of outperformers since the late 1990s. 

Just one of the stocks outperforming the S&P 500 comes from the "Magnificent Seven" tech cohort with Meta's (META) almost 23% rise outpacing the roughly 4% return for the benchmark index this year.

Strategists believe an environment where more stocks are competing to outperform the index is set to persist throughout the year. Goldman Sachs chief equity strategist David Kostin wrote in a recent note to clients that the current market is more "micro driven," meaning company-specific details are influencing stock moves more than broad factors.

This, Kostin argues, creates an opportunity for stock pickers looking to find companies that will outperform the benchmark index in 2025. Kostin listed a healthy economic growth environment, continued broadening of the AI trade, and policy uncertainty as key catalysts that will continue to drive a wide range of returns among individual stocks. 

Kostin's team pointed to the sell-off related to the growing popularity of Chinese AI company DeepSeek as an example of the growing division among stocks. Nvidia (NVDA) stock fell 17% during the sell-off, but Apple and Meta, along with software AI plays like Salesforce (CRM), finished the day higher as investors reasoned companies that are leveraging AI software could benefit from cheaper AI solutions.

"Ultimately, the market reaction was discerning rather than indiscriminate, as stocks moved according to their individual exposure to the new information rather than in unison," Kostin wrote.

Reuters / Reuters

Despite continued uncertainty on tariff policy and investor caution on the prospect of Federal Reserve interest rate cuts, stocks have remained resilient this year. All 11 sectors in the S&P 500 are positive on the year. And investors have shifted which stocks they're buying and expanded beyond the Magnificent Seven. Information Technology, which houses several Magnificent Seven tech names, is one of just three sectors to lag the S&P 500 thus far this year. Meanwhile, Financials (XLF) and Materials (XLB) are among the top performers.

Bank of America's February survey of global fund managers released on Tuesday showed investor allocation to cash hit 3.5%, its lowest level in 15 years, reflecting that while the Magnificent Seven trade has looked tired to start 2025, the risk-on environment in markets hasn't faded.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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4.

Nearly 90% of Fund Managers Say U.S. Stocks Are Overvalued, Most Since 2001

2025-02-18 15:25:09 by Muslim Farooque from GuruFocus.com

A record number of fund managers see U.S. stocks (SPY) (NASDAQ:QQQ) (DIA) as overpriced, according to Bank of America's February Global Fund Manager Survey. The survey, which included 205 panelists managing $482 billion in assets, found that 89% believe U.S. stocks are overvaluedthe highest level recorded since April 2001.

Despite the sharp rise in sentiment, BofA strategist Michael Hartnett pointed out that an average of 81% of fund managers have considered U.S. equities overvalued throughout the 2020s. Meanwhile, the U.S. exceptionalism trade, driven by a strong U.S. dollar (DXY) and an equity bull market led by the "Magnificent 7" stocks, appears to have peaked.

The survey showed 73% of investors now view it as the most crowded trade, down from 80% in January. Fund managers are also shifting their strategy, putting more cash to work, with cash levels at 3.5%a 15-year low. Investors are rotating into bond-sensitive assets and European equities as fears of a global recession ease.

This article first appeared on GuruFocus.

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5.

Stocks near record highs as investors await Fed minutes, manufacturing update: What to know this week

2025-02-16 12:45:03 by Josh Schafer from Yahoo Finance

The S&P 500 (^GSPC) chugged to a record high last week as new inflation data signaled good news about the Federal Reserve's rate cut plans. 

For the week, the Nasdaq Composite (^IXIC) rose more than 2.5%, while the S&P 500 added just under 1.5%. The Dow Jones Industrial Average (^DJI) added about 0.5%.

The week ahead will bring a quieter flow of economic news. Investors will focus on minutes from the Federal Reserve's January meeting, as well as updates on activity in the manufacturing and services sector and consumer sentiment.

Corporate earnings season rolls on, headlined by quarterly reports from Alibaba (BABA) and Walmart (WMT). Overall, 46 S&P 500 companies are expected to release results during the holiday-shortened trading week.

Markets will be closed on Monday for Presidents' Day. 

On hold

Last week, two fresh inflation readings for the month of January showed prices increased more than Wall Street had expected, but economists found positive news for markets and the Federal Reserve within the details.

Key categories in the Consumer Price Index (CPI) and Producer Price Index (PPI) feed into the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. When evaluating those categories, it appears that price increases likely slowed in the month of January.

Economists now expect "core" PCE, which excludes the volatile categories of food and energy, will likely clock in at 2.6% in January, down from the 2.8% seen in December. 

This leaves markets pricing in one or two interest rate cuts from the Fed in 2025, little changed from the week prior, per Bloomberg data. And importantly, many economists still think the Fed is closer to cutting interest rates rather than hiking them.

Read more: Jobs, inflation, and the Fed: How they're all related

"We think the bar for Fed hikes remains high," Morgan Stanley chief US economist Michael Gapen wrote in a note to clients on Friday. "The evolution of inflation expectations and second-round effects from tariffs on services inflation remain key points of emphasis. But, for now, we still think the distribution of Fed policy outcomes skews in the direction of rate cuts as opposed to hikes."

Investors will look to minutes from the Fed's January meeting, due out for release on Wednesday at 2 p.m. ET, for clues to its thinking about the path forward for interest rates.

More magnificent stocks

The S&P 500 is back near a record high, and this time around, it's not all about a handful of tech stocks. Yes, Meta (META) stock has risen for 20 straight days, and its more than 25% gain this year has contributed to the S&P 500's increase. But Meta and Amazon (AMZN) are the only "Magnificent Seven" tech stocks to have outperformed the S&P 500 so far in 2025. Meanwhile, the number of companies outpacing the index's 4% gain has soared to start the year. 

As of Wednesday's close, 48% of the S&P 500 is outperforming the index in 2025, in line with the 25-year median and above the 29% seen last year. As Richard Bernstein Advisors CEO Richard Bernstein pointed out in Yahoo Finance's latest Chartbook, the last two years had marked the lowest number of stocks outperforming the index in 25 years.

The number of stocks participating in the current rally shows strength within the bull market, but it doesn't exactly mean the benchmark index itself will shoot higher, Freedom Capital Markets chief global strategist Jay Woods said.

"If we get a bad report out of Nvidia in a few weeks [on Feb. 26], then we could see the market turn lower," Woods told Yahoo Finance. "But we'll still see rotation, just not into the names that are really making headlines."

AI trade rolls on

While many of the Magnificent Seven haven't been the market leaders this year, AI euphoria appears alive and well in markets. AI software company Palantir (PLTR) is the top performer in the S&P 500 in 2025, rising more than 55%, followed by Super Micro Computer (SMCI), also up over 50%. 

Aggressive moves in other AI plays on Friday underscored this theme as investors quickly dumped some stocks and bought positions in others after Nvidia disclosed its latest equity holdings. The AI chip giant ditched positions in Serve Robotics (SERV) and SoundHound (SOUN). Both stocks sold off on the news. 

Meanwhile, shares of WeRide (WRD), a Chinese autonomous driving play, saw its stock nearly double. 

Weekly calendar

Monday

Markets are closed for Presidents' Day.

Tuesday

Economic data: Empire Manufacturing, February (-1 expected, -12.6 prior); NAHB housing market index, February, (47 expected, 47 prior)

Earnings: Devon Energy (DVN), Oxy (OXY), Toll Brothers (TOL)

Wednesday

Economic data: MBA Mortgage applications, week ending Feb. 14 (2.3% prior); Housing starts month-over-month, January (-7% expected, +15.8% prior); Building permits month-over-month, January preliminary (-2.3% expected, -0.7% prior); FOMC meeting minutes, January Fed meeting

Earnings: Carvana (CVNA), the Cheesecake Factory (CAKE), Etsy (ETSY), Garmin (GRMN), Toast (TOST), Wingstop (WING)

Thursday

Economic data: Initial jobless claims, week ending Feb. 15, (213,000 prior); Philadelphia Fed business outlook, February (25.4 expected, 44.3 prior); Leading index, January (0% expected, -0.1% prior)

Earnings: Alibaba Group (BABA), Walmart (WMT), Block (XYZ), Booking Holdings (BKNG), Rivian (RIVN), Shake Shack (SHAK), Unity (U), Texas Roadhouse (TXRH), Dropbox (DBX) 

Friday

Economic data: S&P Global US manufacturing, February preliminary (51.2 prior); S&P Global US services PMI, February preliminary (52.9 prior); S&P Global US composite PMI, February preliminary (52.7 prior); University of Michigan sentiment, February final (68.7 prior)

Earnings: No notable earnings releases.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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6.

Meta Platforms stock just closed higher for the 20th straight day

2025-02-14 21:47:37 by Myles Udland from Yahoo Finance

Meta Platforms (META) has far and away been the biggest winner among the "Magnificent Seven" stocks so far this year. 

And on Friday, the company extended what's been a record winning streak into new territory, notching its 20th straight day of gains. 

Said another way, the stock hasn't had a losing session in the month of February. 

Said yet another way, Meta stock hasn't had a losing session since Donald Trump was inaugurated as the 47th president of the United States. 

So far this year, Meta stock has only closed lower five times. 

Tesla (TSLA) stock, in contrast, has had two separate five-day losing streaks in 2025. 

Year to date, Meta stock is now up 25.8%, far outpacing its Magnificent Seven peers. 

Amazon (AMZN) is the next best-performing stock among this group of Big Tech stalwarts, having risen 4.2% this year through Friday's close. Tesla has been the laggard of the group, falling 11.9% in 2025. 

With a close at a record high of $736.67 on Friday, Meta stock is now up over 600% from its lows hit back in the fall of 2022. 

Amid that year's tech washout that followed the Federal Reserve's decision to begin raising interest rates aggressively in the face of a 40-year high in inflation, Meta stock fell more than 70% from peak to trough. 

Wall Street widely cheered the results following the company's latest earnings report.

As its Big Tech peers have announced ambitious investment plans toward AI this year, Meta's spending announcement received the most positive reception. And news this week that the company began widespread layoffs across teams only adds to investors' optimism that its plans to invest up to $65 billion this year toward AI will be amid increased efficiency across its teams. 

"The integration of AI-enabled features and products within their Family of Apps is helping drive more activity on their platforms with greater ad engagement," wrote D.A. Davidson analyst Gil Luria following the company's earnings report in late January. 

"Whether it's Reels, Threads, What's App, Facebook, etc., Meta expects to continue gaining share in key markets and become leaders in their respective categories." 

Click here for the latest technology news that will impact the stock market

Read the latest financial and business news from Yahoo Finance

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7.

Retail sales see biggest drop in a year to start 2025

2025-02-14 13:37:21 by Josh Schafer from Yahoo Finance

New data out Friday showed retail sales declined more than expected in the first month of 2025. 

Headline retail sales fell 0.9% in January, more than the 0.2% decline economists had expected, according to Bloomberg data. This marked the largest month-over-month decline in retail sales since January 2024.

Retail sales in December were revised up to 0.7% from a prior reading that showed a 0.4% increase in the month, according to Census Bureau data.

"The traditional holiday hangover & a nasty winter freeze combined to cool topline retail sales," RSM chief economist Joe Brusuelas wrote in a post on X.

The control group in Thursday's release, which excludes several volatile categories and factors into the gross domestic product (GDP) reading for the quarter, declined by 0.8%. Economists had expected a 0.3% increase.

January sales, excluding auto and gas, fell 0.5%, also below consensus estimates for a 0.3% increase. A 4.6% decline in sporting goods and hobby sales led the declines, while sales at motor vehicle and parts dealers fell 2.8%.

"If the February and March data are this weak, then we might see a negative GDP print for the quarter," Jefferies US economist Thomas Simons wrote in a note to clients on Friday morning. "This is not our base case at all, but something shy of 2% seems very realistic."

Friday's retail sales data wrapped up a busy week of economic data releases. Earlier in the week, two fresh inflation readings for the month of January showed prices increased more than Wall Street had expected, but economists found positive news for markets and the Federal Reserve within the details.

When evaluating categories from both the Consumer Price Index (CPI) and Producer Price Index (PPI) that feed into the Fed's preferred inflation gauge, the Personal Consumptions Expenditures (PCE) index, economists argue price increases likely slowed in the month of January. "Core" PCE, which excludes the volatile categories of food and energy, is expected to clock in at 2.6% in January, down from the 2.8% seen in December.

As of Friday morning, markets see less than a 50% chance the Federal Reserve cuts interest rates until at least its July meeting, per the CME FedWatch tool.

REUTERS / Reuters

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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8.

SPY Leads Core Trio of Index ETFs With $877M Inflow

2025-02-13 23:00:23 by DJ Shaw from etf.com

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9.

Invesco Issues Europe's First US Dollar AAA CLO ETF

2025-02-13 21:56:34 by Lauren Gibbons from etf.com

Invesco, the fifth-largest U.S. ETF issuer, has launched a pair of collateralized loan obligation (CLO) ETFs in Europe, including the continent’s first U.S. dollar-denominated AAA CLO ETF.

The Invesco USD AAA CLO UCITS ETF (ICLO) and the Invesco EUR AAA CLO UCITS ETF (CLOD) are listed on the London Stock Exchange (LSE), Deutsche Borse, Euronext Milan and the SIX Swiss Exchange both with total expense ratios (TER) of 0.35%.

ICLO and CLOD are the first Ireland-domiciled ETFs to offer 100% CLO exposure.

Moreover, the ICLO is the first European ETF to provide exposure to USD-denominated AAA CLOs.

Invesco’s Ireland-domiciled CLO ETFs were made possible after Ireland converged its stance with Luxembourg’s financial regulator, allowing managers to enter the ETF market by launching listed share classes of existing Irish-domiciled funds.

Fair Oaks Capital was first to market by registering its AAA CLO ETFs with the Commission de Surveillance du Secteur Financier’s (CSSF).

Gary Buxton, head of ETFs and indexed strategies for EMEA and APAC at Invesco, said: “Although the CLO market has grown rapidly, with outstanding issuance nearly doubling in the past five years, they have only recently become available to investors via an ETF, first in the US and now in Europe. This exposure opens up CLO investment to a wide range of sophisticated investors.”

Michael Craig, head of European senior loans at Invesco Private Credit, added: “We focus on CLOs from high-quality managers that we trust, as these tend to exhibit less volatility and better liquidity in stressed market conditions. We regularly perform stress-testing on our portfolios to simulate these scenarios.”

Atlanta-based Invesco manages $571.7 billion in 228 ETFs, including the $333.1 billion Invesco QQQ Trust (QQQ). That fund is the fifth-biggest in the U.S. and has gained 21% over the past year, roughly in line with the SPDR S&P 500 ETF Trust (SPY).

Elsewhere, credit-focused asset manager Palmer Square Capital Management will enter European ETFs with three strategies capturing collateralised loan obligations (CLOs).

This article was originally published in etf.com sister publication ETF Stream.

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10.

The US labor market isn't putting pressure on the Fed's plans to cut interest rates in 2025

2025-02-07 19:13:47 by Josh Schafer from Yahoo Finance

The US labor market isn't showing signs of weakness that would prompt another interest rate cut from the Federal Reserve in the near term. 

The January jobs report released on Friday showed continued signs of resilience in the labor market as the unemployment rate unexpectedly fell, wages grew more than expected, and December's monthly job gains were revised higher to show the US labor market exited 2024 on an even better footing than previously reported.

Read more: How does the labor market affect inflation?

The unemployment rate fell to 4%, its lowest level in eight months, while wages increased 0.5% month over month, higher than the 0.3% seen in the prior month. Payroll revisions also showed that the US economy added 100,000 more jobs than initially thought in December and November combined.

The Fed has kept interest rates high to try to bring inflation down to its 2% target. The second part of its mandate, though, is full employment. The central bank must make sure rates aren't too restrictive in a job market that is rapidly deteriorating. So far that doesn't appear to be the case. 

"The broader picture is still one of labor market resilience and sustained wage pressures," Seema Shah, Principal Asset Management chief global strategist, wrote in a note to clients on Friday. "This simply gives the Fed little reason to cut policy rates immediately."

The Federal Reserve's most recent Summary of Economic Projections (SEP) from December projected two interest rate cuts in 2025. But markets are already shifting to see fewer cuts as the more likely case this year. Investors are pricing in less than a 50% chance of a rate cut before the Fed's June meeting, per the CME FedWatch tool. Markets see a 52% chance the Fed cuts just once in 2025.

The Fed held interest rates steady at its January meeting as Chair Powell described the labor market as "broadly stable." Powell added that the central bank would be focusing on "real progress on inflation or alternatively, some weakness in the labor market" when considering cutting interest rates further. 

On Friday, Chicago Fed president Austan Goolsbee told Yahoo Finance the latest labor data shows "we're settling into something like full employment." Goolsbee noted this is a better place for the labor market than in the summer when a steady rise in the unemployment rate had sparked concern over how rapidly the labor market was cooling. 

Capital Economics deputy chief North America economist Stephen Brown wrote in a note on Friday morning that the strength in payroll revisions and decline in the unemployment rate likely keeps the Fed "on the sidelines" from cutting interest rates in 2025.

Others agreed the Fed would refrain from acting in the immediate term.

"We will need to take on at least two jobs reports that are considerably softer before we can seriously consider the Fed making a policy shift from here," BlackRock chief investment officer of global fixed income Rick Rieder wrote in a research note on Friday.

To be sure, there have been recent signs of cooling in the labor market. The Job Openings and Labor Turnover Survey (JOLTS) showed the hiring rate held flat at 3.4% in December and is hovering near its lowest levels of the past decade. Similarly, the job openings rate has moved lower in recent months, clocking in at 4.5% in December.

But the decline in both measures has stalled out in recent months, suggesting the job market may be stabilizing versus deteriorating substantially.

"The more recent data are indicative of a labor market that has regained its footing," Wells Fargo senior economist Sarah House wrote in a note on Friday. "This suggests that the tail risk of a sharp deterioration in the labor market has diminished, and as a result the FOMC can wait to see how the Q1 inflation data and economic policymaking play out before taking further action on the federal funds rate."

House's team still sees two interest rate cuts from the Fed in 2025, in line with the Fed's own forecast from December, but noted that the risks are now tilting toward fewer cuts than initially thought this year "in light of the labor market's resilience and the potential upside risks to inflation."

ASSOCIATED PRESS

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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11.

January jobs report: Unemployment rate falls to 4%, wages rise more than forecast as US labor market remains resilient to start 2025

2025-02-07 13:34:42 by Josh Schafer from Yahoo Finance

The US labor market showed continued signs of resilience in January as the unemployment rate unexpectedly fell, wages grew more than expected, and December's monthly job gains were revised higher to show the US labor market exited 2024 on an even better footing than previously reported.

Data from the Bureau of Labor Statistics released Friday showed the unemployment rate fell to 4% in January from 4.1% the month prior. The unemployment rate now sits at its lowest level since May 2024.

The US economy created 143,000 new jobs in January, less than the 170,000 expected by economists and lower than the 307,000 seen in December. But December's monthly job gains were revised higher from a previous reading of 256,000 and November's monthly job adds were also altered higher. Across November and December, the US labor market added 100,000 more jobs than initially thought, per Friday's labor report.

Capital Economics deputy chief North America economist Stephen Brown wrote in a note on Friday morning that the strength in payroll revisions and decline in the unemployment rate "keep the Fed on the sidelines" from cutting interest rates in 2025.

Following Friday's jobs report, market pricing of the Fed holding interest rates steady through its May meeting moved up to a 67% chance, up from a 61% chance a week ago, per the CME FedWatch Tool.

Read more: Jobs, inflation, and the Fed: How they're all related

Wage growth, an important measure for gauging inflation pressures also showed signs of strength. Wages rose 4.1% over the prior year in January, up from 3.9% in December and above the 3.8% economists had expected. On a monthly basis, wages increased 0.5%, above the 0.3% seen the prior month. Meanwhile, the labor force participation rate ticked up to 62.6% from 62.5%.

The report shows that "most of the people who want jobs have them, and people who have jobs are getting paid more," Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. He added, the report "doesn't incentivize" the Fed to change interest rates in the near future.

PATRICK T. FALLON via Getty Images

Recent data has shown the labor market slowing but not rapidly deteriorating, as layoffs remain low. Economists have largely argued the recent string of labor market data fits the "broadly stable" labor market narrative Fed Chair Jerome Powell described in his most recent press conference on Jan. 29.

"It's a low-hiring environment," Powell said. "So if you have a job, it's all good. But if you have to find a job, the job-finding rate, the hiring rates have come down."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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12.

Here's the ETF protection investors need in their portfolios

2025-02-05 17:30:00 by Seana Smith from Yahoo Finance Video

Allianz Investment Management Head ETF Market strategist Johan Grahn discusses how investors can effectively manage risk in their portfolios (^DJI, ^IXIC, ^GSPC) on Catalysts. Grahn advises investors to incorporate "some level of protection" within their investment strategy. "That's the main focus because you have investing periods that are stretched for years, not days," he explains. He recommends buffer ETFs, also known as defined outcome ETFs, as a strategic opportunity for investors seeking portfolio protection. "They provide you a protection level that you decide," Grahn notes. These instruments allow investors to build safeguards into their portfolios while maintaining upside potential. Watch the full video above to hear Grahn's outlook on investing in the bond market (^TYX, ^TNX, ^FVX). To watch more expert insights and analysis on the latest market action, check out more Catalysts here. This post was written by Angel Smith

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13.

Why Trump's tariffs aren't steering Wall Street off a 'bullish' path for stocks

2025-02-05 11:00:38 by Josh Schafer from Yahoo Finance

President Donald Trump's tariffs plans have been front and center for investors over the past week, causing investor angst, and at times, jumpy market action. 

But looking past the noisy headlines, the stock market has shown several signs of strength, providing equity strategists with ample reason to believe the path higher for stocks remains intact. 

Since last Monday's DeepSeek-driven AI sell-off in markets, the S&P 500 (^GSPC) is actually up about 0.3%. And despite some sharp downturns, particularly in pre-market trading, the benchmark index saw less than a 1% decline on Friday and Monday when tariff speculation was running rampant. 

DataTrek co-founder Nicholas Colas pointed out in a note to clients that over the past 10 years, the average daily move of the index falls in a range of 1.1% in either direction, showing that recent losses in the market haven't been abnormal. 

The same could be said for volatility. The CBOE Volatility Index, known by its ticker as simply the VIX (^VIX), has risen at times in the past week but has yet to close above 19.5, a key level Colas is watching as a sign that volatility is significantly increasing in the market. 

"Investors are largely seeing through worrisome trade war headlines, which is entirely understandable," Colas wrote. "President Trump used tariffs as a policy tool in his first term and campaigned on them in 2024. His actions now are therefore not a real surprise." 

Colas added that as long as the market action, or the potential downside economic impact of tariffs, doesn't shift materially, his team "will remain bullish on US stocks," despite trade war concerns. 

While noise about tariffs, inflation, and the overall path of monetary policy continues to dominate the discussion, the strong trend in earnings continues to be one of the things keeping Wall Street strategists bullish about the market outlook.

As of Friday, the S&P 500 is pacing for year-over-year earnings growth of 13.2% for the fourth quarter, which would mark the fastest rate of growth in three years for the benchmark index. This is higher than the 11.8% growth consensus had expected on Dec. 31, per FactSet data.

Analysts remain confident in the trajectory of future earnings growth too. Deutsche Bank chief global strategist Binky Chadha pointed out in a note to clients that at this point in the quarter, earnings estimates would usually have been cut 1.3%. Instead, they've only been trimmed by 0.6%.

"We actually, despite all this noise, expect earnings to accelerate this year," Barclays head of US equity strategy Venu Krishna told Yahoo Finance.

Recent economic data has also shown signs of strength. While Tuesday's Job Openings and Labor Turnover Survey (JOLTS) showed job openings fell to their lowest level since September during December, economists found comfort in the details. 

For example, the ratio of job openings to unemployed workers remained in a tight range over the last six months of roughly one open job for every one unemployed worker. This indicates that while the labor market has cooled significantly from 2022, it hasn't deteriorated to concerning levels either. 

"The totality of the December JOLTS data are consistent with a labour market that has stabilized at a healthy level," Capital Economics North America economist Paul Ryan wrote in a note to clients on Tuesday.

Michael M. Santiago via Getty Images

And in a separate release this week, the Institute for Supply Management's manufacturing PMI showed the sector expanded in January for the first time in more than two years. As Fundstrat head of Research Tom Lee pointed out in Yahoo Finance's recent Chartbook, a pickup in manufacturing activity typically coincides with an increase in earnings per share for the S&P 500. 

"The data continues to support us staying constructive on markets," Lee said in a video to clients on Monday night. 

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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14.

Tech investors are aggressively buying the dip: Morning Brief

2025-02-05 11:00:34 by Jared Blikre from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Two market shocks less than three weeks into Trump's second presidential term have revived a playbook familiar to tech investors: "Buy the dip" is alive and kicking.

Tariff fears sparked the latest rout Sunday evening, sending small-cap stock futures down 4% overnight — only to recover nearly all the losses by Tuesday close.

Only a week before, "fears" of cheap AI from the likes of Chinese up-and-comer DeepSeek sent chip stocks crashing, led by AI poster child Nvidia (NVDA).

On both occasions, investors not only bought the dip, but many bought it in the most aggressive way possible: with leverage. 

On Monday, Jan. 27, Nvidia suffered a 17% decline — its worst since the depths of the early pandemic in 2020. 

Yet, ETF strategist Todd Sohn, CMT of Strategas ETF Research, recently wrote in a note to clients that the GraniteShares 2x Long NVDA ETF (NVDL) pulled in $1.6 billion singlehandedly last week. That product seeks to deliver twice the daily returns of the underlying Nvidia stock, which means that last Monday's 17% NVDA loss was inflated to 34% in the leveraged product.

"It's a reflection that the 'buy the dip' mentality still exists for Tech," said Sohn.

According to Vanda Research, during the height of the Nvidia washout, retail traders were funneling cash into the market at the highest rate since the November election period. 

"Mom-and-pop traders poured roughly [$4.25 billion] of new capital into US financial markets," said Vanda, measuring both ETF and single-stock flows over two market days.

This "buy the dip" mentality isn't new, but it's become nearly reflexive. Years of easy money and rapid rebounds during the quantitative easing-driven years of global financial crisis recovery up through the COVID rebound conditioned a generation of traders. 

This mentality has a good chance of being tested again soon. (And maybe again, and again.) So far this year, markets have been sensitive to event risk, as the DeepSeek and tariff developments have shown. And with an active president in the first year of his term, stocks are already navigating a seasonally choppy stretch — one that tends to invite volatility even in calmer times. Factor in the sheer number of market-moving headlines, and even the most bullish strategists acknowledge turbulence ahead.

As Tuesday's close underscored, this market may be sensitive, but the dip-buying optimism is unbowed.

Click here for the latest crypto news, updates, and more related to ethereum and bitcoin prices, crypto ETFs, and market implications for cryptocurrencies

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15.

'There is no forecast': Wall Street still doesn't know what to make of Trump's tariff plans

2025-02-04 11:00:32 by Josh Schafer from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Wall Street is back in a familiar position. No one knows what will actually happen with Donald Trump's tariff policy.

On Sunday night, a clear market narrative emerged: Donald Trump was actually going to implement the tariffs he's been talking about for weeks. Investors were caught off guard, and stock futures sold off swiftly. 

Less than two hours into the trading day on Monday, Trump's announcement that tariffs on Mexico would be delayed for a month put a large dent in that narrative. 

Stocks rallied significantly off their lows of the day following the news. And then, 36 minutes after the markets closed, Canadian Prime Minister Justin Trudeau posted that after a "good call" with Trump, the tariffs would be paused for "at least 30 days" while the countries hash out various border agreements.

What a ride. But a few clear trends have emerged following a volatile 24 hours. 

For starters, the market is clearly "underpricing" tariff risk, showing a hopeful bias that these tariffs will end up being bargaining chips in service of the Art of the Deal as new agreements are hashed out. 

Dating back to last Friday, any inkling that Trump will follow through with 25% tariffs on both Canada and Mexico has sent stocks lower. And any news that the tariffs won't be as bad as threatened has spawned a relief rally, as seen in Monday's recovery in stocks.

The same goes for China. Beijing quickly slapped tariffs on US energy imports on Tuesday, in response to new US duties on its goods. But the response was seen as restrained by some Wall Street analysts, and the stock futures response was muted.

This speaks to market fears about tariffs stoking inflation and slowing economic growth. Some, like Capital Economics chief North America economist Paul Ashworth, have argued widespread tariffs would likely "shut the door" on Federal Reserve interest rate cuts.

And as Goldman Sachs head of US equity strategy David Kostin pointed out in a note to clients, policy uncertainty combined with the actual economic impact of hefty tariffs could weigh on S&P 500 earnings growth in 2025. 

"To the extent investors believe the tariffs will be a short-lived step toward a negotiated settlement, the equity market impact would be smaller," Kostin said. "In contrast, equities would fall further if investors view the latest tariff announcements as signals increasing the probability of additional escalation."

But exactly which of those scenarios plays out is, of course, the pressing question for investors. And any answer still seems to be more of a guess than a certainty. 

"Perhaps the main takeaway is that no one knows what is going to happen [regarding] tariff policy," Charles Schwab strategist Kevin Gordon wrote on X. "There is no forecast."

Even when there are projections or expectations, they seem a bit more like how most of us feel about the weather forecast. 

As of Jan. 29, Polymarket, a popular online betting offering, was pricing in just 20% odds that Trump imposed 25% tariffs on Canada and Mexico. By Sunday, the odds were closer to 90%. Guess the clouds rolled in after all.

Perhaps that's the real takeaway from the past few days of market action. The "political fog" many have discussed is here. When it lifts, and what's on the other side, is really anyone's guess. 

As JPMorgan chief US economist Michael Feroli said on Sunday, "Even if tariffs are called off tomorrow, the increase in policy uncertainty will be hard to put back in the bottle."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

---

16.

Manufacturing rebound flashes bullish signal for stocks

2025-02-03 16:40:32 by Josh Schafer from Yahoo Finance

In January, economic activity in the US manufacturing sector expanded for the first time in more than two years.

The Institute for Supply Management's manufacturing PMI registered a reading of 50.9 in January, up from December's reading of 49.3. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate contraction. The manufacturing sector had been in contraction for more than two years.

This could be a bullish development for stocks, Fundstrat head of research Tom Lee recently said in Yahoo Finance's Chartbook.

"To me, the most important chart to watch is the ISM manufacturing turning up in 2025," Lee said. "This series has been below 50 for 26 months now, the longest stretch since 1989-1991, and we think [it] signals an acceleration of cyclical [earnings] growth in 2025."

As Lee's chart shows, when ISM's manufacturing PMI picks up, corporate earnings usually follow.

In a note to clients on Monday, Jefferies US economist Thomas Simons wrote the backdrop looks positive for a continued rebound in the manufacturing sector. 

"We see significantly more positive signs for the U.S. manufacturing outlook than negative ones," Simons wrote. "[Interest] rate cuts are on hold, but we still expect that more are coming in the second half of the year. The Trump administration is focused on doing things that (it thinks) will improve U.S. competitiveness in manufacturing, including deregulation, a more accommodative tax environment, and protectionist tariffs. The jury is still out on the net benefit of the tariffs, but the other positive forces are unambiguous."

Another reading on manufacturing activity out Monday also showed positive trends for the sector. The final reading of S&P Global's manufacturing PMI hit a reading of 51.2 in January, above the 49.4 seen in December.

“A new year and a new President has brought new optimism in the US manufacturing sector," S&P Global Market Intelligence chief business economist Chris Williamson said in the release. "Business confidence about prospects for the year ahead has leaped to the highest for nearly three years after one of the largest monthly gains yet recorded by the survey."

NurPhoto via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

---

17.

Dividend Investor Earning Over $10,000 a Month Shares Top 6 Stock Picks - 'Money Coming Without Working is Liberating'

2025-02-03 15:15:37 by Leena Arden from Benzinga

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

Dividend stocks are in focus as investors looking for stability amid volatility in AI stocks and turn to recession-proof companies that reward their investors with regular income. However, choosing dividend stocks to meet long-term financial goals is not easy for beginner investors with a limited budget. 

A few days ago, someone asked income investors on r/Dividends — a Reddit discussion board —how much they were earning per month from dividends. The question received more than 400 comments, with many success stories and impressive income reports.

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An investor said he was making more than $10,000 a month on average with a portfolio worth about $1.4 million. He said most of this income is reinvested in dividend stocks as he does not spend it. The investor also explained why he's playing it safe:

"In case you want to know why: I work in high stress, high income, high risk tech. It’s very possible my job just disappear without much notice, and it could be a long time till I find another. This actually happened to me many years ago, before I had put the dividends put together (or the money to do it)."

The investor said he was once laid off and had to live off his savings for a few months. That phase of life taught him that he should develop a secondary income stream for tough times.

"I said I never wanted that nightmare again, and purposely worked towards this. having some money coming in without working for it is liberating."

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Let's take a look at some of the key dividend stocks in his portfolio based on the details he publicly shared on Reddit.

NEOS Nasdaq-100 High Income ETF

NEOS Nasdaq-100 High Income ETF (NASDAQ:QQQI) was one of the top holdings of the investor making more than $10,000 a month in dividends. However, the investor said he considers the fund risky.

"I hold QQQI, probably a couple hundred thousand dollars worth (not a large pecent of my NW). I consider it the highest risk single holding that I have.... and you are 100% QQQI and SPYI. I guess ignorance is bliss, if you knew more about this, you probably wouldn’t hold it," he said in a separate discussion on Reddit.

NEOS Nasdaq-100 High Income ETF exposes investors to Nasdaq 100 companies and generates income by selling covered call options on the index. 

SPDR Portfolio High Yield Bond ETF 

The SPDR Portfolio High Yield Bond ETF (NYSE:SPHY) provides inventors exposure to USD-denominated high-yield debt. It tracks the ICE BofA US High Yield Index. It generates monthly income from the interest income it collects on its high-yield bond holdings.

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US Treasury 3 Month Bill ETF

The investor making over $10,000 a month in dividends said that US Treasury 3 Month Bill ETF (NASDAQ:TBIL) was a part of his portfolio. However, in the most recent comments on the social platform, he said he sold his entire position in the fund.

"I sold all my TBILs this morning ($300k worth) and bought QQQ with some of it. I was planning on converting TBILS to higher yielding PULS etf anyways, and buying PULS right after they pay out next week.. the QQQ dip was unexpected but welcomed. I’ve been wanting to buy more, but love doing it on deep red days," he said.

PGIM Ultra Short Bond ETF

The PGIM Ultra Short Bond ETF (NYSE:PULS) was a new addition in the portfolio of the investor. PULS is an ultra-short duration bond ETF that offers higher yields than cash while maintaining low interest rate risk.

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The Invesco QQQ Trust Series 1

The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) was a key part of the portfolio. The investor said he buys QQQ whenever the market sees a broader selloff.

"I've been buying QQQ every time it dips and people say the world is ending. so far, the world hasn’t ended and it’s kept by cost basis down."

QQQ is one of the best ways to enjoy dividend income and capital gains through stock price appreciation, as the ETF exposes some of the top tech stocks in the NASDAQ-100 index.

MPLX

The investor earning over $10,000 a month said midstream energy infrastructure company MPLX LP (NYSE:MPLX) is a "stable" investment in the MLP space.

"MPLX, like most MLPs is pretty stable, well kept secrets in plain sight."

MPLX LP is one of the high-yield dividend stocks in the Redditor's portfolio. The company has a dividend yield of about 7.4% and is owned by Marathon Petroleum (NYSE:MCO).

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

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For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).

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This article Dividend Investor Earning Over $10,000 a Month Shares Top 6 Stock Picks - 'Money Coming Without Working is Liberating' originally appeared on Benzinga.com

© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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18.

Monday's stock market action shows investors were 'underpricing' Trump’s promised tariffs

2025-02-03 13:49:43 by Josh Schafer from Yahoo Finance

Investors didn't take President Donald Trump at his word, sparking an early market sell-off in reaction to his move to impose hefty tariffs on Canada, Mexico, and China.

In early trading all three of the major averages sank before recovering some losses after the White House confirmed tariffs on Mexico will be delayed.

The tech-heavy Nasdaq Composite (^IXIC) was down about 1.2%, while the S&P 500 (^GSPC) fell about 0.8%. Meanwhile, the Dow Jones Industrial Average (^DJI) shed 0.3%, or more than 100 points.

The jerky market action in relation to whether or not Trump will fully follow through on his tariff plans reflects what RBC Capital Markets head of US equity strategy Lori Calvasina described as investors "underpricing the risk that [tariffs] were more than a negotiation tool."

While Trump has been clear since his first day in office that he would slap 25% tariffs on both Canada and Mexico, markets and economists appeared not to take the president at face value. The White House also said Friday that the administration planned to enact a 10% tariff on China.

"My sense is tariffs are coming, but I don’t think they’ll be quite on the same scale that the president has talked about," Capital Economics Group chief economist Neil Shearing told Yahoo Finance on Thursday, adding, "for obvious reasons, and that is that it would tank the market."

Read more: What are tariffs, and how do they affect you?

Even betting markets, which many believe were a leading indicator during the recent presidential election, weren't pricing in high odds of tariffs. As of Jan. 29, Polymarket, a popular online betting offering, was pricing in just 20% odds that Trump imposed 25% tariffs on Canada and Mexico. 

Early Monday, it appears markets were caught offsides and investors were facing a repricing of potential risks. The US dollar shot up to 109, near its highest level in two years. Retail and auto stocks that could be impacted by tariffs also sold off.

"Full implemented tariffs with staying power don’t appear to be in the price of key markets," a team of Morgan Stanley equity strategists and economists wrote on Sunday.

They added, "US equities may come under pressure, and services should outperform consumer goods."

Spencer Platt via Getty Images

To be clear, there is still a path in which the widespread tariffs do not hold. The duties on all three countries will be fully in force by Tuesday, Feb. 4, and ongoing negotiations, like the ones cited between the US and Mexico, could continue with other parties as well.

Even so, the weekend tariff surprise for markets could be an early insight into the state of markets over the near-term as investors keep attempting to decipher Trump's trade policy.

"Even if tariffs are called off [Monday], the increase in policy uncertainty will be hard to put back in the bottle," JPMorgan chief US economist Michael Feroli wrote in a note to clients on Sunday. "For the Fed, the weekend’s developments will likely reinforce their inclination to sit on the sidelines and to remain below the radar as much as possible."

In a Sunday note to clients, Goldman Sachs chief US equity strategist David Kostin noted that the tariff announcements have come "as a shock to many investors who expected tariffs would only be imposed if trade negotiations failed."

Kostin added that large tariffs pose "downside risk" to his team's S&P 500 earnings forecast. Combined with increased policy uncertainty, Kostin argued the S&P 500's fair value could see near-term downside of roughly 5% if the market prices "sustained implementation of the newly-announced tariffs."

To Kostin, the key for markets remains whether or not investors truly believe the tariffs will be implemented for an extended period of time. 

"To the extent investors believe the tariffs will be a short-lived step toward a negotiated settlement, the equity market impact would be smaller," Kostin said. "In contrast, equities would fall further if investors view the latest tariff announcements as signals increasing the probability of additional escalation."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

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---

19.

Trump tariffs, more Big Tech earnings, and a jobs report: What to know this week

2025-02-02 12:50:25 by Josh Schafer from Yahoo Finance

Stocks swiftly recovered from the DeepSeek-driven sell-off early in the week but came under pressure on Monday amid concerns over President Trump's tariff plans.

Trump followed through with his plans on Saturday, placing tariffs on Canada, Mexico and China, which will be fully in force by Tuesday, Feb. 4. There will be 25% duties on Canada and Mexico, and 10% on China, over issues of fentanyl and illegal migration.

Markets are digesting the tariff announcements after a strong start to the year. In January, the S&P 500 (^GSPC) rose 2.7% while the Nasdaq Composite (^IXIC) advanced more than 1.6%. The Dow Jones Industrial Average (^DJI) led the gains, rising 4.7%. 

In the week ahead, investors will parse the latest developments in Trump's tariff strategy, the January jobs report, and an onslaught of corporate reports. Updates on job openings, as well as activity in the services and manufacturing sectors, will also be on the schedule. 

Meanwhile, quarterly results from Amazon (AMZN), Alphabet (GOOGL,GOOG), Chipotle (CMG), and Eli Lilly (LLY) headline a week that will feature earnings reports from 131 S&P 500 companies. 

Tariff talk

Tariff reaction will be at the forefront of the market narrative in the week ahead. The duties on all three countries will be fully in force by Tuesday, Feb. 4, according to the order signed by Trump on Saturday afternoon in Florida. Many economists have argued that tariffs could stoke inflation.

As Yahoo Finance's Ben Werschkul reported, Canada and Mexico were quick to announce retaliatory measures across a range of US goods. Prime Minister Justin Trudeau said that Canada will place 25% counter-tariffs on CAD $155 billion (USD $107 billion) worth of American-made products, starting Tuesday.

Stocks are on track for steep losses to start the week, after their rally cooled off on Friday as White House press secretary Karoline Leavitt outlined the plans for imposing tariffs. 

Trump following through with the extent of tariffs he had initially threatened "may be further" than market participants had been expecting, Evercore ISI chief strategist for international affairs and public policy Sarah Bianci told Yahoo Finance.

ASSOCIATED PRESS

On hold for now

The Federal Reserve held interest rates steady on Wednesday as it waits for further clarity on inflation's path toward its 2% target and how potential tariffs could impact that process. 

The week ahead will bring several key updates for the Fed on the employment side of its mandate. The January jobs report, due out Friday morning, is expected to show the US labor market added 150,000 jobs in the month, down from the 256,000 seen in December. Meanwhile, the unemployment rate is expected to hold steady at 4.1%. The report will also include revisions to labor data from the past year.

"We suspect the January jobs report will continue to indicate the labor market has softened over the past year, but not to an alarming degree," Wells Fargo's economics team led by Jay Bryson wrote in a weekly note to clients Friday. 

While the labor market has held up for now, with inflation moving slowly toward the Fed's target, some on Wall Street believe signs of significant slowing would be the most likely catalyst to prompt the central bank to resume its rate-cutting cycle. 

"We think the unemployment rate is probably the single most important macro data point you're going to get every month," Citi head of US equity trading strategy Stuart Kaiser told Yahoo Finance. "If you see a significant uptick in the unemployment rate, that potentially puts the Fed under pressure and puts the market under pressure as well."

Earnings scorecard 

Less than halfway through the reporting period, the S&P 500 is currently pacing for year-over-year earnings growth of 13.2% for the fourth quarter, which would mark the fastest rate of growth in three years for the benchmark index. This is higher than the 11.8% growth consensus had expected on Dec. 31, per FactSet data. 

And FactSet senior earnings analyst John Butters points out this reporting season has been a particularly strong one for companies that are surprising Wall Street to the upside with their earnings per share numbers. Analyzing the two days leading into and following a report, companies that beat Wall Street's earnings expectations have seen their stocks rise 1.5% on average. This is above the five-year average of a 1% rise for companies that top earnings estimates. 

And it's not just this quarter's earnings surprising, either. Deutsche Bank chief global strategist Binky Chadha pointed out in a note to clients that at this point in the quarter, earnings estimates would usually have been cut 1.3%. Instead, they've only been trimmed by 0.6%. 

In other words, while noise about tariffs, inflation, and the overall path of monetary policy continues to dominate the discussion, the strong trend in earnings continues to be what's keeping Wall Street strategists bullish about the market outlook. 

"The most steady part of this bull market has been ... those earnings trends. Those forward earnings estimates every week are making new highs," Truist co-chief investment officer Keith Lerner told Yahoo Finance. "All in all, we think the bull market trend is intact, supported by these earnings that are somewhat still underappreciated." 

Another potential tailwind

Another bullish sign for earnings may soon be flashing green too. On Monday, the Institute for Supply Management will release its ISM Manufacturing PMI. The reading has shown the sector in contraction for more than two years.

Bank of America US economist Aditya Bhave believes the tide may be turning for manufacturing, though. 

"The manufacturing recession might be over, and we think the ISM manufacturing index is likely to break above 50 in January," Bhave wrote in a note to clients on Friday. 

This could be bullish for stocks, Fundstrat head of research Tom Lee recently said in Yahoo Finance's Chartbook.

"To me, the most important chart to watch is the ISM manufacturing turning up in 2025," Lee said. "This series has been below 50 for 26 months now, the longest stretch since 1989-1991, and we think [it] signals an acceleration of cyclical [earnings] growth in 2025."

As Lee's chart shows, when ISM's manufacturing PMI picks up, earnings usually follow. 

Weekly Calendar

Monday

Economic data: S&P Global US manufacturing PMI, January final (50.1 expected, 50.1 previously); Construction spending, month-over-month, December (0.2% expected, 0% prior); ISM manufacturing, January (49.3 expected, 49.3 prior)

Earnings: The Clorox Company (CLX), Palantir (PLTR), Tyson (TSN)

Tuesday

Economic data: Job openings, December (8.01 million previously); Factory orders, December (+0.5% expected, -0.4% previously); Durable goods orders, December final (-2.2% previously), Capital Goods orders nondefense, excluding air, December final (+0.3% previously)

Earnings: Alphabet (GOOGL,GOOG), AMD (AMD), Amgen (AMGN), Apollo (APO), Chipotle (CMG), Electronic Arts (EA), Enphase (ENPH), Estée Lauder (EL), Ferrari (RACE), Juniper Networks (JNPR), Merck (MRK), PayPal (PYPL), PepsiCo (PEP), Pfizer (PFE), Snap (SNAP), Spotify (SPOT)

Wednesday

Economic data: MBA mortgage applications, week ending Jan. 31 (-2% prior); ADP Private Payrolls, December (+153,000 expected, +111,000 previously); S&P Global US services PMI, January final (52.8 prior); S&P Global US composite PMI, January final (52.4 prior); ISM services index, January final (54.5 expected, 54.1 prior)

Earnings: Disney (DIS), Aflac (AFL), Arm Holdings (ARM), Aurora Cannabis (ACB), Boston Scientific (BSX), Ford (F), Novo Nordisk (NVO), Qualcomm (QCOM), Toyota (TM), Uber (UBER), Viking Therapeutics (VKTX)

Thursday

Economic data: Challenger jobs cuts, year-over-year, January (+11.4% previously); Initial jobless claims, week ending Feb. 1 (207,000 previously)

Earnings: Amazon (AMZN), Eli Lilly (LLY), Affirm (AFRM), e.lf. Beauty (ELF), Bristol Myers Squibb (BMY), ConocoPhillips (COP), Hershey (HSY), Peloton (PTON), Pinterest (PINS), Phillip Morris International (PM), Roblox (RBLX), Tapestry (TPR), Yum! Brands (YUM)

Friday

Economic calendar: Nonfarm payrolls, January (+150,000 expected, +256,000 previously); Unemployment rate, January (4.1% expected, 4.1% previously); Average hourly earnings, month-over-month, January (+0.3% expected, +0.3% previously); Average hourly earnings, year-over-year, January (+3.8% expected, +3.9% previously); Average weekly hours worked, January (34.3 expected, 34.3 previously); Labor force participation rate, January (62.5% previously); Annual revisions to the employment establishment survey expected; University of Michigan consumer sentiment survey, February preliminary (74 prior)

Earnings: Canopy Growth (CGC), Newell Brands (NWL)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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20.

Market volatility: How algorithms influence trading

2025-01-30 12:00:00 by Yahoo Finance from Yahoo Finance Video

On the latest episode of Yahoo Finance’s Trader Talk, host Kenny Polcari sat down with guest Bulleye Investment Group's Adam Johnson to break down the forces driving today’s market volatility. The pair explored how psychology, Federal Reserve policy, and the rise of algorithms contribute to the unpredictable ups and downs of the market. Johnson pointed out the market’s tendency to overreact to good news, which often triggers fears of inflation and interest rate hikes. “You buy stocks because of earnings growth, not because you think the Fed's going to cut rates,” Johnson said, urging investors to focus on long-term fundamentals instead of speculation. Polcari echoed this but stressed the importance of caution. “You should understand what the economy is doing around you before you just haphazardly go and start buying stocks,” he advised, noting the impact inflation could have on stock selection and timing. The conversation also highlighted the role of algorithms in driving erratic market movements. Johnson explained that pre-programmed systems often respond automatically to data, amplifying volatility. Polcari added that fear indicators like the VIX crossing 22 can set off sell programs, leading to further market turbulence. Both agreed that if the 10-year Treasury yield hits 5%, it could spell trouble for stocks, especially if inflation surges or economic growth slows. To gain more insights and discover potential investment strategies, tune into the full episode of Trader Talk on Yahoo Finance. This post was written by Langston Sessoms.

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21.

Federal Reserve Holds Firm Amidst Political Pressure from President Trump

2025-01-30 01:53:57 by ShantiPutri from GuruFocus.com

Thursday, Jan. 30, 2025 The Federal Reserve held interest rates steady Wednesday maintain the rate at its current range of 4.25% to 4.5% and President Trump argued in no time calling Fed Chair Jerome Powell and the central failed to stop the problem they created and continued that the Fed has done a terrible job.

President Donald Trump repeatedly suggesting that he would bring interest rates lower has raised fears about political control of monetary policy. As a separate institution the Federal Reserve needs to stay independent from any politicians' control.

"I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!" said President Trump. We don't argue his nationality, his love for the nation is undoubted, but The Fed makes decisions based on economic data rather than political demands and the officials have consistently emphasized their commitment to maintaining autonomy, ensuring that their policies are not influenced by short-term political interests.

Economic expert and guru investor Ray Dalio (Trades, Portfolio) explains why Federal Reserve autonomy is vital for the economy. In a new YouTube Shorts video, Dalio discussed when authorities manipulate central banks they reduce financial stability.

The Fed warned that letting politicians control its operations will spark financial disruptions while creating unpredictable market cycles. Dalio recommends that keeping actual bond yields near 2% helps maintain both nation-building and price stability.

By asking for lower interest rates Trump appeals to his supporters and businesses seeking cheap loans yet economic experts worry about interfering with the Fed's role. Political interference with the Fed's decisions may fuel economic benefits today but may hurt financial health tomorrow.

Experts and the Fed officials reject Trump's idea to influence the Fed's decisions as the Fed's independence is critical and monetary policy must all the time be free from political interferences.

Writer's opinion

Venezuela had demonstrated the negative effect of political interventions to monetary decisions. When politicians control the central bank, the people must pay expensive price for the mistake of their leader by having economic instability that the politician itself can't fix.

Venezuelan politicians had gone too far, they even controlled printing money and caused severe hyperinflation and destroyed faith in their national currency. Maintaining the independence of institution like central banks is crucial, monetary policy can't be adjusted to any administration under any interests and should be free from any politicians' interference.

Smart people learn from mistakes, but smarter people learn from other people's mistakes. We don't need to experience by ourselves by having politician influences central bank's decision like in Venezuela. The example is there; we can learn it and don't need to experience it.

This article first appeared on GuruFocus.

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22.

Nvidia falls 4% after report of potential additional curbs on China sales

2025-01-29 18:54:42 by Josh Schafer from Yahoo Finance

Nvidia (NVDA) stock slid 4% Wednesday after Bloomberg reported that Trump administration officials are "exploring additional curbs" on Nvidia's chip sales to China.

Bloomberg's report added that the talks are in the "very early stages." The new restrictions would likely cover Nvidia's H20 chips, which is a scaled-down product the chipmaker offers to meet existing US restrictions on shipments to China. 

Nvidia said in a statement the company is "ready to work with the Administration as it pursues its own approach to AI. The thresholds set by the Biden Administration are based on performance levels reached five years ago and achieved by leading gaming and workstation products.”

The news comes amid a volatile week for Nvidia shares, which saw their worst one-day market cap loss in history on Monday. The stock slid nearly 17% as investors digested the growing popularity of a new cost-effective artificial intelligence model from the Chinese startup DeepSeek.

The team behind DeepSeek, the artificial intelligence model maker, claimed that its new AI model uses cheaper chips and less data. Investors grew concerned this could hurt future AI chip sales as well as bring into question the dominance of US hyperscalers in the market. They also worried the developments could challenge a consistent trend in the bull market of Nvidia and other Big Tech companies seeing their earnings estimates revised higher.

Nvidia shares rebounded 9% on Tuesday as many on Wall Street largely argued the sell-off was "overblown." But Wednesday's quick move lower following the Bloomberg report shows that the stock doesn't appear to be out of the woods just yet.

Investors will be closely listening for updates from large Nvidia customers Tesla (TSLA), Microsoft (MSFT), and Meta (META) after the bell on Wednesday for further details on the current demand for AI chips.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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23.

Nvidia stock crash saw retail investors dump more than $900 million into the name

2025-01-29 17:48:26 by Josh Schafer from Yahoo Finance

Nvidia (NVDA) stock tanked on Monday, falling more than 17% and losing nearly $600 billion off its market cap as investors digested the growing popularity of a new cost-effective artificial intelligence model from the Chinese startup DeepSeek.

But retail investors bought the dip. Data from VandaTrack shows retail investors bought more than $562 million of the name on Monday, the largest single-day inflow into the stock in VandaTrack's data. On Tuesday, as the stock rebounded and rose roughly 9%, there was once again a large swath of retail buying totaling nearly $360 million. Across the two days of chaotic market action, retail investors sent more than $920 million into shares of Nvidia.

Wall Street strategists largely agreed with retail investors' bullish outlook on the name.

"We think this is probably going to end up a 'buy the dip' Nvidia moment," Fundstrat head of Research Tom Lee said in a video to clients on Monday night.

Bank of America research analyst Vivek Arya provided similar sentiment in a note to clients on Wednesday, saying the recent drawdown in Nvidia, Broadcom (AVGO), and Marvell (MRVL) provided an "enhanced [buying] opportunity."

The team behind DeepSeek, the artificial intelligence model maker, claimed that its new AI model uses cheaper chips and less data. Investors grew concerned this could hurt future AI chip sales for a company like Nvidia as well as bring into question the dominance of US hyperscalers in the market. It could also challenge a consistent trend in the bull market of Nvidia and other Big Tech companies seeing their earnings estimates revised higher.

Bernstein’s Stacy Rasgon told Yahoo Finance's Seana Smith the DeepSeek-driven sell-off was "overblown." Rasgon added that the new developments don't spell out "doomsday for AI infrastructure."

ASSOCIATED PRESS

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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24.

Tread carefully with quantum stocks, trader says

2025-01-29 12:00:47 by Jared Blikre from Yahoo Finance Video

Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite podcast. In this episode of Stocks In Translation, Yahoo Finance Markets and Data Editor Jared Blikre and Producer Sydnee Fried speak with Kenny Glick, owner of HitTheBid.com. Glick shares his top trade recommendations for 2025, highlighting the emerging potential of quantum stocks as a major market disruptor. While optimistic about their long-term growth, he warns that these investments come with substantial risks. Additionally, Kenny advises keeping an eye on the "Magnificent Seven" and the Invesco QQQ Trust (QQQ) for continued opportunities. "It's going to be quantum... it's going to be the same story. And there's going to have to be some new IPOs. People are going to want to be getting into the industry. There's going to be a lot of pump and dumps so be careful out there." Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service. This article was written by Colin Webb.

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25.

Invesco Q4 Assets Beat Estimates as QQQ Flows Jump

2025-01-28 21:59:25 by DJ Shaw from etf.com

Invesco, the fourth-largest U.S. ETF issuer, reported Tuesday that fourth-quarter assets rose 2.8% to $1.85 trillion due partly to investors pouring billions into its flagship $333 billion Invesco QQQ Trust (QQQ). 

Total assets under management topped the $1.84 trillion average estimate of analysts surveyed by Bloomberg. AUM jumped 16% from $1.58 trillion in the previous fourth quarter, according to an earnings release. Atlanta-based Invesco's Q4 EPS of $0.52 per share topped Bloomberg's estimate of $0.47, and the company's shares rose about 9% at midday Tuesday. 

Investors funneled billions into stock ETFs during the fourth quarter, aiming to take advantage of rising equity markets and pushing total U.S. inflows for the year to a record $1.12 trillion. Lager rivals BlackRock Inc. and Charles Schwab Corp. both reported jumps in fourth-quarter inflows, while flows to State Street Corp.'s SPDR unit dipped as its flagship SPDR S&P 500 ETF Trust (SPY) had outflows. 

QQQ Boosts Invesco ETF Unit

A good portion of Invesco's asset growth was a result of the net $10.4 billion that investors bet on QQQ during the fourth quarter, more than three times the $2.84 billion they invested in the third quarter. It was also a big increase from the $3.81 billion they invested in 2023's fourth quarter.

QQQ reached $318.9 billion in assets, exceeding analyst expectations of $315.3 billion and climbing from $294.8 billion in the previous quarter.

The company reported net long-term inflows of $25.6 billion for the quarter, above the consensus estimate of $19.6 billion and up from the $16.5 billion in the third quarter.

The company’s other ETF and index products attracted $29.6 billion in net long-term inflows, above analyst estimates of $26.3 billion and up from the $16.5 billion in the third quarter and $6.7 billion year over year.

The better-than-expected results showcase Invesco’s expansion in passive investments as investors continue moving towards lower-cost index products, particularly in technology and growth sectors.

Breaking down regional performance, Invesco’s ETF growth spread across all three major regions, with EMEA, Americas and Asia Pacific recording net long-term inflows of $9.2 billion, $8.9 billion, and $7.5 billion respectively.

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26.

Why DeepSeek has been so unsettling for the stock market in 3 charts

2025-01-28 16:15:06 by Josh Schafer from Yahoo Finance

A cheaper, competitive AI model from Chinese artificial intelligence company DeepSeek sparked a sell-off in the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) on Monday as it challenged one of the key drivers of the current bull market.

For the first time in a while, investors had a tangible reason to believe some US tech giants, namely Nvidia (NVDA) and Broadcom (AVGO), might not grow earnings by as much as initially hoped in the coming year. The team behind DeepSeek, the artificial intelligence model maker, claimed that the technology uses cheaper chips and less data. Investors are concerned this could hurt future AI chip sales for a company like Nvidia as well as bring into question the dominance of US hyperscalers in AI.

The problem for markets is that Big Tech's earnings beats have been driving stocks higher over the past two years. 

"The key pillar of this bull market is earning estimates moving higher," Truist co-chief investment officer Keith Lerner told Yahoo Finance.

He added, "Tech is at the forefront of the overall return for the market this year."

As Barclays head of US equity strategy Venu Krishna pointed out in Yahoo Finance's latest Chartbook, Big Tech earnings from the giants — Nvidia, Amazon (AMZN), Alphabet (GOOGL, GOOG), Apple (AAPL), Meta (META), and Microsoft (MSFT) — have seen earnings estimates rise more than the rest of the S&P 500 and the MSCI Europe (IEUR) index over the past 12 months. 

Yesterday's more than 3% decline in the Nasdaq and 1.5% drop in the S&P 500 show how the market could react if both the blue (Big Tech earnings estimates) and green lines (the rest of S&P 500 estimates) in Krishna's chart below begin reversing direction. 

The expected scrutiny over tech earnings will come amid a market that Richard Bernstein, CEO of Richard Bernstein Advisors, told Yahoo Finance is ripe for change. Bernstein's contribution to Yahoo Finance's Chartbook showed how just 29% of stocks in the S&P 500 outperformed the index in 2024 and 30% outperformed in 2023. This marked the lowest number of outperformers since the late 1990s. 

"It’s probably incorrect that there is a new paradigm in which the 'Magnificent Seven' secularly dominate the market," Bernstein said. "Such extreme, narrow leadership is rare because it goes against capitalism, open markets, and competition." 

"We think 2025 [will] be a year of returning to normal broader markets as speculation meets reduced liquidity and fundamental investing again outperforms."

Bernstein's call for broader returns in 2025 matches the takeaway from a chart shared with Yahoo Finance by Nicole Inui, HSBC's head of equity research for the Americas. Inui's chart shows that while Magnificent Seven earnings are still expected to grow more than the other 493 stocks in the index in 2025, the gap is expected to narrow, making the case for a broadening of the stock market rally.

"Mag 7, while still outpacing the overall index on earnings growth, is expected to be less of an outlier."

To both Bernstein and Inui's credit, that market action played out on Monday. Roughly 70% of stocks in the S&P 500 closed in the green, despite a more than 1.5% drop in the index itself. Nvidia's large losses led to most of the downside action in the overall index. 

This introduces a stark reality for investors. Should Big Tech's dominance wane, it might become a better environment for stock pickers to find names that could outperform the S&P 500. But it also likely means that the massive gains seen for the broader indexes over the past two years won't come as swiftly if the largest companies in the index aren't leading the charge.

David Dee Delgado via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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27.

XLP, Consumer Staples Stocks Jump Amid Risk-Off Shift

2025-01-28 14:00:00 by Kent Thune from etf.com

While nervous investors sold shares of tech stocks amid Monday’s artificial intelligence panic, they bid up the otherwise boring Consumer Staples Select Sector SPDR Fund (XLP), which surged 2.7% amid the massive risk-off shift. 

The tech sector panic selloff arose from sudden fears that China's new DeepSeek AI, reportedly cheaper and faster than leading artificial intelligence giants like Nvidia Corp., would challenge domestic, high-margin, semiconductor business models. 

NVDA stock sank 17% Tuesday while leading consumer staples stocks Costco Wholesale Corp. (COST) and WalMart Inc. (WMT) rose 2.8%, respectively. 

XLP: The Defensive, Soft Landing, Consumer Staples ETF

Investors often favor consumer staples stocks and ETFs like XLP during periods of economic slowdown for several reasons: 

Stability in Demand

Consumer staples companies produce essential goods such as food, beverages, household products, and personal care items. These products are necessities, and demand remains steady regardless of economic conditions, providing a buffer against economic downturns. 

Defensive Characteristics

Consumer staples stocks are considered "defensive" because their revenues and profits are less sensitive to economic cycles compared to sectors like technology or industrials, making them attractive during uncertain times. 

Dividend Income

Many companies in the consumer staples sector, like Procter & Gamble Co. or Coca-Cola Co., have a history of paying consistent and growing dividends. In a slowing economy, these dividends can provide reliable income to investors, which is especially appealing when growth stocks may struggle. 

Lower Volatility

ETFs like XLP tend to be less volatile than technology-focused ETFs because of their defensive nature. This makes them a "safe haven" for risk-averse investors during market downturns. 

Inflation Resilience

Many consumer staples companies can pass on higher costs to consumers without significantly affecting demand, making them more resilient during periods of inflation or rising input costs. 

Technology's Sensitivity to Economic Growth

Technology stocks often have higher valuations based on future growth expectations, which can be negatively affected by higher interest rates or slower economic growth. In contrast, consumer staples stocks have more predictable earnings and are less tied to growth assumptions, making them relatively more attractive in a slowdown. 

XLP and similar consumer staples ETFs act as a defensive play, offering stability, income, and resilience when the economy slows, while tech stocks, which rely heavily on growth and innovation, may underperform in the same environment

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28.

Yahoo Finance Chartbook: 44 charts that tell the story of markets and the economy to start 2025

2025-01-28 10:58:56 by Josh Schafer from Yahoo Finance

After the best two-year stretch for the S&P 500 (^GSPC) since the late 1990s, few on Wall Street are calling for an end to the bull market run, and this optimism serves as the key throughline in the fourth edition of Yahoo Finance's Chartbook. 

The Federal Reserve has cut interest rates by a full percentage point in the past four months, and though there is still debate surrounding when or if the central bank will lower rates again, the conversation has shifted to start 2025.

The fourth volume of the Yahoo Finance Chartbook shows a clear sense that a regime shift may be underway. 

Instead of data continuing to surprise to the upside, overall confidence in the trajectory of American corporates has now become consensus. If anything, there's a fear of optimism running too high. 

Instead of debating how deeply the Fed will cut rates, market participants are welcoming the reality of a sustainably higher interest rate environment. The 10-year Treasury yield (^TNX) is trading near its highest level in more than a year; the question now is whether multi-decade milestones are next.

And then there's Donald Trump. 

The new president has, in many ways, overtaken Fed Chair Jay Powell as the key source of uncertainty for investors, with questions swirling about what policies he will enact. 

How those changes impact the Fed, markets, and the broader US economy is at the center of the current market moment. 

A new interest rate regime | Tariffs and Trump | Making sense of this bull market | The economic cycle turns

The following commentary has been lightly edited for length and clarity.

Click here to download YF Chartbook Vol. 4 

A new interest rate regime

Mike Wilson, chief investment officer and chief US market strategist, Morgan Stanley

"The chart shows the sharp reversal in correlations between stocks and yields that occurred in December. This was the main reason stocks struggled into year end and for the first week of the year. The reversal in correlations from positive to negative (Stocks vs. 10-year [US Treasury] Yield) coincided with the rise above 4.5% in UST yields, a level we identified as important for P/Es [price-to-earnings ratios] prior to the break-out in rates. We think good economic data is no longer good for stocks when yields are >4.5%. Should yields fall below 4.5%, it could serve as a positive catalyst for stocks so long as rates don’t plummet too far or fast on fears of growth falling. Conversely, if rates rise further, it will be headwind for stocks."

Liz Ann Sonders, chief investment strategist, Charles Schwab

"The Temperamental Era was mostly characterized by heightened economic, inflation, and geopolitical volatility. The Great Moderation era was characterized by fairly consistent disinflation, longer/less volatile economic cycles, and the surge in globalization. During most of the Temperamental Era, there was an inverse relationship between bond yields and stock prices; while it was the opposite during the Great Moderation Era. The recent inverse relationship bears watching to gauge the likelihood we’ve exited the Great Moderation Era."

Michael Kantrowitz, chief investment strategist, Piper Sandler

"We would expect interest rates to matter a lot when we're above 4.5%, and perhaps if we get a growth scare, below 3.5%. In between those levels, we should see correlations decay a bit, and other factors matter much more."

Nicholas Colas, co-founder, DataTrek Research

"This chart shows US 10-year Treasury yields are creeping towards 5%. Markets are spooked by the 5% level on 10-years because it is the outer limit of an entire generation’s (20 years) experience with prevailing interest rates. The last time we went past 5% was in mid-2007, and we all know how that story ends. Granted, 2025 is very different from 2007, both for good (a more stable banking system) and for bad (higher US federal debt levels). Nonetheless, market narratives often anchor on simple, easily observable numbers like 10-year Treasury yields."

Kristy Akullian, iShares Americas head of investments, BlackRock

"This time is, indeed, different. While longer-term bond yields typically fall in tandem with Fed cuts, they have risen meaningfully since the first Fed cut in September. That rise underscores our preference for investing in high-quality companies. The MSCI Quality ETF (QUAL) screens for high profitability, stable earnings, and — crucially — companies with strong balance sheets and low leverage. We believe this combination is the recipe for success in an environment of strong economic growth but stubbornly high long-term rates."

Click here to download YF Chartbook Vol. 4

Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research

"We are calling this the 'year of the term premium' in the bond market. The term premium — the extra yield investors demand to hold longer-term bonds versus reinvesting in short-term bonds — has moved sharply higher in the new year. It reflects the uncertainty about the path of Fed policy. With the economy continuing to grow at a solid pace, the unemployment rate low, and inflation holding stubbornly above the Fed’s 2% target level, the market has adjusted to the prospect of fewer or no rate cuts this year. In addition, there is uncertainty about the path of fiscal policy under the new administration and the potential for tariffs, immigration changes, and tax cuts to lift inflation down the road.

"Although the term premium has risen sharply since late last year, it could move higher. It was in the 1% to 2% region in the past when the economy was resilient."

Gregory Daco, chief economist, EY

"As 2025 unfolds, the upward trajectory of the 10-year US Treasury yield underscores shifting risks tied to inflation expectations, fiscal imbalances, and evolving investor sentiment. The rising term premium likely reflects heightened uncertainty surrounding regulatory, immigration, tax, and trade policy and their inflationary implications, as well as concerns about the sustainability of US debt dynamics."

Michael Gapen, chief US economist, Morgan Stanley

"'Safe haven' assets are generally characterized by low default risk and high liquidity. Hopefully, they also help reduce risk in investor portfolios through a negative correlation with risk assets. For much of the decade following the global financial crisis, global safe haven assets were in short supply as the supply of safe assets only marginally exceeded demand from official institutions. This meant they had a negative correlation with equities and reduced the equity risk premium.

"Now the situation has changed. The supply of safe havens has risen dramatically and far outpaces demand from official institutions. As a result, their favorable portfolio characteristics have diminished, reducing their ability to act as shock absorbers in investor portfolios and leading to higher equity risk premiums."

UBS Asset Management’s fixed income investment specialists team led by Martin Wiethuechter and Bobby Martin

"The global monetary policy hiking cycle that followed the COVID-19 pandemic was broadly synchronized, as central banks acted in tandem to stem inflationary pressures that emerged as economies reopened from the pandemic. As central banks turn to policy normalization and rate cuts, growing divergences are materializing, depending on the economic climate across regions.

"Growing divergences in the pace and extent of rate cuts will likely present attractive relative value opportunities across the fixed-income landscape this year, rewarding investors with active, nimble approaches to their allocations."

Kristina Hooper, chief global market strategist, Invesco

"US monetary policy conditions are even tighter when factoring in quantitative tightening, which helps make the case for more easing in 2025."

Click here to download YF Chartbook Vol. 4

Tariffs and Trump

Ernie Tedeschi, director of economics, Yale Budget Lab

"There is considerable uncertainty about President Trump’s trade agenda for 2025. This chart shows what the stakes are for the economy and consumers. Taken literally, President Trump’s campaign proposals imply raising the average effective tariff rate anywhere from 7 to 27 percentage points, which could mean tariffs higher than they’ve been since 1900. That would represent the most dramatic shift in both trade and tax policy in the US in generations."

Matthew Luzzetti, chief US economist, Deutsche Bank

"This chart shows how our inflation forecast is impacted by different tariff assumptions. Without any tariffs, we anticipated that core PCE inflation could moderate to 2.3% this year. However, with our baseline assumption for tariffs (20 [percentage point rise] in tariffs on imports from China, an equalization of tariff rates on auto imports from Europe, and a 5% universal baseline tariff in 2026), we expect core PCE inflation will remain sticky at 2.5% in 2025. If 25% tariffs were to be imposed on Canada and Mexico, as recently threatened, core PCE inflation would likely accelerate this year to above 3%."

Wells Fargo economics team led by Jay Bryson

"Are you tariff-ied? Just about everyone is awake to the fact that trade policy is set to be front and center as the Trump administration takes office, but it’s still challenging for most of us to wrap our heads around the size of tariff proposals. By nature, a universal tariff is set to hit all imports, but in deconstructing US imports by end-use product category and trading partner, we see how more targeted tariff policies would stack up in terms of the total US economy. Capital goods imports from Asian countries other than China represent the largest portion of our imports today, but a sizable portion of imports across categories from the EU demonstrates the broad tariff exposure of importers of European goods."

Michael McDonough, chief economist for financial products, Bloomberg

"AI-identified mentions of tariffs on S&P 500 earnings calls have surged under the incoming Trump administration’s threat of significant US import tariffs, with the industrial sector seeing the largest spike. Because importers ultimately bear the cost of tariffs, companies could face higher expenses. Digging deeper in ECAN [on the Bloomberg Terminal], we see most tariff discussions in this sector focused on the Machinery and Building Products sub-sectors."

Nancy Vanden Houten, lead US economist, Oxford Economics

"President Trump’s policies on immigration will have a notable impact on the labor market. Taking a high-level view, limits on immigration will curb population growth at a time when the US is increasingly reliant on immigration for growth in the population and labor force because of the aging of the native-born population.

"While much of the discussion on immigration has focused on the surge in the last few years, in most industries where the foreign-born are overrepresented, more than half of noncitizen immigrants have been in the US for more than 10 years. Employers in these industries could face significant labor shortages in the event of mass deportation, which could put upward pressure on wages and inflation."

Click here to download YF Chartbook Vol. 4

Making sense of this bull market 

Binky Chadha, chief global strategist, Deutsche Bank

"The current economic context is strong and rare. The present combination of low unemployment and strong GDP growth has only occurred 6% of the time historically. Prior such episodes occurred in 1965-1969 and in [the second half of the] 1990s. Each saw very strong equity market performance. We look for both GDP growth and unemployment to sustain at these rates in 2025 and remain constructive equities, with a year-end target for the S&P 500 of 7,000."

Venu Krishna, head of US equity strategy, Barclays

"US exceptionalism over the last two years has opened a wide valuation gap between the S&P 500 and its European counterparts. Even excluding Big Tech, the rest of the S&P 500 delivered excess returns against MSCI Europe in 2024 that were the second best in two decades. While this could make European equities look attractive on a relative basis, we believe there are fundamental reasons underpinning this valuation gap.

"From a macro standpoint, US GDP growth has strongly outpaced that of the EU over the last two years. Even without the upside boost from Big Tech, the rest of the S&P 500 has seen [next twelve month earnings per share] revised upward by +5.9% over the last 12 months, compared to MSCI Europe's -4.7% revision (USD)."

Richard Bernstein, CEO & CIO, Richard Bernstein Advisors

"2023/24's stock market was the narrowest since 1998/99. Such narrow leadership has historically been the exception and not the rule, i.e., it’s probably incorrect that there is a new paradigm in which the 'Magnificent Seven' secularly dominate the market. Such extreme, narrow leadership is rare because it goes against capitalism, open markets, and competition. If one believes certain companies' 'moats' are too big to be competed away, then one is implicitly arguing for increased antitrust enforcement. We think 2025 [will] be a year of returning to normal broader markets as speculation meets reduced liquidity and fundamental investing again outperforms."

Nicole Inui, head of equity research for the Americas, HSBC

"[Magnificent Seven] has dominated equity performance as earnings growth far outpaced the rest of the S&P 500. That earnings growth gap is now starting to narrow as the 'rest' catches up. Mag 7, while still outpacing the overall index on earnings growth, is expected to be less of an outlier."

Savita Subramanian, head of US equity and quantitative strategy, BofA Securities 

"Since the 1980s, the most labor-light companies within sectors have substantially outperformed their peers, and 2024 saw a whopping 13 percentage point spread between top-decile and bottom-decile labor-efficient companies. In recent years, we have seen companies’ labor efficiency — or sales per worker — improve, and we believe that trend should continue. The chart is valuable because it illustrates that improved efficiency has performance implications."

Ben Snider, senior equity strategist, Goldman Sachs 

“Many market participants have recently expressed concern about the valuation of US equities, with the S&P 500 currently trading at its highest P/E multiple in recent decades outside of 2000 and 2021. However, while multiples today appear expensive when compared with historical averages, these valuations are supported by the strength of the current macroeconomic and corporate fundamental environment. Taking those factors into account, the multiple of the US equity market is almost exactly in line with fair value. Of course, if interest rates extend their recent volatility, or the fundamental environment deteriorates, fair value multiples will too, just as occurred in 2021.”

Eric Wallerstein, chief markets strategist, Yardeni Research 

"It's hard to find an investor who isn't concerned about US equity valuations. By most measures, stocks are historically pricey. While stock market price-to-earnings (P/E) ratios are a poor tool for market timing, they're highly correlated with poor future returns. The higher the price you pay today, the lower your expected returns should be. And with yields on US Treasuries climbing toward 5%, we sympathize with investors' unease. But we're not so concerned.

"Investors are willing to pay more for high future expected earnings growth. Typically, as companies mature, their growth rate declines and valuation falls. But today's Big Tech behemoths are both high quality and high growth. They constitute a bigger chunk of the stock market, have more verticals, bigger moats, more innovative products and technologies, and eat up any emerging competitors. And as long as earnings continue to grow briskly, stocks can continue to provide returns at or above historical averages without an increase in valuations."

Barry Bannister, chief equity strategist, Stifel

"The valuation is based on the CPI inflation-adjusted operating EPS of the S&P 500, which we estimate to be ~$245 in 2025 up just over 4% year over year. The trend growth of that EPS figure has been 4% [over] the past 30 years. As a result, overpaying is a case of 'near-term gratification with long-term pain in terms of weak prospective market returns.'

"Even for investors interested in the near-term momentum game of musical chairs (when the music stops…), the second chart shows the S&P 500 is closely tracking the correlation-weighted average of all manias the past 150 years, and likely consolidates the mid-upper-5,000s through Q3 2025 then falls off to mid-lower-5,000s Q4 2025. This is probably due to lower P/E multiples caused by persistently high rates and less-than-expected EPS growth."

Keith Lerner, co-chief investment officer, Truist

"While investors' views of economic growth, the path of interest rates, inflation, and political outcomes have gyrated over recent years, the path of corporate earnings has been remarkably resilient. Indeed, rising S&P 500 forward earnings estimates have been a key pillar of market gains over recent years. With market valuations elevated, the ability of corporate America to deliver once again in 2025 will be a key for the sustainability of the bull market."

Tom Lee, head of research, Fundstrat

"To me, the most important chart to watch is the ISM manufacturing turning up in 2025. This series has been below 50 for 26 months now, the longest stretch since 1989-1991, and we think [it] signals an acceleration of cyclical [earnings] growth in 2025."

Callie Cox, chief market strategist, Ritholtz Wealth Management 

"If you wanted to draw up the perfect year for corporate America, you couldn’t sketch a better picture than 2025. S&P 500 earnings could grow 12% this year, led by a broad-based rise across all sectors. CEOs are unusually confident heading into this year, too, and there are rumblings of another big year of AI-based investment.

"Corporate America has a lot of good things going for it, but I can’t help but wonder if we’re collectively expecting too much. Last year was a story of analysts consistently underestimating S&P 500 companies, leading to pleasant surprises and relief rallies. This year, the bar is already high. There’s a lot of room for disappointment, which could lead to a more muted and bumpy year than the past two."

Citi equity strategy team led by Scott Chronert

"Investors should focus on Growth at a Reasonable Price (GARP) as market volatility likely lingers in Q1. However, GARP is getting harder to find. Per our chart above, nearly half of the Nasdaq 100 has market-implied growth expectations that exceed what sell-side analysts have projected. To us, we consider this an unattractive or negative GARP setup. Essentially, these companies may have to post results that beat estimates while raising future growth expectations to sustain current price levels near-term."

Sam Ro, editor, TKer

"Collectively, analysts are surprisingly accurate at forecasting earnings. FactSet recently measured earnings per share (EPS) estimates for S&P 500 companies at the beginning of the year versus what was actually reported for that year for the past 25 years. If you exclude 2001, 2008, 2009, and 2020 — which are arguably outlier years — the average difference between the EPS estimate and the reported EPS was just 1.1%."

Daniel Morris, chief market strategist, BNP Paribas Asset Management

"Expected earnings growth for S&P 500 in 2005 is 14%. But [there is a] bigger opportunity in Nasdaq even excluding the Magnificent Seven, and valuations are not excessive. US small caps [are] recovering from a couple years of poor earnings; emerging market growth [is] coming primarily from the tech sector."

Ryan Detrick, chief markets strategist, Carson Group

“Bull markets are like cruise ships, meaning once they get moving they can be quite hard to slow down and turn around. This current bull market made it past its second birthday late last year, and going back 50 years, we found five other bull markets that made it into their third year, and history would say there could be plenty of life left in the bull. The shortest any bull market made it was five years, with an average of nearly eight years. We aren’t saying this one will last eight years, but we are saying with record earnings, a new cycle high in profit margins, very strong productivity, and a likely more dovish Fed than is currently being priced in, this bull market could surprise once again in 2025.”

Click here to download YF Chartbook Vol. 4

The economic cycle turns

Cam Harvey, economist, Duke University

"There are good reasons to believe the US business cycle has become less volatile. Developed countries should have more stable cycles than their developing peers. From 1880 to 1920, as a developing country, the US had 12 recessions — all before the Great Depression — and was in recession 44% of the time. But in the last 40 years, the US has only endured four recessions. One was big (GFC), two were trivial (1990–91, 2001), and one was brief (COVID). Recessions occurred in only 8% of quarters.

"Why the difference? The US now has nearly automatic stabilizers, such as the Fed’s ability to provide liquidity in a crisis, and a diversified domestic economy, with imports making up only 14% of GDP. It also is geographically removed from disruptions overseas. Plus, increased access to information helps us plan for downturns in advance." Read more here.

Steve Sosnick, chief markets strategist, Interactive Brokers

"It is widely believed that inverted yield curves — when longer-term Treasury yields are lower than their shorter-term counterparts — are harbingers of recessions. The chart above shows that while their infrequent occurrences (too few to be statistically significant) do indeed precede recessions, the recessions only occur AFTER the curve normalizes. Ominously, after the longest period of inversion in the last 40 years, the curve recently normalized. I sincerely hope that the pattern is indeed statistically insignificant!"

Robert Sockin, global economist, Citi

"Real GDP in this cycle has risen by roughly 2% per year in Australia, and even a notch more in the US — strongly outperforming other major developed markets. Canada, meanwhile, has recorded GDP growth of about 1.5% per year, while activity has risen under 1% per year in the euro area, Japan, and the UK. These disparities largely reflect differences in consumer spending. US consumption, which accounts for more than two-thirds of GDP, has expanded at a clip of 2.8% a year over this period. This pace is a percentage point or more faster than consumption growth in Australia and Canada, which have posted the second- and third-best consumer performance in this cycle. 

"Consumption in the euro area, Japan, and the UK have been on an improving trajectory but are still only modestly above pre-pandemic levels. Differing paths of investment have also played an important role in explaining divergent economic performance, and the US and Australia have also recorded the strongest investment growth overall. Euro area investment, meanwhile, ranks at the bottom of the list and is still stuck below 2019 levels."

David Mericle, chief US economist, Goldman Sachs

"Year-on-year inflation has moved sideways over the last six months, causing many to worry it is stuck in the 2.5%-3% range. But most of the 2024 upside surprise just reflects an odd effect of the stock market rally on the financial services category that has little connection to the underlying inflation trend, and the two key pillars of the disinflation narrative — wage growth slowing now that the labor market is back in balance and ‘catch-up inflation’ coming to an end — actually played out as expected in 2024 and should deliver further disinflation in 2025. We think that core PCE inflation would fall from 2.8% year-on-year to 2.1% by the end of 2025 in the absence of tariffs, and the tariffs we expect would provide only a one-time 0.3 [percentage point] boost, leaving it at 2.4% at end-2025 instead."

Aditya Bhave, senior US economist, BofA Securities

"Household balance sheets remain remarkably robust, despite concerns about the depletion of excess savings. The ratio of total assets to liabilities is at an all-time high. The ratio of liquid assets to liabilities is about 10 [percentage points] higher than it was pre-pandemic. This supports our optimism on the health of the US consumer."

Mark Zandi, chief economist, Moody's

"The economy is highly vulnerable to a sell-off in the stock market. Growth is being powered by consumer spending and, more specifically, by the spending of the very well-to-do. The soaring stock market has made these households much wealthier and thus able and willing to lower their saving rate and spend more out of their income. Since they do the bulk of the saving, if they save less, it adds up to a lot of spending. But if the stock market falters, something I’ve argued is a serious risk, these wealthy households would surely react by saving much more and spending less. This would quickly become a threat to the overall economy."

Claudia Sahm, chief economist, New Century Advisors

"Labor productivity growth picked up in the past two years and is running above its pre-pandemic pace and the rate in the US's peer countries. Maintaining that the higher productivity growth would have substantial benefits over the long run; however, the slowdown in the hiring rate and the quit rate may limit the reallocation of workers to more productive jobs."

John Silvia, CEO and founder, Dynamic Economic Strategy

"Slower job growth [is happening] while unemployment rate approaches Fed’s long-run expectations. Therefore, less room for the Fed to ease as job/economic growth continues to move ahead and long-run full employment is on the horizon."

David Tinsley, senior economist, Bank of America Institute

"Bank of America internal data suggests that underlying pay dynamics in the labor market have softened somewhat this year. A prime example of this is the increase in pay that workers receive when changing jobs. Over the first eight months of 2024, it averaged just over 9% compared to an average increase of 11.7% in 2023 and close to 20% in 2022. In 2019, before the pandemic, it was just over 10%."

Mary Hayes, research director, ADP Research

"While post-secondary education matters, the training that organizations offer to workers after they're hired might matter even more. Looking across all worker types — knowledge, skilled task, and cycle workers — we found in our People at Work 2025 story on skills development that no matter the job complexity, employees who receive skills training are more likely to stay, effectively reducing the high cost of turnover.

"When workers feel that their employer invests in their development, they're six times more likely to be brand promoters than those who don't see an investment. Sixty-one percent of workers who both strongly agree they have the skills needed and who believe their employer invests in those skills have no intent to leave their jobs. Only 9% of them are actively looking for work elsewhere, the smallest share of any group."

Skanda Amarnath, executive director, Employ America

"The AI-driven tech boom isn't just an outsized share of the S&P 500's market cap weighting; it's increasingly driving the real economy as its share of US GDP continues to grow. At a time when some commentators are highlighting the possibility of a 'post-recession US economy,' it's worth remembering that the structure of the US economy is constantly shifting and, with it, different sectors of business cycle relevance. As a share of GDP, the final demand for software, information technology hardware, industrial equipment, and data centers is already close to 6% as of Q3 2024. Given [capital expenditure] announcements from the major tech firms and recent trends, that share should surpass what we saw in the late '90s in the telecom-driven tech boom and potentially match housing's share of GDP in the mid-2000s. Technology dynamics and the business cycle are starting to converge again."

Gabriela Santos, chief market strategist for the Americas, JPMorgan Asset Management

"Fiscal policy has taken the baton from monetary policy as the most important driver for markets this year — as all global assets are taking their cues from the 10-year Treasury yield. ... Importantly, it has been real yields rising the most (by 80bps), signaling that inflation is not the main concern at the moment. We believe that already elevated deficits and debt issuance are behind this move and the rise in the term premium, combined with investors factoring in a worsening path upwards from here. If current law holds, the Congressional Budget Office estimates the US will have a $1.9 trillion deficit in fiscal 2025, representing 6.3% of GDP; however, since September investors are already assuming that the 2017 TCJA [Tax Cuts and Jobs Act] individual tax provisions are all extended, elevating the deficit after 2025 to an average of 7.4% over the next decade. The main question this year is whether these estimates will worsen (with additional tax cuts) or improve (with cuts to spending)."

Thomas Ryan, North America economist, Capital Economics

"The precarious nature of the outlook for the Federal budget deficit is well appreciated at this stage, but arguably the bigger long-term risk is the mounting current account deficit. The deficit currently stands at 4.2% of GDP, a level only briefly surpassed when pandemic shortages were easing in 2022 and during the housing boom. A new challenge is the US is no longer benefiting from a primary income surplus from overseas assets to keep a lid on its net external liabilities, which have already ballooned to more than 80% of GDP. The result is an increased risk of a sharp downward correction in the dollar if market conditions overseas change and the potential for growing volatility in the Treasury market."

Click here to download YF Chartbook Vol. 4

This project would not be possible without the work of Yahoo Finance Senior Editor Brent Sanchez, who turned Wall Street jargon into a digestible visual presentation of the current market moment. And a special thanks to Yahoo Finance's team of editors who worked on this project, including Myles Udland, Michael Kelley, Adriana Belmonte, Grace O'Donnell, Becca Evans, and Anjali Robins.

Most of all, thank you to all of the experts who contributed their time and thought to this project and helped make this Chartbook such a valuable snapshot in economic time.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Have thoughts on volume four of the Yahoo Finance Chartbook or have a specific question about markets or the economy you'd like to see a Chartbook for? Email him at Josh.schafer01@yahoofinance.com.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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29.

DeepSeek sell-off reminds investors of the biggest earnings story holding up the stock market

2025-01-27 21:13:46 by Josh Schafer from Yahoo Finance

Monday's swift sell-off in the markets serves as a reminder for not only what's been the driving force of the bull market thus far, but also what investors have been expecting to come in 2025. It's all about Big Tech earnings.

New developments from Chinese artificial intelligence company DeepSeek sparked the rout as investor concerns over brewing competition in the AI space for Nvidia (NVDA) and other Big Tech names prompted a pause in the US AI trade.

Nvidia stock dropped more than 16%. Meanwhile, fellow "Magnificent Seven" members Microsoft (MSFT), Alphabet (GOOGL,GOOG), and Tesla (TSLA) were all off 2% or more. Broadcom (AVGO), another large player in the AI space, fell over 17%.

"When expectations are high, one skeptical headline can knock the market off its axis," Ritholtz Wealth Management chief markets strategist Callie Cox wrote in a note on Monday. "That’s exactly what we’re seeing today."

A slowdown in Big Tech's rapid earnings growth has been a risk to the market that strategists have been talking about for more than a year. With index valuations near multi-decade highs and the 10 largest stocks comprising nearly 40% of the S&P 500, strategists have argued the rapid rally in stocks is increasingly on thin ice.

"You have so much concentration in one area of the market — this has been the AI dominant themed market — and all of a sudden you bring in some uncertainty to that market, the initial reaction is to sell first and ask questions later," Truist co-chief investment officer Keith Lerner told Yahoo Finance.

Unlike other risks like higher interest rates or sticky inflation, there hasn't been a clear story for why the exceptional Big Tech earnings growth story would collapse. For now, DeepSeek's new AI model appears to be a tangible reason for investors to question whether the high earnings expectations will truly follow through.

"The biggest risks are the ones that we're not talking about," Lerner said. "And everyone thinks it's tariffs and China. And, you know, really, what we're finding out is [DeepSeek] wasn't on anyone's bingo card."

Michael M. Santiago via Getty Images

In 2024, Magnificent Seven earnings outperformed the rest of the S&P 500 index by 30 percentage points, per research from Goldman Sachs. And while that margin is expected to slow in the year ahead, causing some to call for a broadening out of stock market returns, Big Tech earnings growth remains a key pillar of the bull market thesis. 

The "Magnificent Seven" stocks are expected to grow earnings by 21.7% in the fourth quarter compared to the 9.7% earnings growth projected for the other 493 tech stocks. The year-over-year growth rate for the "Magnificent Seven" is expected to slow in the first quarter before accelerating once more to year-over-year earnings growth of more than 24% in the third quarter. 

Lerner reasoned that Monday's sell-off brought investors "back to fundamentals." 

"Washington matters, but there's other factors, in totality, that will likely matter more," Lerner said. "Tech is at the forefront of the overall return for the market this year."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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30.

Wall Street in Shock: Nvidia Loses $400B as China's DeepSeek Crushes AI Hype

2025-01-27 16:49:00 by Khac Phu Nguyen from GuruFocus.com

The stock market got hammered as AI fears sent investors scrambling. The Nasdaq (NASDAQ:QQQ) tumbled 2.5% this morning, with Nvidia (NASDAQ:NVDA) taking the biggest hitplunging 15% and wiping out over $400 billion in market value. The reason? Chinese AI startup DeepSeek just pulled off what many thought was impossible: training high-performing AI models without Nvidia's state-of-the-art chips. That's a direct hit to Nvidia's dominance and a wake-up call for investors who bet big on AI's endless spending cycle. Microsoft (NASDAQ:MSFT) and Alphabet (GOOGL) both dropped more than 2%, while semiconductor and infrastructure stocks tied to AI investment took a beating. Suddenly, the AI gold rush doesn't look so bulletproof.

DeepSeek's rise is forcing a hard reset on AI valuations. It's proving that cutting-edge AI doesn't need the most expensive chips, shaking the foundation of companies that banked on AI's insatiable demand for hardware. The fallout was brutalASML (NASDAQ:ASML) and AMD (NASDAQ:AMD) tumbled, while power and infrastructure stocks supplying the AI boom crumbled. Investors who had been riding the AI wave are now questioning if they've overpaid for the dream. Meanwhile, money rushed into safe-haven assetsbonds rallied, bitcoin tanked, and risk appetite evaporated overnight.

The timing couldn't be worse for Big Tech. Microsoft and Meta (NASDAQ:META), two of AI's biggest spenders, are set to release earnings this week, and investors are watching closely for any signs of slowing AI investments. Meanwhile, geopolitical tensions are only adding fuel to the fireDonald Trump's latest push to ramp up U.S. AI dominance and restrict chip exports to China is setting the stage for an AI arms race. The question now isn't just who will lead in AIbut whether the trillion-dollar AI hype cycle is about to face its biggest reality check yet.

This article first appeared on GuruFocus.

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31.

Perplexity AI's Bold Move in TikTok U.S. Acquisition Race

2025-01-27 14:28:50 by ShantiPutri from GuruFocus.com

January 27, 2025 - In the race to bid for TikTok's U.S. operations, Perplexity's recent revised proposal to acquire TikTok's U.S. operations seems more appealing, as it offers the U.S. government to own up to 50% stake in a new entity that will emerge after Perplexity merges with TikTok's U.S. business.

This new business entity is expected to be valued at $300 billion or more once it listed on the stock market. This move is taken to ensure that TikTok's influence in the U.S. is not interfered by China interests. Perplexity AI is proceeding independently, separate from the acquisition team of MrBeast and Tinsley from Employer.com.

This article first appeared on GuruFocus.

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32.

Big Tech earnings, a key Fed meeting, and Trump's first full week in office: What to know this week

2025-01-26 12:35:05 by Josh Schafer from Yahoo Finance

The S&P 500 (^GSPC) just capped its best first four trading days under a new president since Ronald Reagan's first week in 1985. 

The week ahead will bring investors a deluge of news that will put that rally to the test. 

Earnings from more than 100 members of the S&P 500 — highlighted by results from tech heavyweights Meta (META), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) — are set for release, with Wednesday serving as the week's busiest. Starbucks (SBUX), Exxon (XOM), and Chevron (CVX) are also set to report. 

On Wednesday afternoon, the Federal Reserve will also announce its latest monetary policy decision, with the central bank expected to keep interest rates unchanged and investors focused on what Fed Chair Jay Powell has to say about the balance of 2025. 

Last week, the S&P 500, Nasdaq Composite (^IXIC), and Dow Jones Industrial Average (^DJI) each rallied during a holiday-shortened four day trading week. Over the last five days, the S&P 500 and Dow have gained more than 2.8%; the tech index is leading gains over that period, rising more than 3.1%. 

Markets welcomed Trump's initial days in office as limited news on tariffs steadied investors and a massive AI investment announcement helped boost tech stocks.

Trump's moving markets

Four trading days into Trump 2.0, it's been clear that the new president is in the driver's seat of the stock market.

On Tuesday, markets rallied as the dollar fell after Trump held back from firing off the barrage of universal tariff hikes some expected on his first day in office.

Citi equity strategist Scott Chronert wrote in a note to clients on Friday that throughout the week the implied volatility in rates, the US dollar, and oil all moved lower.

"The pricing out of some downside policy catalysts was a cross-asset phenomena," Chronert said. "Thus far, we have seen less macro disruption than initially expected."

On Wednesday, Trump sparked an AI rally after he announced a new $500 billion private-sector investment dubbed "Stargate" to build artificial intelligence infrastructure in the US, with Oracle (ORCL), ChatGPT creator OpenAI, and Japanese conglomerate SoftBank (9984.T) among those committing to the joint venture.

Oracle and SoftBank — along with Microsoft and Nvidia (NVDA) — rallied on the news. 

In week one, not only were the market's fears on tariffs not realized, but the still-hot AI trade came back to the fore. A comfortable start to the second Trump administration. 

Fed back in focus

With a busier week of market news expected, investor focus on Trump's policies will be tested as the typically market-moving Fed announcement highlights the week's economic news. 

Data from the CME Group shows markets are pricing in a nearly 100% chance the central bank holds rates steady when it releases its latest policy decision at 2:00 p.m. ET on Wednesday. Powell's press conference, slated to start at 2:30 p.m. ET, is likely the larger source of market volatility. 

This past Thursday, Trump said in a virtual appearance at the World Economic Forum in Davos that with oil prices going down he'd "demand that interest rates drop immediately." These comments stirred discussion about a potential clash with the Federal Reserve. 

Even so, the press conference may be less exciting than normal, according to JPMorgan chief US economist Michael Feroli. "Powell’s post-meeting press conference has often stolen the show on FOMC day in recent years," Feroli wrote. 

"For next week, however, we expect he will adopt more of a 'duck and cover' approach. In particular, we anticipate he will indicate that each Committee participant is using their own conditioning assumptions on what trade policies are ultimately adopted, and that the only thing decided at the meeting was the monetary policy statement agreed to next Wednesday"

Xinhua News Agency via Getty Images

Economic health check 

Several key readings on the health of the US economy are also due out throughout the week. 

On Thursday, the first estimate of fourth quarter GDP is expected to show the US economy grew at an annualized pace of 2.6% in the final three months of 2024, below the 3.1% pace seen in the prior quarter. 

Friday will feature a fresh reading of the Fed's preferred inflation gauge, the Personal Consumption Expenditures index, with economists expecting annual "core" PCE — which excludes the volatile categories of food and energy — to have clocked in at 2.8% in December, unchanged from November. Over the prior month, economists project "core" PCE inflation rose 0.2%, faster than the 0.1% seen in November.

RBC Capital Markets head of US rate strategy Blake Gwinn wrote in a note to clients on Friday that the data dump at the end of the week — combined with Trump's policies — could leave the Fed "playing third fiddle" in markets. 

Gwinn argued either commentary from Trump or the looming data could "quickly render stale anything Powell says at next week’s press conference."

Big Tech on deck 

S&P 500 companies have had a strong start to earnings season. The index is expected to grow earnings by 12.7% compared to the year prior in the fourth quarter, per FactSet data. 

But much of that growth still relies on the performance of the "Magnificent Seven" tech stocks. And four of those companies — Tesla, Meta, Microsoft, and Apple — will report in the week ahead. 

This group of seven tech stocks is expected to grow earnings by 21.7% in the fourth quarter compared to the 9.7% earnings growth projected for the other 493 tech stocks. 

As the chart below shows, this earnings growth gap is expected to narrow throughout 2025, prompting many equity strategists to call for a broadening of the stock market rally outside of large-cap tech.

Though as Venu Krishna, head of US equity strategy at Barclays, pointed out in his 2025 outlook, given the large earnings growth expected for Big Tech throughout the year, the group is "likely to remain as critical of an EPS growth driver for the S&P 500 as the group was [in 2024]." 

Notably, earnings growth for the Magnificent Seven is expected to reaccelerate in the second half of the year after a moderate slowdown in the year's first six months. 

Weekly Calendar

Monday

Economic data: Chicago Fed National Activity Index, December (-0.12 previously); New home sales, month-over-month, December (+6.6% expected, +5.9% previously)

Earnings: AT&T (T), Nucor (NUE), SoFi (SOFI), Western Alliance Bancorporation (WAL) 

Tuesday

Economic data: Durable goods orders, December (+0.8% expected, -1.2% previously); FHFA house price index, month-over-month, November (+0.4% previously), S&P CoreLogic Case-Shiller home prices, 20-city index, month-over-month seasonally adjusted, November (+0.3% expected, +0.32% previously); Conference Board Consumer Confidence, January (105.6 expected, 104.7 previously); Richmond Fed manufacturing index, January (-10 previously)

Earnings: Boeing (BA), General Motors (GM), JetBlue (JBLU), Lockheed Martin (LMT), Logitech (LOGI), Royal Caribbean Cruises (RCL), SAP (SAP), Starbucks (SBUX), Sysco (SYY)

Wednesday

Economic data: MBA Mortgage Applications, week ended Jan. 24 (+0.1% previously); FOMC rate decision (no change expected)

Earnings: Tesla (TSLA), Meta (META), Microsoft (MSFT), ADP (ADP), ASML (ASML), General Dynamics (GD), IBM (IBM), Nasdaq (NDAQ), Progressive (PGR), ServiceNow (NOW), T-Mobile (TMUS), V.F. Corporation (VFC) 

Thursday

Economic data: Fourth quarter GDP, first estimate (+2.6% annualized rate expected, +3.1% previously); Personal consumption, fourth quarter advance estimate (+3.1% annualized rate expected, +3.7% previously); Core PCE, quarter-over-quarter, fourth quarter advance estimate (+2.2% previously); Initial jobless claims, Jan. 25 (223,000 prior)

Earnings: Apple (AAPL), Blackstone (BX), Caterpillar (CAT), Comcast (CMCSA), Dow (DOW), Deckers Outdoors (DECK), Intel (INTC), Mastercard (MA), Mobileye (MBLY), Southwest Airlines (LUV), UPS (UPS), United States Steel (X), Visa (V) 

Friday

Economic calendar: Core PCE index, month-over-month, December (+0.2% expected, +0.1% previously); Core PCE index, year-over-year, December (+2.8% expected, 2.8% previously); Employment cost index, fourth quarter (1% expected, 0.8% previously)

Earnings: Charter Communications (CHTR), Chevron (CVX), Colgate (CL), Exxon Mobil (XOM), Phillips 66 (PSX)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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33.

1 Monster ETF That Turned $10,000 Into $55,000 in 10 Years: Is It a Smart Buy in 2025?

2025-01-26 12:07:00 by Neil Patel, The Motley Fool from Motley Fool

The S&P 500 (SNPINDEX: ^GSPC) is the most closely followed benchmark to gauge the performance of the overall stock market. In the past decade, it has produced a total return of nearly 254%. But there's one monster exchange-traded fund (ETF) that has crushed this gain. If you invested $10,000 in it exactly 10 years ago, that figure would be worth an impressive $55,300 today. This translates to a fantastic 453% total return (as of Jan. 23).

Even after that type of performance, is it smart to buy this ETF in 2025?

Fantastic track record

If you're not already, you need to get familiar with the Invesco QQQ Trust (NASDAQ: QQQ). This ETF tracks the performance of the Nasdaq-100 index, which contains the 100 largest non-financial companies that trade on the Nasdaq Composite exchange. It provides more specialized exposure to the economy.

The QQQ has generated such a great return because it has high concentration in the technology and consumer discretionary sectors. These industries benefit from powerful secular tailwinds, like cloud computing, digital advertising, digital payments, e-commerce, and streaming entertainment, for example. That leads to durable growth.

It shouldn't be surprising that the "Magnificent Seven" shines bright in the QQQ. These seven dominant businesses in total represent 44% of the ETF's asset base. It's clear that the portfolio's performance is heavily tied to these businesses and how they fare.

Nonetheless, the fact that technology continues to be such an important part of our economy, particularly as it relates to consumer behavior, means that it might make sense for investors to put money into the QQQ.

QQQ benefits

Besides performance, which is obviously what most investors pay attention to, there are other benefits to owning the Invesco QQQ Trust. One area to keep in mind is the fee structure. The expense ratio is just 0.2%, which means out of every $10,000 invested, only $20 goes to fees each year. This means you get to keep more of your money over time, clearly a winning result.

That fee looks even more compelling when compared to a prominent investment product, the Ark Innovation ETF (NYSEMKT: ARKK). Headed up by famed investor Cathie Wood, this ETF invests in some of the most innovative and disruptive businesses benefiting from broad secular trends, not unlike the QQQ.

However, the Ark Innovation ETF charges an expense ratio of 0.75%, almost 4 times that of the QQQ. This is despite much worse performance. In the past decade, the Ark Innovation ETF has produced a total return of just over half that of the QQQ. Investors have been paying up for subpar gains.

The low maintenance of the QQQ is also hard to overstate. Owning this investment product means investors don't need to pick single winners behind certain tech trends. There's no need to have top-notch financial analysis skills, either. This saves a lot of time.

Long-term mentality is key

The QQQ is currently trading in record territory. Hesitant investors are right to wonder if now is still a good time to put money to work. While anything can happen in the near term, I believe owning this ETF for the long haul makes a lot of sense. Practicing patience will increase the chances of a favorable outcome.

To be clear, forward returns might not resemble the past, which has seen tremendous gains. But a dollar-cost-average strategy into the QQQ for part of a diversified portfolio seems like a smart move in 2025. This action will provide growth potential and exposure to some of the world's dominant enterprises, a winning bet in the past.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

1 Monster ETF That Turned $10,000 Into $55,000 in 10 Years: Is It a Smart Buy in 2025? was originally published by The Motley Fool

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34.

3 Growth ETFs to Buy With $2,000 and Hold Forever

2025-01-25 09:35:00 by Justin Pope, The Motley Fool from Motley Fool

Investing in fast-growing companies can help investors build significant wealth over the long term before they shift to more conservative strategies closer to retirement. However, growth stocks can be challenging. They often carry more risk than more mature companies. They also might have more complicated business models, and their competitive advantages may not be as straightforward to understand.

Remember, there is no free lunch. The potential for big growth almost always comes with more volatility and risk. That's why diversifying your investments is crucial. Not every growth stock will be a winner, but if you spread your money across different investments, the winners should compensate for the misses (and then some).

ETFs, or exchange-traded funds, are a great choice for investors because they represent an easy way to get diversification -- their portfolios hold arrays of individual stocks, traded under a single ticker symbol. Consider buying and holding these three high-quality growth ETFs. Even better, it doesn't take a lot to start your investments in these three ETFs.

If you have $2,000 available to invest and are in need of strong, diversified options to consider, these ETFs can form a great basis for your portfolio, especially if you hold them long-term.

1. Invesco QQQ Trust ETF

The Invesco QQQ Trust ETF (NASDAQ: QQQ) might be the best technology ETF you can buy. It tracks the Nasdaq-100 index, which has been highly successful due to its technology-heavy composition. Approximately 60% of the ETF's assets are tech stocks. The "Magnificent Seven" companies, which are leading hot growth trends including cloud computing and artificial intelligence (AI), account for more than 40% of the ETF's value.

There is some risk in that level of concentration. If those megacap tech stocks falter, the Invesco QQQ will surely follow. During market downturns, the Invesco QQQ has historically crashed harder than the S&P 500. Still, volatility is arguably the price of stellar long-term performance. The Invesco QQQ has handily outperformed the S&P 500 over the past decade. 

Many of the trends driving the technology sector's recent strength are still in their early innings, and the global economy has steadily become more reliant on technology over time. If you want dependable technology exposure in your portfolio, it's hard to go wrong with the Invesco QQQ Trust ETF.

2. Vanguard Growth Index Fund ETF

Vanguard is among the oldest and most trusted names in the ETF industry, and the Vanguard Growth Index Fund ETF (NYSEMKT: VUG) is another tech-focused ETF worth considering. It tracks the CRSP US Large Cap Growth index, and holds 179 individual stocks today. Despite having more stocks in its portfolio, the ETF is, ironically, even more concentrated in Magnificent Seven stocks than the Invesco QQQ.

The Vanguard Growth ETF's top three holdings are all Magnificent Seven names: Apple (13.37%), Microsoft (11.07%), and Nvidia (11.04%). Considering they represent over a third of its value, it should probably be a prerequisite for buying this ETF that you feel optimistic about these companies. That said, the ETF has also outperformed the S&P 500 over the past decade. Another thing to like is its low expense ratio. The Vanguard Growth ETF's expense ratio is just 0.04%, or $0.04 for every $100 you have in the fund. The Invesco QQQ's expense ratio is much higher at 0.2%.

This isn't a comparison between the two, and it's always good to diversify among the ETFs you own. If you decide to put money into both, remember how much they lean on the Magnificent Seven stocks, and make moves elsewhere in your portfolio to ensure you don't inadvertently get more concentrated than you intend to be. It's easy to let that happen if you're not careful: Even the S&P 500 index has over 33% exposure to the Magnificent Seven today.

3. Vanguard Small-Cap Growth Index ETF

The Vanguard Small-Cap Growth Index ETF (NYSEMKT: VBK) can be a fine complement to your other growth investments. It tracks the CRSP US Small Cap Growth index, and holds shares of 585 companies with a median market cap of just $8.5 billion.

The ETF is significantly less technology-heavy than the VUG or QQQ, but tech is still its largest weighting -- 22.7% of its value comes from the sector. Its other top sectors are healthcare (16.3%), consumer discretionary (16.1%), and industrials (20.3%). Additionally, no individual stock accounts for more than 1.15% of the fund's value. You've also got to like its modest 0.07% expense ratio.

Large and mega-cap stocks have done quite well in recent years, so this small-cap ETF has underperformed the broader market since the start of the pandemic. Don't let that discourage you from owning it, though. Different investing strategies work better at different times, and small-cap stocks may shine again in the future. Until then, the Vanguard Small-Cap Growth ETF is worth owning for diversification as seemingly everything else in the market gets pulled toward big technology stocks.

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3 Growth ETFs to Buy With $2,000 and Hold Forever was originally published by The Motley Fool

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35.

The stock market has never looked like this before — regardless of who's president

2025-01-19 14:00:21 by Josh Schafer from Yahoo Finance

As President-elect Donald Trump prepares to begin his second term in office, investors are debating how his proposed policies will play out in the stock market. While the answer may be unclear, what's evident is the remarkable position the market is in as he takes the helm of the country.

For one, 2024 marked the second consecutive year the S&P 500 (^GSPC) rose more than 20%, a feat not seen since 1997-1998. 

There were a few reasons for the massive gains: In 2024, the Federal Reserve cut interest rates for the first time in roughly four years and followed with two more reductions, effectively lowering the cost of borrowing, which is good for both businesses and consumers. 

Corporate earnings growth accelerated during the year. Despite a brief growth scare that spooked investors in late summer, the US economy ended 2024 on solid footing. And enthusiasm over the prospects of generative artificial intelligence caught fire among investors, giving a boost to AI darling Nvidia (NVDA) and its "Magnificent Seven" peers.

Zooming in on the rally, much of last year's gain was driven by just a handful of players. In fact, the S&P 500 has never been this concentrated, with the top 10 stocks making up nearly 40% of the index. Many of those stocks, which include the "Magnificent Seven," have driven the lion's share of gains over the past two years. 

While many have called the S&P 500's concentration a key risk to the bull market, it's also been a major reason why US stocks have soared. Large-cap tech earnings have widely outperformed results from the other 493 companies in the S&P 500, supporting the investor bias toward America's largest tech names.

Meanwhile, the S&P 500's current high valuation, which sits at a 21.5 forward 12-month price-to-earnings ratio, per FactSet, is well above the five-year average of 19.7 and the 10-year average of 18.2. At 21.5, the S&P 500's valuation has only been higher than this level during the 2021 post-pandemic boom and the dot-com bubble.

Several Wall Street strategists have pointed out that the index's increasing slant to large technology companies supports the elevated valuation levels.

"Today's market, 50% of it is asset-light growth companies, tech, healthcare, higher-margin industries," Bank of America Securities head of US equity and quantitive strategy Savita Subramanian told Yahoo Finance in December. "Whereas back in the 80s, 70% of it was manufacturing. So I think the exercise of comparing today's multiple to historical averages is fraught with problems." 

All in all, it appears to be a banner moment for stocks. But it's unclear whether the market optimism will continue, especially as investors question how much further the Fed will cut rates in 2025 — or if the central bank will reduce borrowing costs at all.

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

When considering that US equity valuations are already rich, UBS asset management's Evan Brown told Yahoo Finance at its 2025 outlook roundtable it "doesn't take much" to change the widely held beliefs that the US economy and equities will outperform the rest of the world in 2025. 

A key variable in where markets are headed, of course, is Trump himself. While stocks surged to new highs after his election in November, economists have said more recently that some of the policies he has proposed, such as higher tariffs and mass deportations, could keep inflation elevated. 

The details of those policies remain unknown. However, once they are actually enacted, they'll come against a stock market backdrop that many have marveled at — and one that could be ripe for change. 

Spencer Platt via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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36.

Trump's inauguration looms as earnings season rolls on: What to know this week

2025-01-19 12:41:34 by Josh Schafer from Yahoo Finance

The S&P 500 (^GSPC) just logged its best week since the November election as a cooler-than-expected inflation reading eased concerns that the Federal Reserve may rule out interest rate cuts for all of 2025. 

For the week, the S&P 500 jumped more than 3%, while the tech-heavy Nasdaq Composite (^IXIC) rose more than 2.6%. The Dow Jones Industrial Average (^DJI) led the gains, soaring nearly 4%.

Markets will be closed for the Martin Luther King Jr. holiday on Monday, pushing all attention to President-elect Donald Trump's inauguration. Investors have been closely tracking where Trump's tariff and tax policies will land and their eventual impact on American corporations. 

A light economic calendar is set to greet investors with updates on activity in the services and manufacturing sector as well as an update on consumer sentiment slated for release. 

In corporate news, 43 S&P 500 companies are expected to report quarterly results highlighted by Netflix (NFLX), United Airlines (UAL), Johnson & Johnson (JNJ), and 3M Company (MMM). 

Trump takes office 

Trump is set to be sworn in for a second term as president on Monday. US stocks have looked sluggish at times over the past several weeks as rising rates and the debate over whether the Federal Reserve will cut interest rates in 2025 sent the S&P 500 to its lowest levels since the election.

But a better-than-expected inflation reading on Wednesday helped US markets perk up, and Bank of America investment strategist Michael Hartnett believes stocks in the S&P 500 will be "protected" from further downside by Donald Trump as president in the months ahead.

During his first term in the White House, Trump viewed the stock market as a barometer for his administration's success. Many investors expect he will remain sensitive to a pullback in US stocks during his upcoming turn.

Rallies across certain "Trump trades" like small caps, energy stocks, and financials have had fits and starts leading into the inauguration. This has been an early appetizer for what many believe will be a theme of the stock market in 2025.

"January volatility prior to Trump’s 1/20 Inauguration reinforces the core view of a more volatile year ahead," Julian Emanuel, who leads the equity, derivatives, and quantitative strategy team at Evercore ISI, wrote in a note to clients on Thursday night.

Emanuel, who sees the S&P 500 finishing 2025 at 6,800, or about 13% higher than current levels, still argues Trump's administration will bring a continued swing between "risk on" and "risk off" sentiment among investors.

TIMOTHY A. CLARY via Getty Images

Fed debate rolls on 

Earlier in January, we noted that a hotter-than-expected December jobs report prompted some debate on whether or not Fed rate hikes would come back into the discussion. 

A cooler-than-expected inflation reading for December eased those fears. Bank of America Securities senior US economist Aditya Bhave wrote in a note to clients on Jan. 10 that the Fed conversation was "moving toward hikes."

After the December inflation data was released on Jan. 15, Bhave told Yahoo Finance the report "trims the tail risks of a hike." His team still believes the Fed will remain on hold for the foreseeable future, though. 

Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards

Markets will likely have a breather from the Fed discussion in the week ahead as no major economic data releases are expected. Plus, the central bank is entering its "blackout period," during which no officials speak publicly ahead of its next policy decision on Jan. 29.

As of Friday afternoon, markets were pricing in a range of one to two Fed rate cuts this year, per Bloomberg data. 

Earnings have competition

Fourth quarter earnings season kicked off in earnest last week with reports from the nation's largest banks. Largely, company results were better than expected. FactSet data shows the S&P 500 is now pacing for 12.5% year-over-year earnings growth this quarter compared to the 11.5% expected last week. 

"While early, it's a great start to a reporting period where we expect a larger-than-average aggregate beat and remain positive on the earnings outlook," Citi US equity strategist Scott Chronert wrote in a note to clients on Friday. 

Earnings season will roll on this week with 43 S&P 500 companies reporting, headlined by large-cap tech giant Netflix. But whether or not earnings will truly be the focus in the coming weeks will be tested, as political headlines are expected to pile in as Trump is sworn into office.

"We expect policy noise to pick up next week with the inauguration Monday and a number of executive orders reportedly planned," Chronert added. "Short term, markets will have to contend with building fiscal, trade, and monetary policy uncertainty, even if [earnings] reports are solid." 

For now, at least one of the market's headwinds has cooled off. In the past week, the 10-year Treasury yield (^TNX), which had been ripping higher and weighing on stocks, dropped nearly 20 basis points to 4.61%.

Whether or not the conversation around Trump's policies sends bond yields higher once again will be a key narrative to watch in the coming week. 

Monday

Markets closed for Martin Luther King Jr. Day while President Trump will be sworn into office.

Tuesday:

Economic data: No notable economic data releases. 

Earnings: Netflix (NFLX), 3M Company (MMM), Capital One (COF), Charles Schwab (SCHW), D.R. Horton (DHI), KeyCorp (KEY), Interactive Brokers Group (IBKR), United Airlines (UAL), Zions Bancorporation (ZION)

Wednesday

Economic data: MBA Mortgage Applications, week ending Jan. 17 (+33.3% previously); Leading Index, December (-0.1% expected, +0.3% prior) 

Earnings: Alcoa (AA), Abbott Labs (ABT), Ally Financial (ALLY), Comerica (CMA), Discover Financial Services (DFS), GE Vernova (GEV), Johnson & Johnson (JNJ), Halliburton (HAL), Procter & Gamble (PG), Steel Dynamics (STLD), Travelers (TRV)

Thursday

Economic data: Initial jobless claims, week ending Jan. 18 (217,000 previously); Kansas City Fed. Manufacturing Activity, January (-4 prior);  

Earnings: American Airlines (AAL), Alaska Airlines (ALK), CSX Corporation (CSX), Freeport-McMoRan (FCX), GE Aerospace (GE), Intuitive Surgical (ISRG), Texas Instruments (TXN), Union Pacific Corporation (UNP)

Friday

Economic data: S&P Global US manufacturing PMI, January preliminary (49.4 prior); S&P Global Services PMI, January preliminary (56.8 prior); S&P Global US composite PMI, January (55.4 prior); Univesity of Michigan consumer sentiment, January final (73.2 prior); Existing home sales, December (1.2% expected, 4.8% prior)

Earnings: American Express (AXP), First Citizens BancShares (FCNCA), NextEra Energy (NEE), Verizon (VZ)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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37.

Donald Trump loves to use the stock market as a scoreboard. Interest rates will be the judge of that.

2025-01-17 19:00:02 by Josh Schafer from Yahoo Finance

Donald Trump famously measured the success of his time in office using the stock market.

But in the first year of his second term, Trump may have little control over what's expected to be the key market driver of the next year: interest rates. 

Since Trump was elected on Nov. 5, the 10-year Treasury yield (^TNX) has risen about 40 basis points as markets have priced in fewer interest rate cuts from the Federal Reserve amid fears inflation won't fall quickly to the central bank's 2% target. 

At just shy of 4.8%, the yield is at its highest level since late April 2024 and above levels where strategists believe higher rates weigh on investors' willingness to buy stocks. Similar increases in rates in April 2024 and the fall of 2023 coincided with some of the largest stock market declines of the current bull market. 

For example, the last time the 10-year climbed near 5% in the fall of 2023, the S&P 500 (^GSPC) fell for three straight months, with the benchmark index declining as much as 10% over the period.

"The correlation of equity returns to bond yields has flipped decisively into negative territory (yields up, stocks down, and vice versa) — something we have not seen since last summer," Morgan Stanley chief investment officer Mike Wilson wrote in a note to clients on Jan. 5.

Given this correlation of stocks falling when rates rise, Wilson argued rates are "the most important variable to watch in early 2025."

The trouble for Trump is that the president-elect can't do much to influence rates lower. 

In fact, many of his policies, at least when they're talked about in public, have had an adverse effect. Take the market action seen on Jan. 6, for instance. When Trump denied a report from the Washington Post that his tariff plans may not be as widespread as initially thought, yields spiked higher and reversed an earlier decline.

A key fear among many market participants is that tariffs could prove inflationary at a time when inflation is already struggling to fall toward the Fed's 2% target. And the central bank has already begun discussing how Trump's policies could affect the question of whether or not to cut interest rates further in 2025. 

Almost all Federal Reserve officials agreed in their last meeting that "upside risks to the inflation outlook had increased" due in part to the "likely effects" of expected changes in trade and immigration policies, according to minutes from the Fed's Dec. 18 meeting. 

Fidelity Investments director of global macro Jurrien Timmer told Yahoo Finance his "main fear" is the "inflation genie was never quite put back in the bottle."

"If the economy really accelerates without the inflation dragon having been completely slayed, we could see inflation, which is currently in the high twos, go back into the threes and maybe three and a half or four [percent range]," Timmer said. "It's not a prediction, but that's a scenario that would, I would think, prevent the Fed from cutting rates further."

Given that the Fed is an independent body, Trump can't directly order the central bank to cut interest rates, which could help take the pressure off rising bond yields. 

And Fed Chair Jerome Powell has made clear that he won't be taking directives from the incoming president.  

Read more: How much control does the president have over the Fed and interest rates?

This leaves the rise in rates, which strategists have dubbed a "systemic problem" for equities, up to the markets, which will continue speculating on what the Fed could do next.

Many believe a batch of softer economic data could be what finally takes rates off the boil. Piper Sandler chief investment strategist Michael Kantrowitz said in a recent video to clients that this narrative shift from the rising rate environment could help "get equities going once again." 

For now, though, that hasn't come, as a strong December employment report sent rates higher and stocks lower as investors grew more confident the Fed won't need to cut interest rates to help an ailing economy. 

ANDREW CABALLERO-REYNOLDS via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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38.

Stocks could be 'protected' from steep declines by Trump: BofA

2025-01-17 17:03:44 by Josh Schafer from Yahoo Finance

US stocks have looked sluggish at times over the past several weeks as rising rates and debate over whether the Federal Reserve will cut interest rates in 2025 sent the S&P 500 (^GSPC) to its lowest levels since the election.

But a better-than-expected inflation reading on Wednesday helped US markets perk up, and Bank of America investment strategist Michael Hartnett believes further downside in the S&P 500 will be "protected" by President-elect Donald Trump in the months ahead. 

During his first term as president, Trump viewed the stock market as a barometer for his own administration's success. Expectations from many investors are that Trump will remain sensitive to a pullback in US stocks during his upcoming turn. 

And while tariffs are a concern for investors and corporations, other Trump policies may be a positive for the stock market.

Deregulation has been seen as a boon for banks and could encourage more dealmaking after a challenging few years. A more crypto-friendly administration has sent that pocket of the market soaring, and lower corporate tax rates could help corporate profits across industries. Trump's "America First" mantra has also boosted optimism among small businesses and could be seen as a tailwind for small-cap companies too.

Hartnett cautioned, however, that other factors like the market's high valuation and concentration seen in the index — with just 10 stocks making up nearly 40% of the index — likely also put a cap on upside for the S&P 500. 

And a question remains whether rallies across certain "Trump trades" like small caps, energy stocks, and financials will hold after taking off following the election only to retrace most of their gains leading into the inauguration. 

Hartnett added that if Trump 2.0 and a fall in rates can't send the small-cap Russell 2000 (^RUT) index sustainably above its 2021 high, asset allocators are likely to reduce their overweight positioning in stocks.

Broadly, strategists agree that Trump's policies could still be a tailwind for the US equity market but don't believe those gains are going to come in a straight line.

"January volatility prior to Trump’s 1/20 Inauguration reinforces the core view of a more volatile year ahead," Julian Emanuel, who leads the equity, derivatives, and quantitative strategy team at Evercore ISI, wrote in a note to clients on Thursday night. 

Emanuel, who sees the S&P 500 finishing 2025 at 6,800, or about 13% higher than current levels, still argues Trump's administration will bring a continued swing between "risk on" and "risk off" sentiment among investors. 

TIMOTHY A. CLARY via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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39.

4 Simple ETFs to Buy With $1,000 and Hold for a Lifetime

2025-01-16 14:07:00 by Anders Bylund, The Motley Fool from Motley Fool

You don't have to build a fancy stock portfolio. Many investors simply settle for a market-tracking index fund, and keep adding funds to that boring but effective long-term investment. There is absolutely nothing wrong with that approach. Matching the returns of the S&P 500 (SNPINDEX: ^GSPC) index can build serious wealth in the long run.

There's always the middle ground, though. Have you ever thought about setting up a portfolio with a promising mix of exchange-traded funds (ETFs)? This method can give you the natural stability and diversity of index funds with some hope of a market-beating performance. Read on to see four ETFs that would add up to a robust long-term investment strategy.

I'll show you index-tracking safety and income-generating bonds. You'll see high-tech growth stocks and potentially undervalued small-caps. There'll be laughter. There may be tears. There could even be a ticker-tape parade at the end.

Mix and match: Four simple ETFs to buy today

Today, I'll build a long-term fund portfolio with four ingredients:

• The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) is a simple S&P 500 index fund. It comes with about 500 component stocks and minimal annual fees. This is a great starting point for any portfolio, providing a strong foundation and plenty of stability.
• Next, I'll spice things up with the Invesco QQQ Trust (NASDAQ: QQQ). This ETF mirrors the returns of the NASDAQ 100 market index, which is a fairly volatile stock list with a heavy weighting of names from the tech sector.
• Next comes the Vanguard Small-Cap ETF (NYSEMKT: VB). The fund has 1,379 stocks under management today, with a median market cap of $8.5 billion. No single stock represents more than 0.7% of the fund's total value. It's the epitome of diversification, and a good choice if you think small-caps are trading at a discount nowadays.
• The iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) rounds off my fund selection this time. Reflecting the investment results of nearly 50 long-dated U.S. Treasury Bonds, this ETF provides a hedge against stock market downturns and monthly cash distributions adding up to a yearly yield of 4.3%. And after a 50% price drop in less than 5 years, this fund looks deeply undervalued right now.

How these ETFs weathered economic downturns

These funds have been around the block once or twice, providing enough market history for a useful historical example or two.

Let's imagine buying these four ETFs just before a deep market downturn, like at the end of 2007. The subprime mortgage meltdown started the next summer, followed by a slow stock market recovery. The S&P 500 still traded 8% lower three years later, even if you reinvested dividends in more shares along the way. The other three ETFs on my list delivered modest but positive total returns over the same period:

Changing the analysis period shows similar trends over other periods such as two, five, and seven years. Across all of these periods, the worst performer in my basket of ETFs was the bog-standard S&P 500 ETF. The broad market index eventually caught up with the small-cap and bond funds, but keeps falling further behind the Nasdaq ETF's tech stocks:

In these charts, I see a diversified ETF collection providing better shareholder value in economic downturns, and the bullish effect remains several years into the recovery.

Splitting your ETF portfolio into a few distinct categories will also let you manage your holdings with more precision over time. You can always add more funds to undervalued ETFs, lock in some profits by selling a small portion of your best performers, and so on. And if you prefer, you can just let the whole collection ride for decades without micromanaging the balance.

Adapting your ETF strategy to market swings

As a whole, my four ETFs have underperformed a pure S&P 500 tracker slightly over the last decade. The Nasdaq 100 fund took a hard hit in the recent inflation crisis, and so did the bond fund.

On the upside, the tech stocks have a long history of S&P 500-beating returns, and the Treasury fund looks poised for a strong recovery. Any of these ETFs (or the whole bundle) should be a helpful addition to any investor's long-term strategy right now. If I were really building this hypothetical portfolio with $1,000 of real money in this economy, I might hold limit the skyrocketing Nasdaq ETF to a $150 share and give the bond fund $350 instead. The S&P 500 and small-cap funds can stay at the average four-way split with $250 each.

Your strategy and results may vary, though. Remember, there's no one-size-fits-all answer.

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4 Simple ETFs to Buy With $1,000 and Hold for a Lifetime was originally published by The Motley Fool

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40.

December retail sales signal strong economic growth to end the year

2025-01-16 13:33:16 by Josh Schafer from Yahoo Finance

December retail sales data showed the US economy ended 2024 growing at a solid pace amid questions over how quickly the Federal Reserve will cut interest rates.

The control group in Thursday's release, which excludes several volatile categories and factors into the gross domestic product (GDP) reading for the quarter, increased by 0.7%, above economists' estimates for 0.4% sales growth.

Headline retail sales rose 0.4% in December, less than the 0.6% economists had expected, according to Bloomberg data. Meanwhile, retail sales in November were revised up to 0.8% from a prior reading that showed a 0.7% increase in the month, according to Census Bureau data.

December sales, excluding auto and gas, rose 0.3%, below consensus estimates for a 0.4% increase. 

"This was actually a strong report that boosts our fourth-quarter GDP growth estimate to 2.9% [from 2.7%]," Capital Economics chief North America economist Paul Ashworth wrote in a note to clients on Thursday.

A 4.3% rise in sales for miscellaneous store retailers led the gains, while a 2% drop in building material sales led the declines. Building material sales are not included in the control group.

"All told, this year's holiday shopping season was even stronger than last year's, as a resilient labor market has continued to support household income growth," Wells Fargo senior economist Tim Quinlan wrote in a note to clients on Thursday. "As long as households remain employed and are earning income, they likely will continue to spend. That leaves the outlook for retail sales in a healthy place as we kick off 2025."

The report comes as investors continue to monitor the health of the US economy closely. Last Friday, the December jobs report showed the US labor market ended 2024 in a stronger position than many investors had thought, leading them to believe the Fed may not slash interest rates as quickly as initially hoped.

As of Thursday morning, investors are pricing in a less than 50% chance the Fed cuts interest rates until at least the June meeting, per the CME FedWatch Tool.

“The strength in consumer spending and the labor market, elevated inflation readings -despite yesterday’s refreshingly mild core [inflation] print-, and the prospect of changes in tariff and immigration policy boosting inflation support our view that the Fed moves to the sidelines in the first half of the year,” Nationwide chief economist Kathy Bostjancic wrote in a note to clients on Thursday. 

REUTERS / Reuters

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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41.

PPI shows wholesale inflation increased less than expected in December

2025-01-14 14:48:39 by Josh Schafer from Yahoo Finance

Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation isn't falling as quickly as hoped to the Federal Reserve's 2% target.

Tuesday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.3% from the year prior, up from the 3% seen in November but below the 3.5% increase economists had projected. On a monthly basis, prices increased 0.2%, below the 0.4% increase economists had expected.

Excluding food and energy, "core" prices rose 3.5% year over year, above November's 3.4% gain. Economists had expected an increase of 3.8%. Meanwhile, month-over-month core prices were unchanged, below the 0.3% increase economists had expected and the 0.2% gain seen last month.

Capital Economics North America economist Thomas Ryan noted the release "seems encouraging" but it also "masks some price jumps in a few of the key components which feed directly into the Fed’s preferred core PCE inflation gauge." Notably, domestic and international airfare prices — which feed into the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index — jumped in December.

Read more: Jobs, inflation, and the Fed: How they're all related

Morgan Stanley's economics team moved up their core PCE inflation forecast for December following the release. The firm now believes prices increased 0.23% month over month in December, up from the 0.21% they projected prior to the release.

Tuesday’s PPI reading comes one day ahead of a highly anticipated release of the December Consumer Price Index (CPI). Economists expect that print to show little progress, with core inflation anticipated to come in at 3.3% on an annual basis for the fifth straight month. More detailed forecasts on PCE will be updated following the CPI release on Wednesday.

Nationwide senior economist Ben Ayers argued that Tuesday's softer-than-expected PPI should temper the "higher end of expectations for tomorrow's CPI report."

A recent hot labor report has economists largely believing signs of cooling inflation in the coming months will be required for the Fed to cut interest rates further this year. 

As of Tuesday morning, markets were pricing in just a 3% chance the Fed cuts rates at its January meeting, per the CME FedWatch Tool. Markets don't see a more than 50% chance the Fed cuts rates at a meeting until at least June.

Alex Wong via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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42.

Here's My Top AI ETF to Buy Right Now

2025-01-14 11:33:00 by Matt Frankel, The Motley Fool from Motley Fool

When it comes to investing in artificial intelligence (AI) stocks, there are several great ETFs that will allow you to do that without much individual stock risk. Some track various AI-focused indexes, while others are actively managed funds that try to beat the benchmark indexes.

However, you might be surprised how much AI exposure the Invesco QQQ ETF (NASDAQ: QQQ), has. This index fund provides exposure to large-cap AI stocks and more, and with investment fees less than half of most other AI ETFs. Here's a rundown of what the Invesco QQQ ETF is, why it could be a great AI ETF, and other important things to know.

Why the Invesco QQQ ETF could be all the AI exposure you need

The Invesco QQQ ETF tracks the Nasdaq-100 index, which consists of the 100 largest nonfinancial companies listed on the Nasdaq stock exchange. The ETF has a 0.20% expense ratio, which is less than half of what most AI-focused ETFs charge, even those that simply track an index. For example, one leading AI ETF has a 0.68% expense ratio, which means you'll pay $68 in annual investment expenses on a $10,000 investment. That might not seem like a massive amount, but this difference in expense ratios can make a big difference in your long-term investment performance.

To be sure, this is not a pure-play AI ETF. Just to name a few, Costco (NASDAQ: COST), PepsiCo (NASDAQ: PEP), and Starbucks (NASDAQ: SBUX) are Nasdaq-100 components that aren't direct AI plays.

However, you might be surprised at how much AI exposure there is here. Of the ETF's top 10 holdings, only one of them, Costco, isn't a direct investment in AI technology. The other nine account for more than 50% of the fund's assets and include Apple (NASDAQ: AAPL), Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and other big-cap tech stocks.

Even beyond the top 10, there are plenty of AI stocks that have tons of room to grow. CrowdStrike (NASDAQ: CRWD) and The Trade Desk (NASDAQ: TTD) are just two examples. A quick estimate based on the fund's current portfolio indicates that at least 70% of the Invesco QQQ ETF's assets are invested in AI stocks, and that's with using a rather conservative definition of what an "AI stock" is.

The point is that the Invesco QQQ ETF offers a ton of AI exposure for a fraction of the cost of the pure-play "AI ETFs." Your performance over time won't depend too much on any single AI stock, and as long as the AI trend produces a net positive outcome for the Nasdaq, your investment will grow over the long term. For context, the ETF has produced a 436% total return for investors over the past decade, and many experts believe the AI-fueled surge is just getting started.

Confident I'll win, regardless of which companies are the big AI winners

There are some other excellent AI exchange-traded funds in the market. Many have more or less the same top holdings as the QQQ ETF, however, and with significantly higher fees. The Ark Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ) is one example that has a unique strategy and could be worth a look for more risk-tolerant investors.

But as for which ETF that I'd be most confident to put my money into that would win regardless of what companies emerged victorious in the AI boom, the Invesco QQQ ETF, with its low fees and diverse makeup, would be my top choice.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $832,928!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of January 13, 2025

Matt Frankel has positions in Starbucks. The Motley Fool has positions in and recommends Apple, Costco Wholesale, CrowdStrike, Microsoft, Nvidia, Starbucks, and The Trade Desk. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Here's My Top AI ETF to Buy Right Now was originally published by The Motley Fool

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43.

Why rising bond yields are such a problem for stocks: Morning Brief

2025-01-14 11:01:56 by Josh Schafer from Yahoo Finance

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

Rates are making investors nervous. Specifically, the 10-year Treasury yield.

Climbing to 4.8% on Monday and a stone's throw from 5%, the 10-year Treasury yield is at a level that makes investors cautious.

But why exactly? The financial media often talks about this like it's received wisdom, but what exactly drives investors away from stocks when the 10-year Treasury yield creeps near 5%? 

For one, it's not normal. At least not in the post-financial crisis world. DataTrek Research co-founder Nicholas Colas pointed out in a note to clients that the 10-year Treasury yield has averaged 2.91% over the past two decades.

"Markets are spooked by the 5% level on 10-years because it is the outer limit of an entire generation’s (20 years) experience with prevailing interest rates," Colas wrote. 

It also introduces unfamiliar questions. After a decade of low rates that enticed anyone seeking gains to the stock market — the "TINA," a.k.a. there is no alternative narrative — higher rates suddenly look pretty nice, especially given a twitchy stock market.

"A few years ago, when yields were 1%, they didn't compete with equities because there was no alternative," Jurrien Timmer, director of global macro at Fidelity Investments, said in an interview with Yahoo Finance. "But now at 5%, or four and three quarters, and the equity market having a similar earnings yield, stocks have to compete with what we consider to be the risk-free asset."

There are also more direct reasons higher rates can be a tough environment for stocks, like high borrowing costs, which could eventually weigh on economic activity or hurt company profits if they need to refinance at a higher interest rate. 

Strategists believe this level of rates in particular challenges the S&P 500's current high valuation, which sits at a 21.5 forward 12-month price-to-earnings ratio, per FactSet, above the five-year average of 19.7 and the 10-year average of 18.2. 

"The closer that the 10-year yield gets to 5% and to cycle highs, the more the market starts to worry about what the implications of that are for valuations, credit conditions, liquidity, etc.," Dan Suzuki, Richard Bernstein Advisors deputy chief investment officer, told Yahoo Finance.

At a more simple level, the rise in the 10-year yield feels like the most clear depiction of the rising uncertainties in markets. The yield has spiked as concerns about sticky inflation have come clearly into focus. The yield has risen as investors wonder if the Fed will cut interest rates at all this year. It's ticked higher on days that President-elect Donald Trump discusses a wide-sweeping tariff policy. 

This brings us the truth about what's so unsettling for investors about the rise in bond yields. There's no straight answer on why they're rising or when the rise will stop.

"Investors aren't really sure what is really behind the rise in the 10-year yield," CFRA head of research Sam Stovall told Yahoo Finance when asked why 5% on the 10-year seems to be such a sticking point for investors. "There's an awful lot of uncertainty out there, and investors really aren't sure which way things are going to turn."

RBC Capital Markets head of US equity strategy Lori Calvasina told Yahoo Finance that over her 20-plus-year career, the market has largely been in a "secularly declining interest rate environment." The key fear right now is whether or not that's changing. 

"If we break out to this new high, it's going to sort of take us to a place where we might be able to say, look, we've been bouncing around kind of a flattish yield environment, maybe we're in a structurally rising rate environment," Calvasina said. "That's going to flip a lot of modeling on its head. That's going to be a completely different environment than most people remember."

The current rates story isn't really about the level. As Truist co-chief investment officer Keith Lerner pointed out in a note to clients, the 10-year averaged 6.2% from 1950 to 2007. The S&P 500 posted an average annual return of 11.9% over that time. 

It's about uncertainty. The rise in rates feels more like a way to define all the angst brewing among investors in 2025. And for a generation of investors that have had few opportunities to ponder what place a roughly 5% fixed income yield should play in their portfolio, the uncertainty of what keeps driving yields higher and when it ends appears to be the early story of the market in 2025.  

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance

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44.

Is the Invesco QQQ ETF a Millionaire Maker?

2025-01-14 10:14:00 by Geoffrey Seiler, The Motley Fool from Motley Fool

The Invesco QQQ (NASDAQ: QQQ) has been one of the best-performing index-based exchange-traded funds (ETFs) over the years. The ETF tracks the popular Nasdaq-100 index, which consists of the 100 largest stocks that trade on the Nasdaq stock exchange.

The Invesco QQQ proudly boasts that it has outperformed the S&P 500 by more than 400 percentage points since its launch in 1999, but is that enough for the ETF to be a millionaire maker? Let's find out.

Technology focused

An investment in the Invesco QQQ is largely an investment in the technology sector. Approximately 60% of the ETF's holdings are classified as being technology stocks. That's not a bad thing, as technology companies have been leading the way in the market for the past few decades.

In fact, many of the largest companies in the world are now technology or certainly tech-adjacent companies. Within the S&P 500, which comprises the 500 largest companies traded in the U.S., eight of its top 10 holdings would fit in this category. Technology is changing the world we live in, and technology companies have grown to become the biggest companies in the world as a result.

Meanwhile, we appear to be in the early innings of the next big technology trend with artificial intelligence (AI). Generative AI, which can create content based on user questions or prompts, is just getting started and entering our lives. This can be seen in things like asking ChatGPT a question to get an answer; using Alphabet's Veo 2 to create a video using just text; or using Microsoft's 365 copilots help you more quickly complete tasks at work. In addition, companies are already beginning to introduce the next wave of AI with agentic AI, where AI agents can go out and autonomously complete takes under the parameters given with little human involvement needed.

The Invesco QQQ is a great way to invest in many of the top companies riding these trends. Its top holdings are very weighted toward companies that are starting to benefit from AI. This includes Apple (9.4% weighting), Nvidia (8.8%), Microsoft (8.1%), Amazon (6%), Alphabet (5.7%), Broadcom (4.5%), Tesla (3.7%), and Meta Platforms (3.4%). Costco is its largest non-tech holding, with a 2.6% weighting.

This emphasis on large tech stocks have led to outsized returns over the years. Over the past decade, the QQQ ETF has generated a cumulative return of 435.9%, easily outpacing the S&P 500's (SNPINDEX: ^GSPC) 242.5% return over the same period. That equates to an average annual return of 18.3% for the ETF over that period. The past five years have been even better, with an average annual return of 19.9%, compared to 14.5% for the S&P 500.

This outperformance also hasn't just come from one or two large outlier years of outsized performance. According to Invesco, the QQQ ETF has outperformed the S&P 500 87% of the time over the past decade, based on rolling monthly periods.

Is the Invesco QQQ ETF a millionaire maker?

Even with its stellar returns the past decade, the QQQ ETF won't turn a small investment into $1 million in a decade. A $10,000 investment a decade ago would be worth $53,591 today (as of the end of 2024).

The key to the QQQ ETF helping investors become millionaires is consistent investing through the use of a dollar-cost averaging strategy. This is investing in the ETF at regular intervals regardless of price and allows investors to ride the market when it's going higher and to load up on more shares when the market is down. Over the long run, this is a proven strategy to help accumulate wealth.

If you were to make just a $10,000 initial investment and invest an additional $1,000 at the end of each month over the next 20 years, that investment would be worth approximately $1 million with a 12% average annual return. Meanwhile, approximately 75% of that would come from market gains. Note that actual returns would vary based on market fluctuations over that period, but this gives you a good sense of the time frame needed.

All in all, the Invesco QQQ ETF has a long proven track record of outperformance, making it a great investment option, albeit one that is admittedly more on the aggressive side, given its large weighting toward tech stocks. With the ETF pulling back a bit from its recent highs, now could be a great time to start investing for the long term.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $832,928!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of January 13, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Alphabet and Invesco QQQ Trust. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Is the Invesco QQQ ETF a Millionaire Maker? was originally published by The Motley Fool

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45.

Two key inflation prints await investors as rate fears rattle markets: What to know this week

2025-01-12 12:51:12 by Josh Schafer from Yahoo Finance

A hot December jobs report capped off a week in which investor concerns over "higher for longer" interest rates dragged down stocks. 

The S&P 500 (^GSPC), the Nasdaq Composite (^IXIC), and the Dow Jones Industrial Average (^DJI) all ended the week down around 1%.

The biggest concern driving markets is that inflation doesn't continue its downward trend toward the Federal Reserve's 2% target. Two key readings will greet investors in the week ahead on that front. Tuesday will bring a reading on wholesale inflation before the more widely followed Consumer Price Index (CPI) is set for release on Wednesday morning. 

Updates on retail sales, inflation expectations, and housing activity are also on the schedule. 

In corporate news, quarterly results from JPMorgan (JPM), Citi (C), Wells Fargo (WFC), Bank of America (BAC), BlackRock (BLK), Goldman Sachs (GS), Morgan Stanley (MS), and Taiwan Semiconductor (TSM) will highlight the week.

A 'pivot' to inflation data

The December jobs report showed the US labor market remains on more solid ground than initially thought. Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November.

Meanwhile, the unemployment rate fell from to 4.1% from 4.2% the month prior. Revisions added to the narrative too. The cycle high for the unemployment rate initially was 4.3% in July, but that figure was revised down to 4.2% in Friday's release.

Overall, the report has many strategists confident the Federal Reserve will hold off on further interest rate cuts for now. Some on Wall Street think it may have even cracked the door open for the Fed to consider rate hikes in 2025.

"Our base case has the Fed on an extended hold," Bank of America Securities US economist Aditya Bhave wrote in a note to clients on Friday. "But we think the risks for the next move are skewed toward a hike."

Bhave noted that the bar for the Fed to hike is high since the central bank has noted that interest rates remain restrictive. But should the Fed's preferred inflation gauge — the Personal Consumption Expenditures metric, excluding volatile categories like food and energy — reaccelerate or inflation expectations move higher, a hike could be on the table.

Read more: Jobs, inflation, and the Fed: How they're all related

Morgan Stanley chief US economist Michael Gapen said the report showed "Fed cuts are about inflation now." 

As of Friday afternoon, markets were pricing in just one interest rate cut for 2025. Markets don't see a more than 50% chance the Federal Reserve cuts interest rates until at least the end of its June meeting, per the CME FedWatch tool.

Price check 

A fresh update on inflation will come next week with the release of the Consumer Price Index (CPI) for December. Wall Street economists expect headline inflation was at 2.9% annually in December, an increase from the 2.7% in November. Prices are set to rise 0.3% on a month-over-month basis, per economist projections, in line with the month prior.

On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in December. This would mark the fifth straight month of a 3.3% reading of core CPI.

"We are approaching another speed bump on the road to 2% inflation," the Wells Fargo economics team wrote in a weekly note to clients. "Solid increases in energy and food prices at the end of 2024 underpin our forecast of a 0.4% monthly gain in the Consumer Price Index in December. If realized, the annual rate of inflation will tick up to a five-month high of 2.9%."

Retail sales

Thursday will give markets an indication of consumer spending levels at the end of 2024. Economists estimate retail sales increased 0.5% over the prior month during December. The control group of retail sales — which excludes several volatile categories like gasoline and feeds directly into the gross domestic product (GDP) — is also expected to have risen by 0.3%.

Entering the release, several trackers point to the fourth quarter being off to a solid start for economic growth. The Atlanta Fed GDPNow tracker currently projects the US economy growing at 2.7%.

Back to fundamentals 

The stock market has stumbled in recent weeks as rates have soared. This action played out on Friday as the 10-year Treasury yield (^TNX) added about five basis points to creep near 4.8%, its highest level since November 2023. 

Bonds and stocks have been negatively correlated as of late, meaning that as yields have risen, stocks have fallen. Therefore, any good economic news that pushes yields higher has been bad for stocks. 

Citi US equity strategist Scott Chronert wrote in a note to clients that the backdrop of "good economic news is bad market news" tends to last for an extended period of time.

Still, the question remains: what can shake the market out of this environment? Nationwide chief market strategist Mark Hackett wrote in a note to clients that the upcoming earnings season could be "the best opportunity" to change the sour mood for stocks. 

Broadly, Wall Street is expecting another strong quarter of earnings reports. Consensus estimates project earnings to grow 11.7% year over year, which would mark the highest earnings growth in three years. 

“From my perspective, I think investors are wrongly obsessed with how many Fed rate cuts we're going to get this year,” State Street Global Advisors chief investment strategist Michael Arone told Yahoo Finance. “Earnings are growing, and I think that's where the focus should be.”

Weekly calendar

Monday

Economic data: New York Fed one-year inflation expectations, December (2.97% previously)

Earnings: KB Home (KBH)

Tuesday

Economic data: NFIB small business optimism, December (100.5 expected), Producer Price Index, month over month, December (+0.3% expected, +0.4% previously); PPI, year over year, December (+3% previously)

Earnings: No notable earnings.

Wednesday

Economic data: MBA Mortgage Applications, week ending Jan. 10 (-3.7% previously) Consumer Price Index, month over month, (+0.3% expected, +0.3% previously); Core CPI, month over month, December (+0.2% expected, +0.3% previously); CPI, year over year, December (+2.9% expected, +2.7% previously); Core CPI, year over year, December (+3.3% expected, +3.3% previously); Real average hourly earnings, year over year, December (+1.3% previously)

Earnings: BlackRock (BLK), BNY (BK), Citi (C), JPMorgan Chase (JPM), Synovus (SNV), Wells Fargo (WFC)

Thursday

Economic data: Retail sales, month over month, December (+0.5% expected, +0.7% previously); Retail sales ex-auto and gas, December (+0.4% expected, +0.2% previously); Import price index, month over month, October (-0.1% expected, -0.4% prior); Initial jobless claims, week ending Jan. 11 (201,000 previously); Import prices, month over month, December (+0.1% previously); Export prices, month over month, December (-0% previously); NAHB housing market index, January (46 prior)

Earnings: Bank of America (BAC), J.B. Hunt (JBHT), Morgan Stanley (MS), PNC (PNC), Taiwan Semiconductor (TSM), UnitedHealth Group (UNH), U.S. Bancorp USB (USB)

Friday

Economic data: Industrial production, month over month, December (+0.3% expected, -0.1% previously); Housing starts month over month, December (+2% expected, -1.8% prior); Building permits month over month, December preliminary (-2.4% expected, +5.2% prior)

Earnings: Citizens Financial Group (CFG), State Street (STT), Truist (TFC), Webster Bank (WBS)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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46.

This Top ETF Has Generated 1,400% Returns in 20 Years. Here's Why It Can Still Soar Even Higher.

2025-01-12 09:50:00 by David Jagielski, The Motley Fool from Motley Fool

Earning a great return in the stock market doesn't necessarily mean you have to be great at picking individual stocks. Exchange-traded funds (ETFs) can give you a simpler way of investing, and the good news is you can still earn a fantastic return by doing so.

Some ETFs target top growth stocks and can provide you with exposure to many great businesses. And they do regular rebalancing and reconstruction, so you don't have to worry about having to closely monitor which stocks are still good buys and which ones may have become too risky.

A top-performing fund that is popular with investors is the Invesco QQQ Trust (NASDAQ: QQQ). It tracks the Nasdaq 100 index, with exposure to the top 100 nonfinancial stocks on the exchange.

These will include popular tech stocks as well as top-performing stocks in other industries. Although it has performed exceptionally well over the years, the fund can still be a great place to invest for the long haul.

The Invesco fund has significantly outperformed the market over the years

To say that the Invesco fund has been a market-beating investment for decades would be a massive understatement. Since 2005, its total returns (which include dividends) have come in at more than 1,400% -- far higher than the S&P 500 over that stretch.

To put that into perspective, a $25,000 investment in the fund 20 years ago would be worth around $380,000 today. Meanwhile, a similar investment in a fund that mirrors the S&P 500 might only be worth $180,000.

While investing in the S&P 500 can be a good way to hold a broad mix of stocks, the benefit of the Invesco fund is that with a more concentrated portfolio of top growth stocks, it can generate superior returns. There may be volatility from one year to the next, but over the long haul, growth stocks generally outperform other types of investments.

Why the Invesco fund isn't in danger of running out of upside anytime soon

Although the Invesco fund has produced incredible returns, and you might be worried about the valuations of high-performing growth stocks, it's still possible for this ETF to continue outperforming the market.

The simple reason comes back to it tracking the Nasdaq 100, which undergoes regular reconstruction and rebalancing. Unlike a hot growth stock that may run out of steam, the Nasdaq 100's composition will change over time, giving it more room to rise.

Last month, for example, it completed its annual reconstruction and upon doing so, removed multiple stocks: Illumina, Super Micro Computer, and Moderna. They were replaced in the index with Palantir Technologies, MicroStrategy, and Axon Enterprise.

The index may be susceptible to high valuations, but by focusing on just the best of the best, it means funds that track the Nasdaq 100 can be in excellent positions to outperform the market in the long run.

Investing in the fund regularly can be a solid long-term strategy

Even if you're worried that valuations might be high on the Nasdaq today, investing regularly in the Invesco fund can be a good way to balance out your risk. Investing a regular monthly amount in the fund can build up your position over time, ensuring that you aren't too worried about trying to time the market and waiting for an ideal buying opportunity, which may never come along.

By continuously investing, if the ETF drops in value, you are averaging down your position. And if it rises, you're benefiting from strong market conditions and buying into the rally along the way. Either way, investing in the fund on an ongoing basis can make for a great long-term strategy and be an effective way to grow your portfolio at a potentially higher rate than just trying to track the S&P 500.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $832,928!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of January 6, 2025

David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise and Palantir Technologies. The Motley Fool recommends Illumina, Moderna, and Nasdaq. The Motley Fool has a disclosure policy.

This Top ETF Has Generated 1,400% Returns in 20 Years. Here's Why It Can Still Soar Even Higher. was originally published by The Motley Fool

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47.

QQQ, SCHG, SCHD: 3 Great ETFs to Start Investing in 2025

2025-01-11 14:19:37 by TipRanks from TipRanks

Looking to get started on your investing journey in 2025? Exchange-traded funds (ETFs) are a great place to start, as they offer diversified exposure to a wide group of the market’s best stocks in one simple, convenient instrument.  

Here are three of the best ETFs to consider as you set out on your path as an investor – the Schwab U.S. Large-Cap Growth ETF (SCHG), the Schwab U.S. Dividend Equity ETF (SCHD), and the Invesco QQQ Trust (QQQ). All three offer diversified exposure to great stocks, varying levels of strong returns over the years, and, importantly, low fees.

Schwab U.S. Large-Cap Growth ETF (SCHG)

If you’re looking for an ETF to start out with, the Schwab U.S. Large-Cap Growth ETF is a good place to begin. This growth-oriented ETF from Charles Schwab was launched in 2009 and now has $37.7 billion in assets under management (AUM). 

It offers investors exposure to a basket of 227 companies that make up the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. 

You’ll find an overview of SCHG’s top 10 holdings from TipRanks’ holdings tool below. 

As you can see, SCHG has positions in many of the market’s most dominant stocks, including the magnificent seven plus other powerhouses like Broadcom (AVGO) and Eli Lilly (LLY). These are many of the most dynamic and innovative companies in the U.S., not to mention the world, with exposure to compelling long-term themes like artificial intelligence, quantum computing, autonomous vehicles, and more, making them good propositions for long-term investors. 

SCHG’s top holdings are also rated highly by TipRanks’ Smart Score system. The Smart Score is a quantitative stock scoring system created by TipRanks. It gives stocks a score from one to 10, based on eight key market factors. The score is data-driven and does not involve any human intervention. Seven of SCHG’s top 10 holdings have Outperform-equivalent Smart Scores of 8 or above.

SCHG itself features an Outperform-equivalent ETF Smart Score of 8 out of 10. 

Another reason SCHG is a top choice for new investors is that it has generated strong returns over a long period of time. 

As of the end of 2024, SCHG has delivered an annualized three-year return of 11.4%, an annualized five-year return of 19.8%, and an annualized 10-year return of 16.7%. These returns beat those of the broader market over each time frame as the Vanguard S&P 500 ETF (VOO), a good stand-in for the broader market and an ETF that has produced strong returns itself, delivered an annualized three-year return of 8.9%, an annualized five-year return of 14.5%, and an annualized 10-year return of 13.1% as of the same date. 

Additionally, SCHG is delivering this market-beating performance for a very low price. Its expense ratio of 0.06%, means that an investor in the fund will pay just $6 in fees on a $10,000 investment annually. 

Is SCHG Stock a Buy, According to Analysts?

Turning to Wall Street, SCHG earns a Strong Buy consensus rating based on 195 Buys, 31 Holds, and one Sell rating assigned in the past three months. The average SCHG stock price target of $31.92 implies 13.4% upside potential from current levels.

Overall, I’m bullish on SCHG and consider it a great building block for new investors (and all investors for that matter) based on its strong portfolio of highly-rated stocks, its history of outperforming the market to generate compelling returns, and its ultra-low expense ratio. 

Schwab U.S. Dividend Equity ETF (SCHD)

Like SCHG, the Schwab U.S. Dividend Equity ETF is another offering from blue-chip asset manager Charles Schwab (SCHW). SCHD debuted in 2011 and has grown to $65.8 billion in AUM. 

While SCHG focuses on growth stocks, SCHD is instead focused on dividend stocks. 

The fund owns a portfolio of 101 dividend stocks, and its top 10 holdings make up a reasonable 41.1% of assets. You can check out an overview of SCHD’s top 10 holdings below. 

While SCHG caters towards the more growth-oriented part of the market, SCHD hones in on tried-and-true dividend stocks like healthcare giants Pfizer (PFE) and AbbVie (ABBV), soft drink giants Coca-Cola (KO) and Pepsi (PEP) and even BlackRock (BLK), the world’s largest asset manager. 

These companies have been paying and, in many cases, growing their dividends for many years. Because they hail from more defensive parts of the market like healthcare, consumer staples, and financials, these holdings, and by extension SCHD itself, should hold up better than the market as a whole during a market pullback as these sectors typically feature lower valuations and more defensive business models. 

SHCD features an attractive dividend yield of 3.6%, which is nearly triple the S&P 500’s (SPX) yield of 1.3%. Newer investors can reinvest these above-average dividends to create a snowball effect and slowly but surely build up their positions in SCHD over time. 

It’s worth noting that SCHD has slightly underperformed the market over time, but its results have still been quite positive, and it may outperform the broader market if there is a rotation from growth stocks to more defensive names like those that SCHD specializes in. As of December 31, SCHD has posted an annualized three-year return of 4.2%, an annualized five-year return of 11.1%, and an annualized 10-year return of 11.0%. For comparison, the aforementioned VOO has generated better returns over the comparable periods.

Like SCHG, SCHD sports a favorable expense ratio of just 0.06%, meaning an investor will pay just $6 in fees annually on a $10,000 investment in the fund. 

Is SCHD Stock a Buy, According to Analysts?

Turning to Wall Street, SCHG earns a Moderate Buy consensus rating based on 55 Buys, 41 Holds, and five Sell ratings assigned in the past three months. The average SCHD stock price target of $31.31 implies 14.6% upside potential from current levels.

I’m bullish on SCHD as another great choice for new investors based on its diversified portfolio of blue-chip dividend stocks, its attractive above-average dividend yield, and its favorable expense ratio. 

Invesco QQQ Trust (QQQ) 

Last but not least, the Invesco QQQ Trust (QQQ) is another powerhouse ETF for beginners to consider. 

With $321 billion in AUM, QQQ is one of the largest and most popular ETFs in the world, and with good reason. It invests in the Nasdaq 100 (NDX), an index of the 100 largest non-financial stocks listed on the Nasdaq exchange. 

The Nasdaq has long been associated with top tech and growth stocks, so the ETF and its holdings skew heavily in this direction. QQQ owns 102 stocks, and its top 10 holdings account for 52.2% of assets. You’ll find an overview of QQQ’s top 10 holdings below. 

As you can see, QQQ’s top holdings look fairly similar to the growth-oriented SCHG’s, with Costco (COST) replacing Eli Lilly (LLY). These holdings give investors significant exposure to secular trends like artificial intelligence, quantum computing, robotics, autonomous driving, and more. Seven of these top 10 holdings feature Outperform-equivalent Smart Scores, with QQQ itself earning an Outperform-equivalent ETF Smart Score of 8 out of 10. 

QQQ’s long-term track record of outperforming the market is what truly sets it apart as a can’t-miss investment opportunity. The powerhouse ETF has outperformed the market over each of the past three-, five- and 10-year time frames, racking up the best returns in this group of three strong ETFs in the process.

As of the end of 2024, QQQ had generated an annualized three-year return of 9.5%, an excellent annualized five-year return of 20.0%, and an impressive annualized 10-year return of 18.3%. For comparison, QQQ has outperformed VOO over these three periods.  

With an expense ratio of 0.20%, QQQ is the most expensive of the ETFs in this group but still reasonably priced and well below the average expense ratio for all ETFs. An investor in the fund will pay just $20 in fees on a $10,000 investment annually.

Is QQQ Stock a Buy, According to Analysts?

Turning to Wall Street, QQQ earns a Moderate Buy consensus rating based on 91 Buys, 11 Holds, and zero Sell ratings assigned in the past three months. The average QQQ stock price target of $584.51 implies 13.4% upside potential from current levels.

I’m bullish on QQQ based on its stellar long-term performance, its portfolio of top tech and growth stocks, and its reasonable expense ratio. 

Three Great Building Blocks for Investors 

If you’re looking to get started investing in 2025, ETFs are a great way to get the ball rolling, as they give you instant exposure to a wide array of the market’s top stocks. I’m bullish on all three of these ETFs as excellent building blocks for investors to use and start building their portfolios around.

All three feature diversified portfolios of blue-chip stocks and reasonable expense ratios. I’m bullish on SCHG and QQQ based on their portfolios of top tech and growth stocks, exposure to exciting long-term themes, and their long histories of outperforming the broader market. Meanwhile, I’m bullish on SCHD as a strong complement to these names based on its more defensive portfolio and attractive dividend yield. 

Disclosure 

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48.

December jobs report has Wall Street starting to talk about rate hikes in 2025

2025-01-10 18:55:30 by Josh Schafer from Yahoo Finance

A hot December jobs report has many strategists confident that the Federal Reserve will hold off on further interest rate cuts for now. 

And some on Wall Street think this report may have even cracked the door open for the Fed to consider rate hikes in 2025. 

"Our base case has the Fed on an extended hold," Bank of America Securities US economist Aditya Bhave wrote in a note to clients on Friday. "But we think the risks for the next move are skewed toward a hike."

Bhave cautioned that the bar for the Fed to hike is high, with Fed officials still describing the current level of rates as restrictive. But should the Fed's preferred inflation gauge — the Personal Consumption Expenditures metric, excluding volatile categories like food and energy — reaccelerate or inflation expectations move higher, a hike could be on the table. 

The latest reading of "core" PCE showed prices increased 2.8% in November, higher than the 2.7% seen in October. There is also concern among economists that incoming President Donald Trump's policies could push inflation higher or, at minimum, hold back inflation's progress in slowing to the Fed's 2% goal. 

A fresh reading from the University of Michigan showed consumers' year-ahead inflation expectations jumped to 3.3% in January from 2.8% the month prior. Meanwhile, long-run inflation expectations also hit 3.3% in January, the highest level for the metric since 2008.

"After a very strong Dec jobs report, we think the cutting cycle is over," Bhave wrote. "Inflation is stuck above target, with upside risks."

Read more: How the Fed rate cut affects your bank accounts, loans, credit cards, and investments

Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November. Meanwhile, the unemployment rate fell from to 4.1% from 4.2% the month prior.

The cycle high for the unemployment rate had initially been 4.3% in July, a number that sparked investor concerns and contributed to a stock market sell-off in August. But that number was revised down to 4.2% in Friday's release, showing that while the labor market cooled throughout 2024, it isn't deteriorating at a concerning pace. 

"From the Fed's perspective, the unemployment rate started the year in 'too hot' territory at 3.7%, but it has cooled to 'just right' at 4.1% in December," Wells Fargo senior economist Sarah House wrote in a note to clients on Friday. 

With the labor market in solid shape, House believes the Fed not cutting interest rates when it announces its next decision on Jan. 30 is "all but assured." And a March cut looks increasingly unlikely as well. 

"It will take a further slowdown in inflation or much weaker labor market data for the FOMC to resume cutting rates over its next few meetings," House wrote. 

EY chief economist Gregory Daco agreed. 

"I think the attention will actually pivot back towards inflation developments over the course of the next three months," Daco told Yahoo Finance.

Daco is more sanguine on what those inflation prints could bring. He sees several low inflation readings leading to an interest cut in March before the Fed pauses to decipher how changes to fiscal policy could impact the inflation story. Markets are pricing in just one interest rate cut for 2025, per Bloomberg data. 

Read more: Jobs, inflation, and the Fed: How they're all related

Still, one thing is clear after Friday's jobs report: The market is expected to be more focused on the incoming inflation data rather than labor market developments when deciphering whether or not the Fed will cut interest rates in 2025.

"Fed cuts are about inflation now," Morgan Stanley chief US economist Michael Gapen wrote in a note to clients on Friday. 

A fresh update will come next week with the release of the Consumer Price Index (CPI) for December. Wall Street economists expect headline inflation rose 2.9% annually in December, an increase from the 2.7% seen in November. Prices are set to rise 0.3% on a month-over-month basis, in line with the month prior. 

On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in December. This would mark the fifth straight month of a 3.3% annual reading for core inflation.

ANDREW CABALLERO-REYNOLDS via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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49.

December jobs report shows unemployment fell to 4.1%, 256,000 jobs added to finish 2024 on high note

2025-01-10 14:08:52 by Josh Schafer from Yahoo Finance

The US economy added more jobs than forecast in December while the unemployment rate unexpectedly fell.

Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November. The unemployment rate fell to 4.1% from 4.2% in November. December marked the most monthly job gains seen since March 2023. 

Revisions to the unemployment rate in 2024 also showed the labor market was stronger than initially thought. The cycle high for the unemployment rate had initially been 4.3% in July but that figure was revised down to 4.2% in Friday's release. 

"There is no denying that this is a strong report," Jefferies US economist Thomas Simons wrote in a note to clients on Friday.

Wage growth, an important measure for gauging inflation pressures, rose 0.3% in December, in line with economists' expectations and below the 0.4% seen in November.

Compared to the prior year, wages rose 3.9% in December, below 4% in November. Meanwhile, the labor force participation rate remained flat at 62.5%. 

The strong picture of the US labor market presented in Friday's report pushed out investor bets on when the Federal Reserve will cut interest rates next. Traders now see a less than 50% chance of the Fed cutting interest rates until June, per the CME Fed Watch Tool. A day prior, investors had favored a cut in May. 

Read more: How the Fed rate cut affects your bank accounts, loans, credit cards, and investments

"You're seeing this steady but slightly cooling labor market trend, which is very encouraging from a Fed perspective," EY chief economist Gregory Daco told Yahoo Finance. "I think the attention will actually pivot back towards inflation developments over the course of the next three months."

Stocks sank following the report, with futures tied to all three major averages down nearly 1%. Meanwhile, the 10-year Treasury yield (^TNX), a recent headwind for stocks, added about 8 basis points to reach 4.78%, its highest level since November 2023.

"The problem here now is if you're looking for rate cuts based on a weakening labor market ... stop looking for those," Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. "It's not going to happen in the immediate term."

Quinn Rooney via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

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50.

Carter Funeral Suspends Stock Market; What to Expect Friday

2025-01-09 14:54:00 by Mark Vickery from Zacks

Thursday, January 9, 2025

Stock markets will suspend trading this Thursday, taking a traditional pause for the funeral of a former head of state. James Earl Carter, Jr., known as Jimmy even during his years in the White House (1977-80), was the 39th President of the U.S. He lived to be 100 — the first ex-president in 235 years of presidents to do so.

Carter was also a highly visible altruist following his tenure in office, helping build houses for the poor via his connection with Habitat for Humanity, among other things. The former Georgia governor had been a nuclear engineer while serving in the U.S. Navy and, famously, a peanut farmer in his home town of Plains, GA. He was a progressive liberal by political orientation, and originally an outgoing advocate for the Civil Rights movement in the South.

His four years in office were at times quite turbulent, most especially pronounced by the Iran Hostage Crisis, which marred his final year as president. (The hostages were not released until the very day his successor, Ronald Reagan, took office.) But a formal remembrance of a U.S. Presidency is granted to all who have held the position, not just those with an historically favorable record during their terms.

FedSpeak Today, Following Minutes from Last FOMC Meeting

A significant number of Fed members will make public addresses today. These include Philadelphia’s Patrick Harker, Boston’s Susan Collins, Richmond’s Tom Barkin, Kansas City’s Jeffrey Schmid and Fed Governor Michelle Bowman. These speeches will no doubt be focused on the Fed’s plans for cutting interest rates in 2025. 

Yesterday’s release of the minutes from the December 17-18 Federal Open Market Committee (FOMC) meeting revealed no new real surprises, though we did note an increase in concern regarding how the incoming Trump administration’s policies may augment the trajectory the economy has been on over the past four years. These include tariffs on foreign imports increasing prices of goods here in the U.S. and deporting a high number of immigrants, which threatens to gut the domestic labor force, especially on the low-income side.

Friday’s Jobs Numbers the Big News of the Week

We have seen all but one of the Jobs Week reports come out so far — JOLTS data Tuesday, ADP ADP private-sector payrolls and Weekly Jobless Claims yesterday — but the big one is the Employment Situation report from the U.S. Bureau of Labor Statistics (BLS), out Friday before the opening bell. Expectations are for 155K jobs to have been filled in December, with an Unemployment Rate holding steady at +4.2%.

Beyond this, we’ll get a glimpse at Hourly Wages — expected to come down a bit to +0.3%, with year-over-year wages remaining at +4.0%. As we saw from the ADP numbers Wednesday, which came up short of expected private-sector job fills, it is cyclical industries like Education and Healthcare leading the labor market currently, not secular areas like Leisure and Hospitality, which dominated job growth in the years directly following the Covid pandemic.

The reason Jobs Week is so key is that it holds in its hands nearly half the dual mandate the Fed has when considering monetary policy. Going back to the FOMC minutes, inflation levels have of late been holding and not falling precipitously; while it’s good we’re not seeing a hard landing in the economy, after 100 basis points in cuts there does appear to be a consensus to pause further cuts at this time. Rapidly decreasing labor force numbers over time would very likely change the Fed’s equation.

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