Market Analysis for January 12, 2025

As we step into the week, the stock market has shown resilience amid global economic challenges. The recent week of trading was marked by volatility, primarily influenced by macroeconomic indicators and geopolitical tensions.

Key Events Impacting the Market:

1. US Employment Data: The non-farm payroll data released last Friday indicated stronger-than-expected job growth, adding 350,000 jobs in December. This statistic has rekindled discussions regarding potential interest rate hikes by the Federal Reserve.
2. Geopolitical Tensions: Tensions escalated in Eastern Europe, raising concerns about economic sanctions and their impact on global oil supplies. This development has driven energy stocks up, with crude oil prices hitting $85 a barrel.
3. Tech Earnings Reports: Major tech companies like Apple and Microsoft are set to report their Q4 earnings next week. Market sentiment will likely be influenced by their performance and guidance for 2025.

Market Performance Overview:

• S&P 500: Closed at 4,550, down 1.2% for the week.
• NASDAQ: Closed at 14,200, down 1.5% for the week due to profit-taking in tech stocks.
• Dow Jones: Finished at 35,250, relatively stable compared to other indices.

Predictions for Next Week:

• With the upcoming tech earnings and stability in job growth, the market could see a rebound if the reports meet or exceed expectations.
• The focus will also remain on inflation rates, with the next Consumer Price Index (CPI) data scheduled for release.

Recommendations:

Buy:

• Energy Select Sector SPDR Fund (XLE): Given the rise in oil prices, XLE is poised for growth.
• Technology Select Sector SPDR Fund (XLK): Expecting strong earnings from major tech firms could mean a buying opportunity.

Sell:

• Excessively Valued Tech Stocks: Consider trimming positions in overvalued stocks that may see price corrections after earnings.

In summary, investors should be mindful of the upcoming earnings and economic data that could guide next week’s trading strategy. Volatility is expected, but informed decisions can lead to potential gains.