The S&P 500 saw a significant increase of 1.8% on Wednesday, January 15, as strong earnings reports from several financial institutions and a decline in core inflation spurred optimism for potential interest rate cuts.
Tesla Stock Surges on Strong Demand in China
Tesla’s stock experienced a notable jump, rising 8%, after reports showed strong initial demand for the company’s updated Model Y in China. The electric vehicle (EV) maker’s revamped SUV is expected to be available in the U.S. and European markets in the coming months. Additionally, analysts at Morgan Stanley forecast that Tesla’s stock could reach up to $800 per share in the next year.
Positive Bank Earnings Boost Financial Sector
The financial sector also saw a boost, with several banks posting strong earnings. Bank of New York Mellon (BK) led the pack, reporting increased fee revenue and reduced non-interest expenses, surpassing quarterly profit expectations. Despite concerns regarding potential changes in tariffs and interest rate projections under the incoming presidential administration, the CEO of BNY Mellon emphasized the company’s positive momentum heading into 2025. As a result, shares of Bank of New York Mellon rose 8%, contributing to the broader rally in bank stocks.
Intuitive Surgical and Other Firms See Gains
Intuitive Surgical (ISRG) also performed well, with shares climbing 7.7%. The medical technology company reported preliminary fourth-quarter results, showing a 25% increase in year-over-year sales, surpassing analysts’ forecasts. The company also saw an 18% rise in procedures performed using its da Vinci surgical platform, boosting sales of related instruments and accessories. However, Intuitive Surgical expects a slight slowdown in global procedure growth in 2025.
Lululemon and Viatris Face Setbacks
On the downside, Lululemon Athletica (LULU) saw its stock fall 3.1%, marking the biggest loss among S&P 500 companies for the day. Although the yoga apparel maker had raised its sales and profit outlook earlier in the week due to strong holiday performance, its stock experienced volatility and was unable to maintain the gains.
Shares of Viatris (VTRS), a generic drug manufacturer, dropped 2.8% after the U.S. Food and Drug Administration (FDA) restricted the import of 11 generic drugs produced at one of its facilities in India. The FDA cited issues related to manufacturing and quality control, which caused the continued decline in Viatris’ stock since the announcement of the restrictions.
Hershey’s Stock Falls Amid Leadership Changes
Shares of Hershey (HSY) slipped 2.3% after the company announced that its CEO, Michelle Buck, would be departing. The announcement came shortly after a significant shareholder rejected a buyout proposal from snack giant Mondelez (MDLZ), which could have created the world’s largest confectionary company.
The strong performance in U.S. equities, particularly in the financial sector, was supported by the latest data from the Consumer Price Index (CPI), which showed signs of cooling inflation. These developments revived market hopes that the Federal Reserve might consider rate cuts in 2025, further boosting investor sentiment.
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