Summary
Here Comes Nvidia AI giant Nvidia reports this week. Wall Street will also take in another key inflation gauge and new data on GDP. Last week, the Dow Jones Industrial Average fell 2.5%, the S&P 500 dropped 1.7%, and the Nasdaq lost 2.5%. So far, in 2025, the Dow and the S&P 500 are both up 2%, while the Nasdaq has gained 1%. The earnings train continues. Highlights this week include Zoom Communications on Monday; Home Depot, Intuit, and Keurig Dr. Pepper on Tuesday; Nvidia, Saleforce.com, Lowe’s, and TJX on Wednesday; and HP and Warner Bros. Discovery on Thursday. Some 425 (85%) of the S&P 500 companies have reported so far, and earnings for 4Q show a strong growth rate of about 16% over the prior-year quarter. That compares to 9% growth in 3Q. Communication Services, up 33%, and Financial, up 30%, are the best-performing sectors, while Energy is the worst, down 30%, according to Refinitiv. We forecast 12% EPS growth for 2025 and 11% EPS growth for 2026. On the economic calendar, the most-important indicator coming is a measure of inflation, namely the Personal Consumer Expenditures Index (PCE, due on Friday). This week also includes the Case-Shiller Home Price Index on Tuesday; New Home Sales on Wednesday; GDP and Durable Goods Orders on Thursday; and Personal Income and Personal Spending on Friday. PCE is the Economic Call of the Week from Argus’ Chief Economist Chris Graja, CFA, who offers the following. ‘We expect PCE to ease slightly for January. We see the headline number at 2.5% on a year-over-year basis. That would be a tick lower than 2.6% in December, but still above the Fed’s 2% target. We expect Core PCE, excluding food and energy, to be up 2.7% versus 2.8% in December. The PCE report follows the release of the Consumer Price Index and the Producer Price Index. Both CPI and PPI came in hot, but we are hopeful that this Friday’s release will show progress has been made on inflation because some components of PPI which flow into the PCE looked encouraging.’ Last week, mortgage rates dipped 2 basis points (bps), with the average 30-year fixed-rate mortgage now at 6.85%, according to FreddieMac. Gas prices rose two cents to an average
