Midterm #1 BAFI 355 Financial News Review

Week 1 (Thursday) Financial News

• US Consumer Prices: Rose less than forecast in December.

• Core CPI: Increased by 0.2% (down from previous 0.3%).

Implications for Fed Rate Cuts

• Fed may cut rates in March if inflation stays low and job growth slows.

• Initial expectations for rate cuts shifted from early to second half of the year.

Market Update

• Monitoring 2025 YTD performance of S&P 500, Dow Jones, and Nasdaq.

Week 2 (Tuesday) Financial News

• Trump’s Trade Policies:

  • Initially held off on China-specific tariffs, boosting US equity futures.

  • Announced 25% tariffs on goods from Mexico and Canada effective Feb 1.

Market Reactions

• Mexican peso and Canadian dollar fell.

• Wall Street uncertain regarding Trump's policies and Fed interest rate strategies.

Market Update

• Focus on corporate earnings and investor sentiment.

• Major indices include S&P 500, Dow Jones, Nasdaq.

Week 2 (Thursday) Financial News

• SoftBank, OpenAI, Oracle JV: Forming a $100 billion AI infrastructure venture (possible $500 billion expansion).

• Technology Providers: Microsoft, Nvidia, and Arm involved.

• Elon Musk’s Doubts: Raised concerns about execution.

• White House Tension: Internal disagreements on AI investments.

Market Update

• Key indicators remain the S&P 500, Dow Jones, and Nasdaq.

Week 3 (Tuesday) Financial News

• US Economy Growth:

  • Q4 GDP forecast at 2.7%, down from ~3% in previous quarters.

  • Strong consumer spending observed.

AI Competition & Market Disruption

• Chinese AI startup DeepSeek launched a competitive model.

• Stock market panic due to undervaluation fears in AI stocks.

• Nvidia's 17% drop erased $589 billion in value, triggering a tech selloff.

Market Update

• S&P 500, Dow Jones, and Nasdaq monitoring NVIDIA’s effects.

Week 3 (Thursday) Financial News

• Fed’s Stance on Interest Rates:

  • Chair Powell indicated no rush to cut rates.

  • Economic growth and labor market strength allow for inflation assessment.

• Trump’s Economic Policies:

  • Fed waiting for clarity on immigration, tariff, and tax policies.

Market Update

• Key focus on S&P 500, Dow Jones, and Nasdaq performance.

Week 4 (Tuesday) Financial News

• Fed’s Cautious Approach:

  • No urgency to cut rates; core PCE inflation measure at 2.8%.

• Trump’s Economic Uncertainty: Unclear policies are impacting forecasts.

Market Update

• S&P 500, Dow Jones, and Nasdaq remain primary indicators.

Week 5 (Tuesday) Financial News

• January Jobs Report:

  • Nonfarm payrolls rose by 143,000, down from 307,000 in December.

  • Unemployment rate at 4.0%; job growth mainly in healthcare, retail, and government.

• Fed Rate Cut Expectations:

  • Market anticipates Fed will hold rates until at least June.

Market Update

• S&P 500, Dow Jones, and Nasdaq performance remains under scrutiny.

Week 5 (Thursday) Financial News

• Inflation Concerns:

  • CPI rose by 0.5%, highest since August 2023.

  • Main contributors: housing, groceries, and gas.

• Fed’s Response:

  • Powell acknowledged progress in reducing inflation but indicated more work is necessary.

  • Interest rates likely to remain elevated in the near term.

Market Update

• Continuing trends observed in S&P 500, Dow Jones, and Nasdaq.

Week 6 (Tuesday) Financial News

• Trump’s Trade Policies Creating Uncertainty:

  • Investors uncertain about potential tariffs or delays; markets cautiously optimistic.

• Global Trade War Risks:

  • Initiation of 25% tariffs on steel and aluminum imports expected in March.

Market Update

• S&P 500, Dow Jones, and Nasdaq tracking investor sentiment.

Week 6 (Thursday) Financial News

• Stock Market Hits All-Time Highs:

  • Investors overlook Fed’s cautious approach.

• Fed’s Caution on Rate Cuts:

  • Reluctance to cut rates amid strong economic indicators and inflation concerns.

• Stock Market Outlook for 2025:

  • No expectation for another year of 20%+ returns after strong years (2023-24); historical average ~10% annually, real returns ~6.5-7%.

Market Update

• Performance of S&P 500, Dow Jones, and Nasdaq analyzed.

Week 7 (Tuesday) Financial News

• US Consumer Inflation Expectations:

  • Reached the highest levels since 1995; concerns about tariff-induced price increases.

• Consumer Sentiment:

  • Dropped to 64.7 from 71.7—politically polarized declines attributed mainly to Democrats.

Market Reaction

• Stocks experienced the worst session in 2025 due to weak economic data and inflation fears.

• S&P 500 dropped over 1.5%; bonds rallied.

• Market volatility intensified due to $2.7 trillion options expiration.

• Vaccine stocks surged following new coronavirus study reports from China.

Market Update

• S&P 500, Dow Jones, and Nasdaq reflect economic uncertainty.

Week 7 (Thursday) Financial News

• Shift Toward International Stocks:

  • Analysts prefer global equities;