MARKET SNAPSHOT

U.S. stocks closed higher as indicators pointed to a cooling economy that could allow the Fed to cut interest rates down the road. Treasury yields fell as relatively soft economic indicators retook center stage. Oil prices settled at their lowest levels of the year after a bigger-than-expected increase in U.S. inventories. Gold closed at a new record high and the dollar weakened.

MARKET WRAPS

EQUITIES

After trade-war fears ballooned early this week, an old reliable-earnings season-retook center stage in markets.

Major stock indexes notched modest gains. The Dow Industrial Average led the pack, climbing 0.7%, while the S&P 500 rose by 0.4%. Investors pored over quarterly reports from Google parent Alphabet and chip maker Advanced Micro Devices, both of which disappointed Wall Street. That dragged on the tech-heavy Nasdaq Composite, which eked out a 0.2% increase.

The relatively muted trading suggests investors have calmed their nerves since President Trump threatened wide-ranging tariffs against America's three largest trading partners.

Earlier Wednesday, Chinese shares ended mixed on their first trading day after the Lunar New Year break, as investors digested the latest trade developments between China and the U.S.

The Shanghai Composite Index fell 0.7%, the Shenzhen Composite Index rose 0.4%, the ChiNext Price Index was flat and Hong Kong's Hang Seng Index fell 0.9%.

PMI data signaling softer services sector growth was also in focus. Still, the view that the U.S.'s initial 10% tariff is milder than expected and that China's response also seems moderate likely limited some losses.

Japanese stocks closed higher, led by auto stocks, as fears about U.S. tariffs subside. The Nikkei Stock Average rose 0.1%.

Stocks in Australia reversed a two-day losing streak, as the S&P/ASX 200 gained 0.5%, boosted by mining shares.

New Zealand's NZX-50 closed 0.5% lower, staying firmly on course for a fifth weekly decline in six weeks.

COMMODITIES

Oil futures marked their lowest settlement prices of the year, after official U.S. data showed a weekly climb of nearly 9 million barrels in U.S. crude inventories and as the U.S.-China trade battle threatened to dent demand.

West Texas Intermediate crude for March delivery fell 2.3% to settle at $71.03 a barrel on the New York Mercantile Exchange.

April Brent crude dropped 2.1% to $74.61 a barrel on ICE Futures Europe.

Although the 10% U.S. tariff has already "prompted tit-for-tat responses from China, markets are all too aware that trade tensions between the world's two largest economies have room to escalate further," said Han Tan, chief market analyst at Exinity. "A significant escalation and broadening of a trade war is set to darken the global economic outlook and could lead to oil demand destruction, potentially offsetting further sanctions on Iranian supplies."

Front month Comex gold for February delivery rose 0.6%, the third consecutive gain, to settle at $2871.60, a new record high.

Amid confusion surrounding U.S. tariffs and retaliation, physical gold demand is strong, said Phil Flynn of Price Futures Group. "We're starting to see huge demand for physical gold and reports that the Comex exchange is having to secure more supplies to satisfy massive gold deliveries," Flynn said in a note.

TODAY'S TOP HEADLINES

ADP says 183,000 private-sector jobs created in January. Labor market in pretty good shape.

The numbers: U.S. businesses created a solid 183,000 new jobs in January, paycheck company ADP said, in a sign a cooling labor market still has plenty of mojo.

Economists polled by the Wall Street Journal had forecast a gain of 150,000 new jobs in the ADP's November survey.

ADP also reported a revised 176,000 increase in employment in December, up from a preliminary 122,000.

The Economy Is Fine, Fed's Barkin Says. Government Policy Is the Real Wild Card.

Federal Reserve Bank of Richmond President Tom Barkin says he needs more information before assessing how tariffs and a variety of Donald Trump's other policy proposals will affect inflation and the economy. Interest rates are on hold until things become clearer or the data shift.

Barkin doesn't see signs of an impending recession in the data or anecdotes about the economy, but said there are plenty of unanswered questions on the Washington front. The list includes what happens with tariffs, immigration, deregulation, tax cuts, and energy policies.

"All the leading indicators seem to be headed in a positive direction," Barkin said at an event hosted by The Conference Board in New York on Wednesday morning. "The way I see the economy today is there's the baseline economy and then there's the uncertainty being caused by policy. The baseline economy is really healthy."

The biggest part of the U.S. economy cools off early in the new year. So does inflation.

The numbers: The large service side of the U.S. economy, in which most people work, cooled off in January - as did inflation - but cold weather at the start of the year had something to do with it.

The service index compiled by the Institute for Supply Management slid to 52.8% in January from 54% in December. Most businesses supply services, and more than 80% of Americans workers are employed by those businesses.

"Poor weather conditions were highlighted by many respondents as impacting business levels and production," said Steve Miller, chair of the survey.

Ford Stock Drops. Earnings Were Fine, but There Is a Problem.

Ford Motor delivered a solid fourth quarter, but the outlook for 2025 was a big disappointment.

Shares were falling after the results were released.

For the fourth quarter, Ford reported an operating profit of $2.1 billion from sales of $48.2 billion. Wall Street was looking for an operating profit of about $2 billion and sales of about $47.4 billion.

Qualcomm Earnings Beat Estimates. The Stock Is Rising.

Qualcomm reported strong first-quarter earnings results Wednesday afternoon. Its shares were up in after-hours trading.

Earnings per share rose 24% to $3.41, compared to Wall Street's consensus estimate of $2.96, according to FactSet. Revenue for the quarter reached $11.67 billion, well above expectations of $10.91 billion, and up 18% on the year.

Qualcomm's revenue outlook for the second quarter came in strong at $10.3 billion to $11.2 billion, up 15% from 2024 at the midpoint, versus a $10.3 billion analysts' estimate.

Google Kills Diversity Hiring Targets

Google is eliminating its goal of hiring more employees from historically underrepresented groups and reviewing some diversity, equity and inclusion programs, joining other tech giants rethinking their approach to DEI.

In an email to employees Wednesday, Google said it would no longer set hiring targets to improve representation in its workforce.

In 2020, amid calls for racial justice following the police killing of George Floyd, Google set a target of increasing by 30% the proportion of "leadership representation of underrepresented groups" by 2025.

Expected Major Events for Thursday

00:30/AUS: Dec International Trade in Goods & Services

01:00/PHI: Dec Labour Force Survey

02:00/JPN: Jan Imported Vehicle Sales

03:30/THA: Jan CPI

23:30/JPN: Dec Household Spending

23:50/JPN: Jan International Reserves / Foreign Currency

23:50/JPN: Jan Provisional Trade Statistics for 1st 20 days of Month

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(END) Dow Jones Newswires

February 05, 2025 16:46 ET (21:46 GMT)

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