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Key Sector News for US Stock Investors - January 21, 2025

Market Summary

On January 20, 2025, US markets showed mixed performance due to uncertainty around economic policies announced with President Trump's inauguration. In his inaugural address, Trump announced various pledges including rebuilding the US economy, controlling inflation, expanding domestic oil production, and revitalizing US manufacturing, but did not announce specific tariff policies, leaving uncertainty about future policy direction. Despite this uncertainty, the S&P 500 index closed up 2.91% at 5,996.66, the Dow Jones index rose 3.69% to 43,487.83, and the Nasdaq index gained 2.45%. S&P 500 futures rose to 6,040 on Trump's conciliatory comments about tariffs, but later closed lower at 5,982. The volatility index (VIX) fell to 15.97, indicating some easing of investor anxiety.

US Market Indices

S&P 500 Index: 5,996.66 (+2.91%)
Dow Jones Index: 43,487.83 (+3.69%)
Nasdaq Index: +2.45%

Global Market Indices

European Markets: The euro showed stability around 1.0228 and closed up 0.4% for the week at 1.0270.
Asian Markets: Hong Kong's Hang Seng Index surged 2.41% to its highest level since December 31, driven by gains in consumer cyclicals and education services stocks. China's CSI 300 index rose 0.86% after the People's Bank of China maintained its 1-year loan prime rate (LPR) at 3.1% and 5-year LPR at 3.6%.

Interest Rates

Mortgage Rate Increase: Mortgage rates rose to around 6.70% due to potential policy changes under the Trump administration. This poses challenges for homebuyers and those considering refinancing.

Current Interest Rates

Mortgage Type
Average Rate
30-Year Fixed
6.70%
20-Year Fixed
6.32%
15-Year Fixed
5.93%
7/1 Adjustable-rate Mortgage (ARM)
7.01%
5/1 Adjustable-rate Mortgage (ARM)
6.98%
30-Year FHA
6.29%
30-Year VA
6.06%

Business Sentiment

Canadian Business Sentiment: According to the Bank of Canada's Q4 2024 business outlook survey, overall business sentiment remained subdued, though signs of cautious optimism emerged.

Economic News

China: Maintained benchmark interest rates at 3.1% for 1-year and 3.6% for 5-year terms in January.
Japan: Core machinery orders increased 3.4% month-over-month in November, while revised industrial production decreased 2.2% month-over-month in November.
UK: Housing price index rose 1.7% in January after falling 1.7% in December.
Switzerland: Producer and import prices showed 0.0% change month-over-month in December.
Germany: Producer price index fell 0.1% month-over-month in December.
Dollar Weakness: The WSJ Dollar Index fell 0.98% to 102.32, marking its largest single-day decline since November 14, 2023. This appears to be related to strength in the Indian rupee.
Gold Prices: Gold prices maintained strength despite thin holiday trading. Demand was sustained by dollar weakness and policy uncertainty, with prices rising later following Trump's tariff comments.

Key Sector News

Tech Sector

EU Files WTO Complaint Against China: The European Commission has filed a WTO complaint against China for allegedly pressuring EU companies to lower their standard-essential patent royalties unfairly. This is claimed to be an unfair trade practice allowing Chinese manufacturers cheaper access to EU technology, potentially impacting European tech companies' profitability and leading to increased patent litigation.
Trump Orders Dogecoin Use in Government Tech: President Trump signed an executive order mandating the use of Dogecoin in government technology sectors, signaling the Trump administration's active involvement in cryptocurrency markets.
US Video Game Market Growth Forecast: The US video game market is estimated to reach $61.96 billion in 2025 and grow to $192.91 billion by 2033. Market growth is expected to be driven by VR/AR technology innovation, cloud gaming, and cross-platform multiplayer capabilities.
2025 Key Tech Trends: AI remains the most prominent technology theme, presenting both opportunities and threats to businesses. In 2025, companies expect tangible returns on AI investments, while AI vendors face pressure to deliver on their promises.

Healthcare Sector

Changes in Hospital Operations and Healthcare Delivery: Growing distrust in the US healthcare system has led to calls for changes in hospital operations, healthcare service design and delivery, and funding methods.
Healthcare Industry Expectations for 2025 Budget: The healthcare industry is seeking policy support for medical device import tariff reduction, advanced technology R&D promotion, local manufacturing support, rural healthcare assistance, and improvements to government-led health insurance programs.
Ransomware Attacks Increase: Ransomware attacks on Latin American healthcare sectors are expected to increase in 2025. Digital transformation is making hospitals, clinics, and medical centers more vulnerable to cyber attacks.
Healthcare Policy Changes Under Trump Administration: The Trump administration is expected to bring changes to healthcare-related policies including FDA and ACA (Affordable Care Act), with medical AI regulation oversight and patient-centered healthcare services emerging as key issues.
Lack of Women's Health Support: The healthcare industry has raised concerns about insufficient health support for female employees, potentially leading to reduced productivity across the healthcare sector.

Financial Sector

Indian Overseas Bank Performance: Indian Overseas Bank reported Q3 2025 net profit of 87.3 billion rupees, up 21% year-over-year. Net interest income increased to 278.9 billion rupees, while gross non-performing assets ratio improved to 2.55%.
Dollar Weakens Ahead of Trump Inauguration: The dollar is weakening ahead of President Trump's inauguration, while the Indian rupee shows strength.
US Market Outlook: The US market is expected to show moderate gains in 2025 due to foreign policy and interest rate volatility. Investment sentiment is expected to improve once uncertainty around Trump administration's tariff and economic policies clears.
Symbotic Securities Class Action: Symbotic (SYM) faces a securities class action lawsuit over improper accounting practices. Investors can join the lawsuit until February 3, 2025.
Income Financial Trust Dividend: Income Financial Trust announced a monthly dividend of $0.072 per share, payable on February 10, 2025.

Energy Sector

Trump Administration Signals Energy Policy Changes: The Trump administration has announced a series of executive orders on energy and environmental policy. This could impact investment strategies in the energy sector.
Offshore Wind Leasing Suspended: The Trump administration plans to suspend offshore wind leasing and review federal wind project leasing and permitting practices. This could negatively impact the renewable energy sector, particularly offshore wind-related companies.
Trump Declares Energy Emergency: President Trump declared an energy emergency and signed an executive order to expand US energy production. The plan includes encouraging energy exploration and production on federal lands and waters, expanding production of non-fuel minerals including rare earth elements, and ensuring stable energy supply across all states. This is expected to benefit traditional energy industries.
LNG Energy Group Strategic Review Update: LNG Energy Group is conducting a strategic review to enhance shareholder value, examining options including financing, strategic partnerships, investments, acquisitions, divestitures, and mergers.
Carbon Capture, Utilization and Storage (CCUS) Market Outlook: ExxonMobil, Chevron, and Qatar Energy are leading the CCUS market, which is expected to grow significantly by 2030.

Retail/Consumer Goods Sector

Retail Sales Increase: December retail sales reached $994.1 billion, up 0.4% from the previous month. Year-over-year growth was 3.9%, showing strong momentum. This signals improving consumer sentiment and is positive for the retail/consumer goods sector.
Online Retail Market Growth: Online retail markets are growing rapidly in emerging markets including Brazil, China, India, Mexico, and South Africa. The market size in these countries was $885.32 billion in 2023 and is expected to reach $1.41 trillion by 2028.
Dollar General vs. Five Below: Dollar General and Five Below have seen their stock prices halve over the past year. Dollar General faces challenges from pressured low-income consumers, while Five Below must overcome slowing growth following the Squishmallow craze.
Martin Luther King Jr. Day and Trump Inauguration Impact: Some retailers may have modified hours due to the overlap of Martin Luther King Jr. Day and Trump's inauguration. Postal services are suspended, but Costco and Target remain open.
Henrico County Retail Leasing Deals: Colliers International and Cushman & Wakefield | Thalhimer announced several retail leasing deals in Henrico County. Emmy Squared Pizza, CAVA and others have opened new locations.

Investment Strategy

Markets are experiencing increased uncertainty and volatility following President Trump's inauguration. Investors should maintain a long-term investment perspective rather than being swayed by short-term market fluctuations.

US Market

Policy Uncertainty: A cautious stance is needed until Trump administration policy uncertainty clears and economic recovery signals strengthen.

Promising Sectors

Tech Sector: Focus on high-growth areas like AI, VR/AR, cloud gaming, especially US companies. The EU's WTO complaint against China could benefit US companies.
Healthcare Sector: Continued growth expected due to aging society and medical technology advances. Investment opportunities should be explored while monitoring healthcare policy changes and regulatory trends.
Energy Sector: Trump administration's energy policy changes could benefit traditional energy industries while disadvantaging renewable energy. Portfolio adjustments needed based on analysis of beneficiaries and negatively impacted stocks.

Risk Management

Interest Rate Hikes: Need to prepare for potential Fed rate hikes. Rate increases could negatively impact growth stocks, so caution needed in rate-sensitive sectors.
Inflation: Price pressures may persist. Include inflation hedge assets in portfolio to manage inflation risk.
Geopolitical Risk: Be mindful of uncertainty from Trump administration foreign policy changes. Diversify investment portfolio to spread risk as geopolitical factors can increase market volatility.

Important Notes

US markets closed January 20, 2025 for Martin Luther King Jr. Day.
Trump inauguration scheduled, market volatility may increase based on inauguration speech and policy announcements.
Watch for Fed rate hike possibility, persistent inflation, and geopolitical risks.

Summary and Conclusion

As of January 21, 2025, the US stock market shows mixed performance amid uncertainty with the Trump administration launch. While Trump's inauguration speech provided short-term upward momentum, uncertainty remains about specific policy directions. Energy policy changes in particular are expected to have opposing impacts on traditional versus renewable energy industries.
Investors should carefully develop investment strategies while monitoring key market variables including Trump administration policies, potential rate hikes, and inflation.

References

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