- Morning Download
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- Apple's mixed results
Apple's mixed results
and GDP disappoints
Good morning investors! Earnings season is in full swing with big companies coming up with surprises.
Today we cover:
Pending home sales drop
GDP disappoints
Earnings (Apple, Mastercard, Visa, and more)
📊 Economy and News
Pending Home Sales Drop Sharply in December
Signed contracts for existing homes fell 5.5% in December from the previous month and 5% year-over-year, marking the lowest level since August, according to the National Association of Realtors. This decline followed four consecutive months of gains.
The drop coincided with rising mortgage rates, which climbed from 6.68% on Dec. 6 to 7.14% on Dec. 19. While buyers had adjusted to higher rates, the 7% threshold appeared to deter demand.
Unlike existing homes, new home sales saw gains as builders offered mortgage rate buy-downs to attract buyers. Pending sales declined across all regions, with the West and Northeast experiencing the steepest drops at 8.1% and 10.3%, respectively, where home prices are highest.
Global hits:
German economy shrinks by 0.2% in fourth quarter, more than expected.
US dollar edges higher against peers amid fresh tariff threats, ECB cut.
Italy's regulator blocks Chinese AI app DeepSeek on data protection.
Economic Growth Slows: The U.S. economy grew at a 2.3% annualized pace in Q4 2024, below the expected 2.5% and down from 3.1% in Q3, according to the Commerce Department. For the full year, GDP rose 2.8%, slightly lower than 2023’s 2.9%.
Consumer spending remained strong, rising 4.2% despite high prices, while government spending increased 3.2%. Trade and private investment dragged on growth, with imports and exports both down 0.8%, and private domestic investment falling 5.6%, cutting over a percentage point from GDP. This report is the first of three estimates from the Bureau of Economic Analysis.
Also check: Initial unemployment claims fell to 207,000 for the week ending Jan. 25, a sharp drop of 16,000 from the previous week and well below the expected 228,000.
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📈 Stocks
S&P 500 6,071.17 (+0.53%)
DJIA 344,882.13 (+0.83%)
NASDAQ 19,681.75 (+0.25%)
BRENT CRUDE 77.02 (+0.57%)
* Prices as of Jan 31st, 12:20 AM UTC
Apple announces mixed results
Apple reported Q1 EPS of $2.40, beating estimates by $0.04, with revenue reaching $124.3 billion, slightly below the $124.99 billion forecast, its best ever. The company’s fiscal 2025 first-quarter revenue grew 4%, driven by product sales of $97.9 billion.
iPhone sales dipped to $69.1 billion from $69.7 billion a year earlier, while services revenue surged to $26.3 billion from $23.1 billion. US and European sales rose to $52.6 billion and $33.8 billion, respectively, but China sales fell to $18.5 billion from $20.8 billion.
Apple declared a $0.25 per share dividend, payable on February 13, 2025. CEO Tim Cook announced that "Apple Intelligence" will expand to more languages in April. The stock closed at $237.59, up 6.59% over three months and 28.84% over the past year.
Exciting: IBM had its best day since 2000, jumping over 13% on the back of a solid earnings report. Also, Mastercard pushed to a record high after topping Q4 estimates. For 2025, the company expects to generate low double-digit revenue growth for both Q1 and the full year. On the other hand, competitor Visa reported first quarter EPS of $2.75, $0.09 better than the analyst estimate of $2.66. Revenue for the quarter came in at $9.51B versus the consensus estimate of $9.35B.
Some fell: UPS shares fell over around -15% after the company announced plans to slash Amazon deliveries by over half. CEO Carol Tome said the move aims to make UPS more profitable and agile. The company has been moving away from low-margin contracts, while Amazon continues expanding its own logistics network. Elsewhere, H&M fell after missing Q4 sales forecasts, partly due to a later Black Friday. However, sales improved in December and January, and full-year operating profit slightly beat expectations.
💵 Personal Finance
More about taxes
We’ll continue the topic and discuss more about taxes below.
State and Local Tax Deduction Limits
The State and Local Tax (SALT) deduction allows taxpayers who itemize their federal income tax returns to deduct certain taxes paid to state and local governments, including property taxes and either income or sales taxes. However, the Tax Cuts and Jobs Act (TCJA) of 2017 imposed a cap of $10,000 on the SALT deduction ($5,000 for married individuals filing separately) from 2018 through 2025.
As of 2024, this $10,000 cap remains in effect, limiting the amount of state and local taxes that taxpayers can deduct on their federal returns. This limitation has been particularly impactful for residents in high-tax states, such as California, New York, and New Jersey, where state income and property taxes often exceed the cap.
Looking ahead, the future of the SALT deduction cap is uncertain. The current cap is scheduled to expire at the end of 2025, along with other provisions of the TCJA. Lawmakers are debating potential changes, including proposals to repeal or modify the cap. Some representatives from high-tax states advocate for increasing or eliminating the cap to provide relief to their constituents.
Taxpayers considering itemizing deductions should be aware of the current SALT deduction limits and stay informed about potential legislative changes that could affect their tax planning strategies in the coming years.
Want more tax data, including available tax credits? Feel free to comment and let us know.
Here’s an interesting video on the topic:
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