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