Market Outlook

Last week, delays in the imposition of U.S. tariffs on Mexico and Canada provided global markets with some relief. The S&P 500® was relatively unchanged week over week, and non-U.S. equities posted positive returns. Canadian equities were among the top performers, and equities in Europe rose as the euro remained below its technical resistance level relative to the U.S. dollar. Emerging market equities also moved higher due to the delay in U.S. tariffs on China. Year to date, the MSCI China Index has been one of the top-performing country indices.

U.S. economic data came in strong last week. The ISM® Manufacturing PMI® entered expansion territory for the first time since late 2022, and Friday’s strong payroll report was another sign the business cycle is growing, in large part due to the robust labor market. We continue to believe the path forward for markets in 2025 depends on a rebound in manufacturing, which in turn could broaden earnings growth and bring down lofty valuations. 

Table of the Week

Fourth-quarter earnings season continued last week, with 62% of S&P 500 constituents having reported. The blended growth rate rose 320 basis points, driven primarily by the Consumer Discretionary, Health Care and Industrials sectors.

Earnings reports from the Magnificent 7 have shown a common trend of stagnant cloud growth alongside rising artificial intelligence investments in new infrastructure and capabilities.

Although fourth-quarter earnings continue to rise, first quarter 2025 estimates have declined by more than 5% since earnings season began.

FOR AN IN-DEPTH LOOK
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