What you need to know today
Markets rise amid choppy trading
Major U.S. benchmarks rose on Thursday in a volatile session that saw stocks slump in the final hour of trading before sharply recovering losses. Europe’s regional Stoxx 600 index added 0.86% to close at a record high, buoyed by the European Central Bank’s quarter-point cut to interest rates on Thursday. That said, ECB President Christine Lagarde cautioned that the euro area economy “is set to remain weak in the near term.”
Slower-than-expected U.S. economic growth
U.S. gross domestic product expanded by 2.3% on an annualized and inflation-adjusted pace in the fourth quarter of 2024, the U.S. Commerce Department reported Thursday. The figure was lower than the 2.5% expected by economists surveyed by Dow Jones, and a drop from the 3.1% growth recorded in the third quarter. Still, the U.S. experienced healthy economic growth of 2.8% for the whole of 2024.
Apple’s services sales make up for iPhone slump
Apple shares climbed around 3% in extended trading after the company reported a 14% year-on-year jump in services revenue during its first fiscal quarter — which helped boost gross margins to 46.9%, the highest on record. That bump defrayed worries over declining iPhone sales, which not only missed LSEG estimates by the largest margin in two years but were also lower compared with a year earlier because of weakness in the Greater China market.
New funding round would double OpenAI’s valuation
OpenAI is in talks to raise up to $40 billion in a funding round that would lift the artificial intelligence company’s valuation to as high as $340 billion, CNBC has confirmed, more than doubling its last valuation of $157 billion by private investors. Masayoshi Son’s SoftBank would lead the round, contributing up to $25 billion, according to two people familiar with the negotiations who asked not to be named because the talks are ongoing. At such amounts, SoftBank would surpass Microsoft as OpenAI’s top backer.
India’s budget will walk a tightrope
Indian Finance Minister Nirmala Sitharaman will present the national budget on Feb. 1v, the coalition government’s first full-year budget after assuming power in June. The Indian government faces a tough choice between fiscal prudence and reviving growth. Sitharaman pledged in her July budget speech to narrow the deficit to 4.5% of GDP in the next fiscal year, but more government stimulus might be needed to revive the country’s slowing economy.
[PRO] As goes January, so goes the year
The January Barometer, a concept devised by Yale Hirsch, creator of the Stock Trader’s Almanac, states that “as goes the S&P 500 in January, so goes for the year.” With only one trading day left in the month, the S&P is higher by 3.2% for the month — putting it on course to signal gains for the rest of 2025. But why would performance in January determine the market’s direction in the following eleven months?
The bottom line
After the DeepSeek-induced ruction that rocked markets on Tuesday, markets seem to have regained their footing. Assessments — and skepticism — by industry experts over DeepSeek’s claims helped dispel some of that initial panic.
A week packed with Big Tech earnings also reminded investors that it might be better to focus on companies already bringing in billions in revenue, while a healthy, albeit slightly disappointing, U.S. gross domestic product report fueled expectations that earnings growth will continue in 2025.
Friday’s the last trading day of January, and, unless a new artificial intelligence model that costs maybe $5 is unleashed on the world, the S&P 500 is likely to finish the month in the green. Despite DeepSeek resurfacing some deep-seated fears about lofty tech valuations, the S&P is having a promising start to the year.