Joey Solitro
Earnings and guidance still matter most when it comes down to real decisions about buying, holding and selling stocks. An old-school big tech stock was among the day's biggest upside movers, while a major e-commerce player led to the downside. It was all fundamentals, with solid economic data in the background.
Price action largely reflected investors' feelings about a handful of big names, neither Federal Reserve Chair Jerome Powell nor President Donald J. Trump among them. At the same time, incoming data continue to support Powell's assertions during his post-Federal Open Market Committee meeting press conference on Wednesday that the U.S. economy is growing at a "solid" pace, supported by a "stable" labor market.
Gross domestic product (GDP) increased at an annual rate of 2.3% in the fourth quarter of 2024, according to the Bureau of Economic Analysis. And weekly jobless claims totaled 207,000 for the week ending January 25, a decrease of 16,000 from the 223,000 reported in the week prior, according to the Department of Labor.
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Of course, President Trump did take issue with Powell's claim that current monetary policy is "well calibrated." On Wednesday, he weighed in on the FOMC decision to hold the target range for the federal funds rate steady at 4.25% to 4.50% via Trump Media & Technology Group's (DJT) Truth Social platform with little apparent effect at either the central bank or the market level.
Accusing Powell and the Fed of failing "to stop the problem they created with Inflation," Trump said he "will do much more than stopping Inflation" and "will make our Country financially, and otherwise, powerful again!"
The 10-year U.S. Treasury note yield trended lower from 4.555% on Wednesday to 4.524% as of 4 pm Eastern Time on Thursday.
At the closing bell, the blue chip Dow Jones Industrial Average added 0.4% to 44,882. The broad-based S&P 500 was up 0.5% to 6,071. And the tech-heavy Nasdaq Composite gained 0.3% to 19,681.
Amazon.com can't kill UPS
United Parcel Service (UPS) stock plunged 14.1% after the international shipping company reported mixed results for its fourth quarter, provided a soft outlook for 2025 and announced shipping volume for its largest customer will be cut in half over the next two years.
UPS said shipping volume from Amazon.com (AMZN) will decline by more than 50% over the next two years. Amazon accounted for 11.8% of total revenue at UPS in 2023. UPS also expects to realize annual savings of approximately $1 billion through efficiency initiatives related to its transition.
According to CEO Carol Tomé, management is executing a strategy to get "further down the path to becoming a more profitable, agile and differentiated UPS that is growing in the best parts of the market."
BofA Securities analyst Ken Hoexter raised his rating on UPS from Neutral (Hold) to Buy two weeks ago, citing a potential end to the freight recession in 2025 and benefits from the company's dynamic pricing model and cost initiatives.
Hoexter also noted that "these gains will work to offset potential volume losses as it insources the remainder of its SurePost last mile volumes from the U.S. Postal Service, continued Amazon revenue glide down, and its high-cost Teamster labor contract."
Hoexter has a 12-month price target of $150 for UPS stock, upside of more than 30% from Thursday's closing price.
Big Blue gets an AI boost
International Business Machines (IBM) was No. 1 among the 30 Dow Jones stocks on Thursday, rising as much as 14.5% to a new 52-week high and closing up 13% after the O.G. big tech stock beat fourth-quarter expectations and issued positive guidance for the year ahead.
"Clients globally continue to turn to IBM to transform with AI," said CEO Arvind Krishna, noting that Big Blue's "generative AI book of business now stands at more than $5 billion inception-to-date, up nearly $2 billion quarter over quarter."
Jefferies analyst Brent Thill reiterated his Hold rating on IBM stock but raised his 12-month price target to $270 from $245. "We are encouraged by the recent software momentum and implied further acceleration in guidance," Thill said.
The Mag 7 and other earnings matters
Microsoft (MSFT) was No. 30 among the 30 Dow Jones stocks on Thursday, shedding 6.2% even after it beat top- and bottom-line expectations for its second quarter.
The holdup here was management's weaker-than-expected outlook for its fiscal third quarter.
Meta Platforms (META) stock rose 1.2% after the Facebook parent beat top- and bottom-line expectations for its fourth quarter.
And Tesla (TSLA) stock rallied 2.9% despite the electric vehicle maker coming up short of top- and bottom-line expectations for its fourth quarter. It's possible Elon Musk's relationship with the White House is putting some wind behind Tesla.
Apple (AAPL) is next up among Magnificent 7 stocks on the earnings calendar and will report its fiscal first-quarter results after Thursday's closing bell. AAPL was down 0.7% ahead of its announcement.
Alphabet (GOOGL) will report its fourth-quarter and full-year 2024 results after the close on Tuesday, February 4. GOOGL was up 2.8% on Thursday.
Amazon.com, meanwhile, is scheduled to report after the close on Thursday, February 6. AMZN was down 1%, seeing no upside for itself from UPS' intraday demise.
Nvidia (NVDA), which rallied into the closing bell and ended the day up 1%, will wrap up this chapter of the Mag 7 story when it reports fiscal fourth-quarter results after the close on Wednesday, February 26.
Though Microsoft and Meta have confirmed their AI-related capex plans, NVDA stock continues to reflect fears about emerging lower-cost artificial intelligence models.
ServiceNow (NOW, -11.5%) and Comcast (CMCSA, -11%) were also dragging on the S&P 500. ServiceNow missed with both its report and its guidance for subscription revenue, while Comcast suffered a bigger-than-expected decline in broadband customers.
For the record, DJT stock was down 1.5% on Thursday. Trump Media & Technology is expected to reveal its fourth-quarter results on or about February 4.
Trump Media announced on Wednesday that its board of directors "has approved a financial services and financial technology strategy, which will include the launch of the financial services and FinTech brand Truth.Fi."
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