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;