Investment Week at a Glance
Stocks finished mixed for the week. The Dow Jones Industrial Average fell 0.4%, the S&P 500 was up 0.3%, and the NASDAQ fell 0.2%. Foreign stocks (MSCI EAFE) were up for the week, rising 1.4%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.25%. (Data source: Wall Street Journal)
Fed Leaves Rates Unchanged, Trump Picks Warsh as Next Chair
The Federal Reserve met last week, and as expected, no change in rates was made. This decision was expected by the market, and there was little reaction from investors. The market continues to price in 2 rate cuts by the end of the year, with only a 7% chance of no cut this year. Kevin Warsh was selected by President Trump to be the next Fed Chair, and the market also showed little reaction to this announcement. While many expect Warsh to be more willing to cut rates than Powell, he is a critic of the Fed’s large balance sheet. It seems his hope would be for lower rates, but shrinking the balance sheet of the Fed, which could help offset inflation pressure from lower rates.
Earnings Season in Full Swing
It is Q4 earnings season, and companies continue to beat estimates and grow their earnings. The expected growth rate of earnings for the S&P 500 is just above 10% for Q4 of 2025. That number is expected to grow to over 17% in Q1 of 2027. Although roughly 80% of companies have beaten earnings estimates, the market has had a somewhat subdued reaction as investors have somewhat expected these beats. We will see if companies can meet the analysts’ expectations of continuing to grow earnings throughout 2026 and into 2027.
Verizon Rises Nearly 12%, Best Day Since 2008
Verizon reported earnings last week, and the company announced 616,000 new postpaid phone subscribers (most since 2019), beat earnings expectations, and also announced plans for a $25 billion share buyback. All of this led to the stock having its best day since 2008. This was much needed for investors as the stock has performed poorly over the past 5 years, down nearly 20%. Investors are hopeful the stock can continue to perform well as it remains below its .com peak in 1999. (CNBC)
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Quiz
How long is the Fed Chair’s term? (Scroll Down for Answer)
- 4 Years
- 8 Years
- 10 Years
- 12 Years
Answer:
- The Fed Chair is appointed to a 4-year term. The Fed Chair can be reappointed and has no limit on how many years they can serve. William McChesney Martin Jr. holds the longest term in which he was Fed Chair for nearly 19 years.
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