Stock Market Today: Stocks Slip as Inflation Worries Rise

Stocks were choppy Friday, though all three main benchmarks closed with weekly gains. All eyes are on next week's Fed meeting – particularly after President Donald Trump's comments on interest rates during a virtual appearance at Davos – though the latest batch of earnings reports created plenty of headlines too.

At the close, the Dow Jones Industrial Average was down 0.3% at 44,424, the S&P 500 was off 0.3% to 6,101 and the Nasdaq Composite had shed 0.5% to 19,954.

The Federal Open Market Committee (FOMC) will conclude its two-day policy meeting next Wednesday afternoon. The group is widely expected to keep the federal funds rate unchanged this time around – even after Trump on Thursday told a group of business leaders gathered in Switzerland that he will "demand interest rates drop immediately."

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Still, as many folks have been quick to point out, the Federal Reserve remains independent of the executive branch and so at this point, there's little Trump can do to change the outcome of the next Fed meeting.

One hurdle to the Fed's rate-cutting plans is sticky price pressures. Indeed, Fed Chair Jerome Powell said in his press conference following the central bank's December meeting that any additional rate cuts will require seeing progress on inflation.

University of Michigan data shows inflation worries are growing

And the Fed isn't alone in its concerns about inflation. Today's University of Michigan consumer sentiment data showed year-ahead inflation expectations jumped to 3.3% in January from 2.8% in December – the highest since May 2024. Long-term inflation expectations also rose, to 3.2% from 3.0%.

"Concerns over the future trajectory of inflation were visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs," says Joanne Hsu, director of Surveys of Consumers at the University of Michigan.

Elsewhere on the economic calendar, data from the National Association of Realtors revealed existing home sales rose 2.2% from November to December, to a seasonally adjusted annual rate of 4.24 million. This was the strongest pace since February 2024.

American Express hikes dividend

In single-stock news, American Express (AXP) reported higher-than-expected fourth-quarter earnings and revenue stock thanks to strong card member spending. The company also announced a 17% dividend hike, marking the fourth straight year it has raised its payout.

However, the Dow Jones stock slumped 1.4% after the credit card company's full-year earnings per share forecast of $15.25 fell short of what some analysts are expecting.

Price hikes fuel Verizon's beat

Verizon Communications (VZ) was one of the best Dow stocks Friday, gaining 0.9% after the telecommunications company beat top- and bottom-line expectations for its fourth quarter.

Helping boost Verizon's results was a 3.1% increase in wireless revenue, which the company says is a result of price hikes and sales perks.

Other stocks on the move

Outside of the earnings calendar, Novo Nordisk (NVO) stock soared 8.5% after the Danish pharmaceutical company announced positive early stage results for its once-weekly weight loss drug, Amycretin.

"The company is working with regulators on new indications for its GLP-1 treatments and is also focused on launching new products," wrote Argus Research analyst Jasper Hellweg in a January 16 note. He adds that given the company's "strong track record and growth outlook," NVO deserves to be trading at a higher valuation than it currently is.

Twilio (TWLO) stock surged 20.1% after the cloud communications company unveiled its financial targets for fiscal years 2025 to 2027, which exceeded analysts' expectations.

"We come away from Twilio's Investor Day positive on its direction and more confident in its ability to accelerate growth," says Oppenheimer analyst Ittai Kidron. He admits that while management's vision isn't new, it comes at a time "when the need for an efficient and compelling omnichannel customer and contextually enhanced experience is rising."

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