The Stock Market Has a Big Day on Jan. 29. Here's What Investors Should Know.
The S&P 500 (SNPINDEX: ^GSPC) is widely considered the best gauge for the overall U.S. stock market. The index surged 23% in 2024 as investors reacted to the strong economy and excitement about artificial intelligence, and it has already advanced another 2% in 2025 for similar reasons.
However, the U.S. stock market could move sharply on Jan. 29 and Jan. 30 based on commentary from the Federal Reserve, and earnings results from several "Magnificent Seven" companies: Apple (NASDAQ: AAPL) , Meta Platforms (NASDAQ: META) , Microsoft (NASDAQ: MSFT) , and Tesla (NASDAQ: TSLA) . Read on for details.
The Federal Reserve wraps up a two-day meeting on Jan. 29
The Federal Reserve has made dramatic changes to its economic outlook in recent months. In September, policymakers anticipated four quarter-point interest rate cuts in 2025, reflecting expectations that inflation would continue falling, gross domestic product (GDP) growth would slow to 2%, and unemployment would increase to 4.4% in 2024.
Inflation has since reaccelerated, and the economy and labor market have proven more resilient than Federal Reserve officials projected. GDP growth accelerated to 3% in the second quarter and 3.1% in the third quarter, and unemployment never topped 4.2% last year. So policymakers revised their outlook at the December meeting. They now expect only two quarter-point interest rate cuts in 2025.
However, since the last meeting, new data showed that inflation accelerated in November, hitting its highest level since July 2024. And the economy added 256,000 jobs in December, crushing the consensus estimate of 160,000. That information may cause the Federal Reserve to revise its outlook once again. Investors will get more information when the two-day meeting wraps up on Jan. 29.
Importantly, interest rate cuts encourage consumer spending and business investments, which promote economic expansion. Consequently, lower interest rates tend to send the stock market higher. So, any sign that policymakers anticipate fewer rate cuts in 2025 could send the stock market lower.
Several "Magnificent Seven" companies report earnings on Jan. 29 and 30
The U.S. stock market faces another potential inflection point in the next two days in that four "Magnificent Seven" companies are scheduled to report earnings results. Specifically, Meta Platforms, Microsoft, and Tesla will announce earnings after the market closes on Jan. 29, and Apple will deliver its report after the market closes on Jan. 30. Details are provided below:
The earnings events listed above have direct and indirect consequences for the stock market. By that I mean Meta Platforms, Microsoft, Tesla, and Apple collectively account for about 18% of the S&P 500. So, the entire stock market could rise or fall depending on how investors react to their earnings.
Additionally, those four companies play critical roles in the AI economy. Any context their management teams provide about AI investments and monetization could indirectly impact the market by influencing the share price of other stocks, like Nvidia , Amazon , and Alphabet . Importantly, those three companies account for 15% of the S&P 500, which means they could also move the entire stock market.
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