This Weekly Financial Markets Update reviews the top market headlines: Job Gains Cool in January, Manufacturing Sector Activity Moves to Expansion, AI Arms Race Gains Momentum
  • The U.S. economy added 143,000 jobs in January
  • The ISM Manufacturing Index registered 50.9% in January
  • Microsoft, Google, and Meta Platforms plan to grow AI capital expenditures by 45% in 2025

Top Three Market Headlines

Job Gains Cool in January: The U.S economy added 143,000 jobs in January, the U.S. Department of Labor reported last week. This fell short of economists' estimate of 170,000 additions and was a deceleration from the prior two months, which were revised upwards to 307,000 and 261,000, respectively. The healthcare sector was once again a large component of the employment gains in January, with retail, social assistance, and government employment also contributing. Meanwhile, the unemployment rate ticked downward to 4.0% from 4.1%, while average hourly earnings rose at a 4.1% annual pace, consistent with last month.

Manufacturing Sector Activity Moves to Expansion: The Institute for Supply Management (ISM) reported that its ISM Manufacturing Index registered 50.9% in January, up from 49.2% in December, led by improvements in new orders, production, and employment. This was the first month since October 2022 the index surpassed the 50% threshold differentiating expansion of business activity from contraction. ISM also reported that activity in the services sector expanded for the seventh consecutive month in January, albeit at a slightly lesser pace, as the Services Index fell from 54.0% to 52.8%.

AI Arms Race Gains Momentum: Large U.S. technology companies last week reiterated plans to spend aggressively on artificial intelligence (AI) related investments, such as building out data centers. Microsoft, Google, and Meta Platforms, in quarterly earnings reports, projected combined capital expenditures of at least $215 billion for their current fiscal years, up 45% from last year. Amazon also noted that most of its capital expenditures growth this year will be related to AI. The commitments come despite the recent announcement by Chinese company DeepSeek that it was able to replicate many of the capabilities of advanced American AI systems with at cheaper cost with far fewer chips.

As of February 07, 2025 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.05% 3.41% 3.41% 18.47%
S&P 500 -0.23% 2.55% 2.55% 22.30%
Russell 2000 -0.33% 2.28% 2.28% 18.49%
MSCI EAFE 0.24% 5.50% 5.50% 10.01%
MSCI Emerging Markets 1.40% 3.21% 3.21% 13.25%
FTSE NAREIT Equity 1.16% 2.21% 2.21% 16.27%
Bloomberg Commodity 1.97% 6.00% 6.00% 13.34%
Bloomberg U.S. Aggregate 0.39% 0.92% 0.92% 3.35%

US Dept. of Labor 2/7/25. WSJ 2/6/25 Institute for Supply Management 2/3/2025 & 2/5/2025, WSJ 2/7/2025. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.