New York Stock Market Mixed Near Steady as Interest Rates Hold and Big Tech Earnings Digest

Q4 U.S. Growth Rate at 2.3%, Below Expectations
Strong Consumer Spending Drives Solid Recovery
New Unemployment Claims Total 207,000, Lower Than Forecast
Apple to Announce Earnings After Market Close

The three major indices of the U.S. New York Stock Exchange showed mixed movements near the flat line on the 30th (local time). After the market fell due to the Federal Reserve's (Fed) temporary pause in monetary easing the previous day, it is attempting a rebound while digesting the earnings of big tech companies.

As of 11:31 a.m. in the New York stock market, the Dow Jones Industrial Average (Dow), which focuses on blue-chip stocks, was trading at 44,791.68, up 0.17% from the previous day. The S&P 500, centered on large-cap stocks, rose 0.19% to 6,050.5, while the tech-heavy Nasdaq index fell 0.15% to 19,602.8.

By individual stocks, Meta, the parent company of Facebook, rose 1.75% after announcing better-than-expected revenue and profits after the market closed the previous day. Tesla was up 2.43%. Despite earnings below market expectations, Tesla CEO Elon Musk announced the launch of a robo (driverless) taxi using fully autonomous driving software FSD in June, attracting buying interest. Microsoft (MS) plunged 6.21% as its quarterly revenue fell short of expert forecasts.

The market focused on the U.S. economic growth rate for the fourth quarter of last year, released that morning. The U.S. Department of Commerce reported that the preliminary real Gross Domestic Product (GDP) for Q4 grew at an annualized rate of 2.3% compared to the previous quarter. Although this was below the Q3 growth rate (3.1%) and market expectations (2.7%), it exceeded the U.S. potential growth rate, estimated to be in the high 1% range, maintaining solid growth. The annual growth rate for last year was 2.8%, down 0.1 percentage points from 2.9% in 2023. Consumption, which accounts for two-thirds of the U.S. economy, increased by 4.2% in Q4, driving a robust recovery. The core Personal Consumption Expenditures (PCE) price index, the inflation gauge most closely watched by the Fed, rose 2.5%. This was higher than Q3's 2.2% and in line with market expectations of 2.5%.

Employment also appeared stable. The U.S. Department of Labor reported that new claims for unemployment benefits for the week of January 19-25 totaled 207,000, down 16,000 from the revised figure of 223,000 the previous week. This was 17,000 lower than the expert forecast of 224,000.

Josh Jamner, investment strategy analyst at ClearBridge Investments, said, "Overall, the economy is building a solid foundation heading into 2025," adding, "Given the strong correlation between economic growth and corporate earnings, this will support risk assets."

The Fed, which temporarily paused its monetary easing cycle the previous day, is closely monitoring U.S. economic growth, employment, and inflation. Despite pressure from U.S. President Donald Trump to cut interest rates, the Fed kept the benchmark rate unchanged at 4.25-4.5% per annum. This was the first hold after three consecutive rate cuts totaling a 1 percentage point reduction since starting rate cuts in September last year, when rates were at a high of 5.25-5.5%. Fed Chair Jerome Powell said at a press conference the previous day that the current rates are "considerably less restrictive" and that there is "no need to rush adjustments" in monetary policy. Amid concerns about "Trumplation" (inflation caused by Trump's policies), the Fed reaffirmed its cautious approach to monetary easing, evaluating the impact of a potential second Trump term and inflation conditions.

Investors are awaiting Apple's earnings report, scheduled for release in the afternoon. Alphabet, Google's parent company, and Amazon will report earnings on February 4 and 6, respectively, while Nvidia will release its earnings on February 26.

Government bond yields are weakening. The yield on the 10-year U.S. Treasury, a global bond yield benchmark, fell 2 basis points (1 bp = 0.01 percentage points) from the previous day to 4.53%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, dropped 1 bp to 4.21%.

International oil prices are on the rise. West Texas Intermediate (WTI) crude oil rose $0.52 (0.72%) from the previous day to $73.14 per barrel, and Brent crude, the global oil price benchmark, increased $0.60 (0.79%) to $76.21 per barrel.