Global Markets Rally as Earnings Surge Past Expectations | Commodities Turn Bullish
S&P 500 surges 3.7% YTD while earnings growth hits an impressive 16.6% - marking the strongest start since 2023. Yet beneath the surface, a seismic shift is occurring as small caps outperform and sector leadership broadens. Here's your roadmap to capitalizing on this evolving landscape.
MARKET SNAPSHOT
- S&P 500: 6,086.37 (+0.61%, +3.7% YTD)
- Dow Jones: 44,156.73 (+0.30%, +3.79% YTD)
- NASDAQ 100: 21,853.00 (+1.33%, +4.00% YTD)
Trading volume remains robust, tracking 15% above the 30-day average, indicating strong institutional participation.
DRIVING FORCES
Q4 earnings season is delivering stellar results, with 78 S&P 500 companies reporting 16.6% earnings growth and 4.7% revenue growth. Eight sectors are showing positive earnings momentum, with four posting double-digit gains. The strongest performers include:
- Industrials: +7.0%
- Communications Services: +6.2%
- Energy: +6.0%
State Street Global Advisors has increased their equity overweight stance, particularly favoring Pacific and US small-cap equities. Meanwhile, commodities have been upgraded to overweight, supported by rising energy prices and positive momentum indicators.
TRADER TACTICS (1-5 DAYS)
Entry Points:
- S&P 500: Look for pullbacks to 6,000 for tactical entries
- Small Caps: Consider entries on Russell 2000 at current levels
Risk Management:
- Place stops 2% below entry points
- Use trailing stops on winning positions
INVESTOR POSITIONING (3-6 MONTHS)
Sector Rotations:
- Overweight: Energy, Financials, Consumer Discretionary
- Underweight: Communication Services
Portfolio Adjustments:
- Increase allocation to small-caps
- Add commodity exposure
- Reduce aggregate bond positions
WATCH LIST
Economic Calendar:
- Q4 GDP Report (Expected: +2.7% annualized)
- Federal Reserve Meeting
- January Employment Report
RISK RADAR
- Technical: S&P 500 resistance at 6,200
- Fundamental: Valuations stretched in tech sector
- Geopolitical: US-China trade relations, Iran-Russia partnership developments
The market's strong start to 2025 presents compelling opportunities, particularly in small-caps and commodities. While mega-cap tech has led in recent years, we're seeing a healthy broadening of market leadership. Maintain disciplined position sizing and stay alert to upcoming catalysts.
Sources:
- State Street Global Advisors - Tactical Asset Allocation Report - January 21, 2025
- Oppenheimer & Co. Inc. Market Strategy Report - January 27, 2025
- MarketScreener Global Markets Data - January 27, 2025
- The Strategist - 2025 Geopolitical Calendar - January 17, 2025
- Russell Investments - 2025 Global Market Outlook