Market Summary – January 13, 2025

Last Week’s Summary

  • S&P 500 Index fell 1.92%
  • International Equities fell 0.79%
  • Emerging Markets fell 1.50%
  • U.S. 10-Year Treasury Yield rose to 4.75%
  • JOLTS layoff rate rose to 1.1%
  • Initial Jobless Claims fell to 201k
  • ADP Employment Change fell to 122k
  • Change in Nonfarm Payrolls rose to 256k
  • Unemployment Rate fell to 4.1%

What to Watch for This Week

  • M, 1/13/25 Federal Budget Balance
  • T, 1/14/25 PPI Final Demand
  • W, 1/15/25 MBA Mortgage Applications, CPI, CPI Core, Empire Manufacturing
  • Th, 1/16/25 Initial Jobless Claims, Retail Sales Advanced
  • F, 1/17/25 Housing Starts, Industrial Production

Weekly Market Recap

Stocks tumbled, and bond yields climbed alongside the dollar as traders scaled back expectations for Federal Reserve interest-rate cuts following a blowout jobs report. A 1.5% drop in the S&P 500 on Friday erased its early-year gains, marking the index’s steepest decline since December 18, when the Fed signaled caution about the pace of future rate reductions.

Risk sensitive areas of the market were hit hard, with small caps now down about 10% from recent highs. Treasuries also faced a sharp sell-off, briefly pushing 30-Year Yields above 5%. Swaps are now pricing in fewer than 30 basis points of Fed cuts this year.

In December, the U.S. economy added the most jobs since March, while the unemployment rate unexpectedly fell, underscoring a robust year for the labor market. Separate data heightened concerns about persistent inflation, with consumers’ longer-term inflation expectations climbing to their highest level since 2008.

While equity markets don’t necessarily need lower rates to rally, a Fed that is easing policy typically provides a more favorable backdrop for investors compared to a tightening or neutral stance.

Looking ahead, earnings season will ramp up next week, led by reports from major financial institutions such as JPMorgan Chase & Co. and Wells Fargo & Co. These banks are expected to report strong results in trading and investment banking, which have helped offset declines in net interest income caused by higher deposits and weak loan demand.

Additionally, key reports on consumer and wholesale prices will offer further insights into inflation trends ahead of the Fed’s next policy meeting on January 28-29.

60-Second Breakdown:

Redwood Senior Analyst Michael C. Sasaki, CFA® discusses recent market performance and explains this week’s chart.

HOW to Invest like a PRO!

Bryan Bourgeois, CEO/Founder of Shorebreak Capital, discusses why 90% of investors fail and how to avoid these common investment mistakes with Conner Small, Partner at Redwood Investment Management, Shorebreak Capital’s dedicated asset manager.

Download Market Snapshot January 13, 2025

Market Summary

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