WSJ What’s News in Markets: Banking Boom, Macy’s Troubles, Drugmakers Slide
Released on January 18, 2025

Host: Francesca Fontana
Produced by: Pierre Bienime and Taliar Bell

Market Performance Overview

In this episode of What’s News in Markets, Francesca Fontana provides a comprehensive analysis of the week's stock market movements, highlighting significant gains and declines across various sectors. The major indices closed the week on a high note, marking their best performance since the post-election rally in November.

• Weekly Gains:
  • Dow Jones Industrial Average: Increased by 3.7%
  • S&P 500: Rose by 2.9%
  • Nasdaq Composite: Gained 2.5%

Francesca notes, “[...] the Dow, S&P 500, and Nasdaq all had their best trading day since that big post-election rally back in November” (00:45). These gains were largely driven by optimistic inflation data suggesting potential rate cuts and robust earnings reports from major banks.

Banking Sector Booms

The banking sector stood out with remarkable quarterly profits, signaling strong investor confidence and a positive economic outlook influenced by the incoming Trump administration.

• Key Bank Performances:
  • JPMorgan Chase: Net income surged by 50%.
  • Goldman Sachs: Net income more than doubled.
  • Citigroup: Swung to a profit after previous losses.
  • Wells Fargo, Morgan Stanley, and Bank of America: Also reported strong profit growth.

Francesca attributes the banks' success to heightened optimism from corporate clients regarding economic prospects and a resurgence in deal-making, fundraising, and trading activities: “...banks are seeing this optimism from their corporate clients about the economy and the incoming Trump administration, which is spurring a big return to deal making, fundraising and trading” (02:15).

• Stock Performance:
  • Goldman Sachs: Up nearly 12% for the week.
  • Wells Fargo: Rose over 10%.
  • Citigroup: Increased by 12%.

These gains underscore the market’s positive reception of the banks' financial health and future prospects.

Retail Sector Challenges: Macy’s vs. Target

While the overall retail landscape showed a 4% increase in core sales during November and December compared to 2023, not all retailers fared equally.

• Macy’s Struggles:

  • Performance: Macy's warned of weaker holiday sales despite efforts to boost revenue.
  • Stock Impact: Shares tumbled 8.1% on Monday and dropped over 11% for the week.
  • Insight: “Despite the company's recent efforts to boost revenue and turn the company around, Macy's shares tumbled” (04:10).

• Target’s Mixed Results:

  • Performance: Reported better-than-expected sales during the holiday period after years of sluggish performance.
  • Stock Impact: Despite strong sales, shares slipped 1% on Thursday and fell 5.7% for the week.
  • Insight: “Even so, Target shares slipped 1% Thursday and on a weekly basis fell 5.7%” (05:20).

Francesca explains that while consumer spending remained robust, certain strategic missteps or market expectations affected stock performance differently across retailers.

Drugmakers Face Slumps

The pharmaceutical sector experienced notable declines, with major drugmakers reporting disappointing earnings and guidance.

• Moderna's Decline:

  • Earnings Report: Missed Wall Street’s expectations with a revised 2025 revenue forecast slashed from $3.5 billion to between $1.5 billion and $2.5 billion due to sluggish sales of Covid and RSV vaccines.
  • Stock Impact: Shares plunged 17% on Monday and fell 19% for the week.
  • Quote: “Moderna really slashed this forecast” (06:45).

• Eli Lilly's Warning:

  • Issue: Sales growth of diabetes and anti-obesity drugs Mounjaro and Zepbound slower than anticipated.
  • Stock Impact: Shares sold off over 6% on Tuesday and dropped more than 9% for the week.

• Novo Nordisk's Setback:

  • Issue: Both Novo Nordisk and Eli Lilly faced further declines after the U.S. Government announced that Wegovy and Ozempic would undergo a second round of Medicare price negotiations, potentially hindering sales growth.
  • Stock Impact: Novo Nordisk shares fell 4.1% on Thursday and over 8% for the week.

Francesca highlights, “Now, it wasn't just me who was under the weather this week. So were some of the big names in drugmaker stocks” (07:30), emphasizing the sector-wide challenges stemming from regulatory pressures and shifting market dynamics.

Conclusion

Francesca Fontana wraps up the episode by directing listeners to her column in the Wall Street Journal’s Exchange section for more detailed insights on stock movements influenced by the week's news. She emphasizes the importance of staying informed and maintaining a diversified investment portfolio to navigate the ever-changing market landscape.

“Have a great weekend, stay healthy and see you next Saturday,” Francesca signs off, underscoring the cyclical nature of market news and the need for continuous engagement (08:15).

Key Takeaways:

• Banking Sector: Strong profit reports driven by economic optimism and strategic business activities.
• Retail Sector: Mixed performance with Macy’s struggling despite overall retail growth, while Target showed resilience.
• Pharmaceutical Sector: Significant challenges due to lowered revenue forecasts and regulatory pressures impacting major drugmakers.

For a deeper dive into these topics and to explore more stock movements influenced by the week's news, visit Francesca Fontana’s column in the Wall Street Journal’s Exchange section.