On the evening of January 27, Beijing time, US stocks opened with mixed results on Tuesday. A busy week for corporate earnings lies ahead, with several tech giants like Apple, Meta, and Microsoft poised to release their financial reports. Investors are also anticipating the interest rate decision from the Federal Reserve, scheduled for later this week.
The Dow Jones Industrial Average fell by 306.75 points, a decline of 0.62%, to 49,105.65 points; the Nasdaq Composite Index rose by 127.294 points, an increase of 0.54%, to 23,728.651 points; and the S&P 500 Index gained 16.65 points, up 0.24%, to 6,966.88 points. Technology stocks led the market's gains on Tuesday, with shares of Apple, Meta Platforms, and Microsoft rising more than 1%, 0.3%, and 0.7%, respectively. US stocks started the week on a strong note. During Monday's regular trading session, the S&P 500 climbed 0.5%, the Dow advanced 0.6%, and the Nasdaq increased by 0.4%. Apple, Meta, and Microsoft moved higher ahead of their planned earnings releases later this week, contributing to the indices' upward momentum. More than 90 companies in the S&P 500 index are set to report quarterly earnings this week. Meta and Microsoft, along with fellow "Magnificent Seven" member Tesla, are all scheduled to announce their results on Wednesday. Apple will report its earnings on Thursday. The US earnings season has shown robust performance so far. According to data from FactSet, approximately three-fourths of the S&P 500 companies that have already reported have surpassed expectations. Adam Parker, Founder and CEO of Trivariate Research, stated, "The number one item is earnings season. We have 200 S&P companies reporting over the next two weeks, and so far, so good. I think the real issue is that the second-half earnings expectations are too high. So the question is, can we maintain this momentum in the April guidance? I think we can." On Tuesday, shares of several major health insurers underperformed after the US Centers for Medicare & Medicaid Services proposed a net average increase of just 0.09% in payments to Medicare Advantage plan insurers for 2027. Affected by this news, Humana, CVS, and UnitedHealth saw their stock prices generally decline. The market is also keeping a close watch on international trade issues. Late Monday, US President Donald Trump stated he would increase tariffs on South Korean automobiles, pharmaceuticals, and timber from 15% to 25%. He indicated this action was due to the South Korean legislative body's delay in approving a trade agreement the country reached with the US last summer. The Federal Reserve is set to make its first policy decision of the year this week. The central bank is widely expected to hold its key interest rate steady within the target range of 3.5% to 3.75%, but traders will be searching for clues regarding the potential timing of future rate cuts. According to the CME FedWatch Tool, trading in federal funds contracts still implies the possibility of two 25-basis-point rate cuts by the end of 2026. Despite the anticipation of a new Fed Chair appointed by Trump in the coming months, respondents to a CNBC survey projected only minor changes to the federal funds rate over the next two years. The survey results, aligning with pricing in the fed funds futures market, indicate that neither Wall Street nor economic forecasters expect the new Fed Chair to lower the overnight rate to the low levels demanded by the President. The survey revealed that the average expectation is for two more 25-basis-point rate cuts this year, totaling 50 basis points, with no cuts anticipated in 2027. The funds rate is expected to stabilize around 3% this year and remain there until 2027. President Trump, who is currently considering his nomination to replace Fed Chair Jerome Powell, has previously stated that US interest rates should be the lowest in the world and has called for the Fed to reduce rates to 1%. The survey report noted that, considering a 2% inflation rate, Trump is essentially calling for negative real interest rates. On the economic data front for Tuesday, traders will focus on the latest consumer confidence index and housing price data.
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