Market Overview

The stock market experienced some volatility at the start of the week. The S&P 500 and Nasdaq Composite decreased by as much as 1.9% and 2.5%, respectively. Meanwhile, the Dow Jones Industrial Average dropped over 650 points at its lowest point. This downturn was triggered by the U.S. imposing a 25% tariff on imported goods from Canada and Mexico (with only a 10% tariff on Canadian energy) and a 10% tariff on goods from China, effective at midnight.

Developments in Trade and Market Reactions

Subsequent news revealed that Mexico's President, Claudia Sheinbaum, had a "good call" with President Trump, leading to an agreement to "pause tariffs for one month." President Trump confirmed this update. Stocks rebounded from their lows but did not fully recover due to ongoing concerns about tariffs affecting growth and increasing inflation.

Sector Performance

The market's lower finish was also driven by increased selling in heavily-weighted sectors:

• Information Technology: -1.8%
• Consumer Discretionary: -1.4%
• Financials: -0.4%

However, there were areas of buying interest, with the following sectors closing higher:

• Consumer Staples: +0.7%
• Utilities: +0.5%
• Energy: +0.4%

Treasury Yields

Treasuries had a mixed response, with the 10-year yield settling three basis points lower at 4.54% and the 2-year yield settling three basis points higher at 4.27%.

Year-to-Date Index Performance

• Dow Jones Industrial Average: +4.4% YTD
• S&P Midcap 400: +2.5% YTD
• Russell 2000: +1.3% YTD
• S&P 500: +1.9% YTD
• Nasdaq Composite: +0.4% YTD

Economic Data Review

• January S&P Global US Manufacturing PMI - Final: 51.2; Prior: 50.1
• January ISM Manufacturing Index: 50.9% (consensus 49.1%); Prior revised to 49.2% from 49.3%

The key takeaway is that the manufacturing sector entered expansion territory for the first time after 26 months of contraction, highlighting improved demand as seen in new orders and employment indexes.

• December Construction Spending: 0.5% (consensus 0.2%); Prior revised to 0.2% from 0.0%

The report indicates an increase in new single-family construction activity despite rising interest rates.

Upcoming Economic Data

Looking ahead to Tuesday, market participants will receive:

• 10:00 ET: December job openings (prior 8.098 million)
• December Factory Orders (consensus -0.3%; prior -0.4%)

International Markets and Commodities

• Europe: DAX -1.5%, FTSE -1.0%, CAC -1.2%
• Asia: Nikkei market closed, Hang Seng -0.0%, Shanghai market closed

Commodities:

• Crude Oil: +0.66 @ 73.12
• Natural Gas: +0.31 @ 3.35
• Gold: +22.40 @ 2856.50
• Silver: +0.31 @ 32.53
• Copper: +0.05 @ 4.32

SPY,DIA,QQQ,XLF,XLY,XLE,XLP,XLU

Guru Stock Picks

John Hussman has made the following transactions:

• Reduce in COLL by 25%
• Sold out in ZYXI
• Add in CRI by 100%
• New position in ICUI

Today's News

Palantir Technologies (PLTR, Financial) reported impressive fourth-quarter results, with a non-GAAP EPS of $0.14, surpassing estimates by $0.03. The company achieved a revenue of $827.52 million, a 36% year-over-year increase, exceeding expectations by $46.28 million. Palantir closed 129 deals worth at least $1 million, including 32 deals over $10 million, and recorded a U.S. commercial total contract value of $803 million, a 134% annual increase. The company projects Q1 2025 revenue between $858 million and $862 million, above the consensus of $799.36 million, and full-year 2025 revenue between $3.741 billion and $3.757 billion, surpassing the consensus of $3.53 billion.

Tyson Foods (TSN, Financial) started fiscal 2025 strongly, with exceptional performance in its Chicken segment, marking its best first-quarter adjusted operating income in eight years. The Beef and international operations also surpassed expectations, while prepared foods maintained profitability. Tyson's CEO highlighted a 65% growth in adjusted EPS and a reduction in the net leverage ratio to 2.3 times. The company raised its full-year adjusted operating income guidance to $1.9 billion to $2.3 billion, driven by gains in chicken and operational efficiencies.

BlackRock (BLK, Financial) saw a decline of nearly 5% in its stock price, breaking a seven-session winning streak. Despite this drop, BlackRock has gained nearly 39% over the past year, outperforming the S&P 500 Index. The company plans to strengthen its presence in the Gulf region by opening an office in Kuwait.

Enphase Energy (ENPH, Financial) is set to announce Q4 earnings, with expectations for a quarterly EPS of $0.75 and revenue of $377.51 million. In Q3, Enphase missed earnings estimates and guided Q4 revenues below consensus. Guggenheim recently upgraded the stock to Neutral, acknowledging its fair valuation amid long-term industry challenges.

NXP Semiconductors (NXPI, Financial) reported Q4 results that beat expectations, with an EPS of $3.18 and revenue of $3.11 billion. However, its Q1 guidance fell short of consensus estimates, with expected EPS between $2.39 and $2.79 and revenue ranging from $2.73 billion to $2.93 billion.

Capital Southwest (CSWC, Financial) declared a quarterly dividend of $0.58 per share, maintaining a forward yield of 10.41%. The company also increased its supplemental dividend to $0.06 per share. In Q3, CSWC originated over $300 million in new commitments, with net investment income per share slightly exceeding expectations.

PayPal Holdings (PYPL, Financial) is expected to report Q4 earnings of $1.12 per share, a decrease from the previous quarter. However, revenue is anticipated to rise to $8.28 billion. Analysts have revised their earnings estimates upward more frequently than downward, while the opposite is true for revenue.

Airbus (EADSF, Financial) is exploring the creation of a European space and satellite company to rival SpaceX, with Goldman Sachs advising on the venture. The collaboration may involve Thales and Leonardo, although the details are still under discussion.

Clorox (CLX, Financial) reported a FQ2 non-GAAP EPS of $1.55, beating estimates by $0.15, and revenue of $1.69 billion, surpassing expectations by $60 million. The company saw a slight increase in gross margin and updated its fiscal year 2025 outlook to reflect a potential sales range of down 1% to up 2%.

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