New York Late Money Rates from The Wall Street Journal

US indices closed mixed on Thursday, as investors digested latest batch of corporate results ahead Amazon earnings and Friday's job report.

The S&P 500 and Nasdaq added 0.3% and 0.5%, respectively, while the Dow lost 125 points.

Semiconductor stocks declined, with Qualcomm dropping 3.8% and Arm losing 3.4%, while Skyworks Solutions plunged 24.7% following its latest earnings report.

Ford fell 7.1% as the automaker projected a challenging 2025, and Honeywell slid 5.5% after issuing weaker-than-expected earnings guidance and announcing plans to split into three companies, weighing on the Dow.

In contrast, Philip Morris surged 11% after posting strong earnings and revenue, setting the stock up for a record high close.

Eli Lilly also gained 3.7% following an earnings beat.

Meanwhile, bank stocks climbed after the Fed's stress test revealed milder hypothetical shocks.

Citigroup gained 3.7%, while Goldman Sachs, Morgan Stanley, Bank of America, and JPMorgan rose over 1.5% each.

Health care stocks were lower late Thursday afternoon, with the NYSE Health Care Index down 0.8% and the Health Care Select Sector SPDR Fund (XLV) shedding 1%.

The iShares Biotechnology ETF (IBB) dropped 1.3%.

In corporate news, Eli Lilly reported in-line Q4 sales on Thursday while reiterating 2025 revenue guidance that implies its top line will grow at the same pace as last year. Lilly shares rose 3.5%.

X4 Pharmaceuticals said Thursday that it is reducing its headcount by 43 employees, or about 30% of the workforce, ending research activities, and closing the Vienna, Austria facility. Its shares slumped past 7%.

Bausch + Lomb said a go-private deal with a third-party buyer won't materialize at this time. The deal was one of the options being explored to complete a full separation from Bausch Health , it said. Bausch + Lomb shares fell 9.5%, and Bausch Health was down past 10%.

Prestige Consumer Healthcare shares jumped over 14% after its fiscal Q3 adjusted earnings and revenue came in ahead of analysts' estimates.

Financial stocks were higher in late Thursday afternoon trading, with the NYSE Financial Index up 0.5% and the Financial Select Sector SPDR Fund (XLF) adding 0.7%.

The Philadelphia Housing Index shed 0.5%, and the Real Estate Select Sector SPDR Fund (XLRE) rose 0.1%.

Bitcoin (BTC/USD) declined 0.3% to $96,373, and the yield for 10-year US Treasuries rose 2 basis points to 4.44%.

In economic news, US initial jobless claims in the week ended Feb. 1 rose to 219,000 from 208,000 in the previous week, compared with expectations for 213,000 in a Bloomberg survey.

In sector news, US Treasury Secretary Scott Bessent said he personally vetted the Treasury workers on Elon Musk's government efficiency team with read-only access to payment data and that there hasn't been any "tinkering" with the department's payment systems, Bloomberg reported, citing a Bloomberg TV interview with Bessent.

Separately, the Federal Reserve told six big banks they will not need to submit climate stress test data in 2025 as the program has been shut down, Bloomberg reported.

In corporate news, Citigroup said it promoted more than 8,500 employees, effective at the start of this year, in its latest round of career advancements. Its shares were rising 3.5%.

JPMorgan Chase has been granted permission by a federal judge to proceed with its trade secrets lawsuit against Argus Information & Advisory Services, a unit of TransUnion (TRU), over alleged misuse of its credit card data. JPMorgan shares rose 2.1%.

Paysafe shares jumped 17% after Bloomberg reported the company is weighing a potential sale after receiving takeover interest.

Colliers International shares dropped over 8% after its Q4 adjusted earnings missed market expectations.

Treasury yields recover a little under the weight of relatively soft U.S. economic indicators and ahead of January jobs report. Weekly jobless claims were higher than expected, but within the range observed in most of the past several months. Economists surveyed by The Wall Street Journal expect payrolls tomorrow to print at 169,000, well below December's blockbuster figure of 256,000. Unemployment is forecast to remain at 4.1%. The sentiment index in the University of Michigan Consumer Survey is expected to decline to 71.3 from 73.2. Inflation data are coming next week. The 10-year gains 0.016 percentage point to 4.437% and the two-year rises 0.024 p.p. to 4.207%. (paulo.trevisani@wsj.com; @ptrevisani)

By Debbie Carlson

The Economic Policy Uncertainty Index is at the highest level since 2020. So are many equity valuations and bond yields. Yet, getting out of the markets at this time — or any time — is the wrong move, says George Gatch, CEO of J.P. Morgan Asset Management, a unit of JPMorgan Chase.

"Time in markets is more important than timing markets," he says.

Gatch, a 39-year J.P. Morgan veteran, has lived through many market cycles, and a regulation- and technology-driven revolution in asset management that has led to new investment strategies and products, including many that bundle traditional and risk-mitigating assets. Like other Wall Street firms, J.P. Morgan Asset Management, which oversees $3.6 trillion in global assets, has many more such products on the drawing boards.

Barron's recently spoke with Gatch about his investment views, industry innovations, and the importance of diversification. An edited version of the conversation follows.

Barron's : The stock market has whipsawed investors this year but continues to trade near all-time highs. What investment advice are you giving clients?

George Gatch: Because of the increased concentration of the indexes — not just the Magnificent Seven tech stocks but the technology sector overall — [equity] markets are fully valued and perhaps expensive relative to historical measures. We are recommending that clients broaden their equity exposure beyond large-cap growth and the Mag Seven. We see opportunities to broaden toward value in large-cap stocks and across all sectors. And, we see opportunities in mid-caps relative to large-caps.

We also suggest rebalancing toward fixed income, given the strength in equities over the past couple of years. Fixed income, on a relative basis, is more attractive than equities. We see opportunities in high-yield, where yields are topping 7%, and in securitized credit.

Do international markets look attractive to you? Many underperformed the U.S. last year.

Based on the Trump administration's policies, there is an opportunity to lean into the idea of "America the Exceptional." The proposed policies are likely to be more beneficial for the U.S. and more challenging for non-U.S. markets. We see above-trend growth in the U.S. this year. We expect the economy to grow more than 2%, and are forecasting growth above 2% for multiple years.

With that said, equity markets outside of the U.S. are more attractive on a valuation basis. There are opportunities in international markets [J.P. Morgan Asset Management recommends overweighting Japan and Hong Kong].

So, you still favor the U.S. over other markets but suggest some international exposure?

The only free lunch in investing is diversification, and we recommend that investors have exposure to U.S. and international companies. There are risks that we know about, and there are risks that we can't anticipate. We can hedge those things that we can see, but we use diversification to protect us against risks that we can't see.

Over a 24-year period, a diversified portfolio sits in the top third of all asset-class market returns, and in the bottom third based on volatility. [Diversification] is an important principle. As you come into an environment like this, it is hard to see across the horizon. Therefore, we are strongly encouraging people to have very broadly diversified portfolios and rebalance frequently.

What sort of odds do you put on a serious market selloff?

There will be a credit cycle and a recession at some point. The likelihood of that is probably small over the next one to two years.

You have overseen the growth and diversification of J.P. Morgan's asset-management business. How does J.P. Morgan think about launching new investment products?

Everything we do starts with, "does a strategy make sense for a long-term investor within a diversified asset allocation?" Our product-development strategy teams around the world work with our investment teams and get feedback from our clients.

That is very much how our equity premium income strategy developed. [The $38.8 billion JPMorgan Equity Premium Income exchange-traded fund, or JEPI, is the largest actively managed U.S. large-cap equity ETF.] Our teams recognized that clients in the U.S. and elsewhere were hesitant to move out of cash into equity markets because of risks, and they wanted high real [inflation adjusted] income in portfolios. That led us to develop a series of capabilities, starting in mutual funds and moving to exchange-traded funds, that provided participation in the market, upside potential with protection against downside risk, and attractive current yields using options.

To be in cash on the sidelines is the worst investment decision that a long-term investor can make.

Even in the current environment, with high valuations and a multitude of risks?

There is room in every portfolio for some position in liquidity. In a market like this, we are going to have higher levels of volatility. Having dry powder to redeploy, as you see more volatility and trade-offs, is good.

Time in markets is more important than timing markets. It is very difficult to time markets. Staying invested is the best strategy. If you missed the 10 best days in the past 20 years, you would have cut your return in half.

What product innovations do you see for J.P. Morgan and the broader asset-management industry?

Multi-asset is one of the next frontiers that hasn't been fully offered to investors in ETF structures. It is difficult for individual investors to make decisions about relative valuations of asset classes in periods of high volatility. Professional teams have the ability to make more-rapid decisions. I expect to see more innovation around the use of derivative strategies in ETF structures.

There is the potential to integrate derivatives and other strategies to reduce risk or offer downside protection [during market selloffs]. Target-date funds that give investors guaranteed forms of income payments, and the ability to dial up or dial down risk based on their risk tolerance, is another innovation.

Investors who got out of the market during the financial crisis of 2008-09 had a hard time getting back in at lower levels. What products are available now to address that conundrum that weren't on the market then?

One such product is absolute-return fixed-income funds that are broadly diversified [they invest in traditional and alternative fixed-income assets to achieve low-volatility returns uncorrelated with the bond market]. They complement traditional fixed income. The emergence of covered-call-type strategies [which use options to provide income and offer limited protection during market selloffs] are useful for investors who are hesitant about market levels.

What is the biggest change you have seen in the asset-management business during your career?

The biggest transformation has been that the individual investor has now become the dominant decision maker in asset management. That is a megatrend for the industry, and it is going to persist. More than half of the total flows into the asset-management industry come from individual investors through the wealth management segment, and that likely will continue to grow.

This trend emerged from the development of the defined-contribution 401(k) program and the movement away from defined-benefit plans. Individual investors can't rely on the government or their companies to provide for their investing and retirement, so they have to supplement retirement savings. That is the dominant factor in the U.S. and around the world.

Where is the growth in the asset-management industry?

Opportunities in the separately managed account business [customized portfolios for wealthy investors], and the ability to use technology for tax optimization and personalization at the individual account level, are a growing space for us. We have launched a series of tax-optimization capabilities for separately managed accounts, both actively managed and tied to direct indexing [which allows investors to own individual securities that mimic a chosen index to diversify and reduce taxes]. We're excited to take that same methodology and apply it across mutual funds, ETFs, and separately managed accounts.

We are also looking, as are many others, at the opportunities to bring direct private-market capability to wealth management structures. I'm talking about alternative products that historically have been available only in private vehicles for the largest clients.

Private credit is starting to make inroads into ETFs. How do you see these illiquid products fitting into a daily-liquidity vehicle?

Private-market assets wouldn't be suitable investments for the bulk of ETFs or mutual funds because of daily value and daily liquidity requirements. There are many who are hopeful that the Securities and Exchange Commission will provide approval for the launch of these strategies, but the key test is going to be the ability to value these securities. Also, there needs to be broad, deep markets to trade the securities. That isn't the case now.

What are more-appropriate vehicles?

Based on the structure of the markets today, other structures would be much more appropriate, such as interval funds [a type of closed-end fund that buys back shares at regular intervals but limits when investors can sell], business development corporations, and nontraded real estate investment trusts.

Even with the emergence of some of these new structures, like business development corporations and nontraded REITs, my concern is that sometimes investors don't understand these aren't always liquid, and there will be market environments where you may not be able to get your money back. It is important for industry participants to ensure that there is appropriate suitability and disclosure.

In the past, you ruled out a Bitcoin ETF. With the Trump administration friendly to cryptocurrencies, would you reconsider? Our litmus test for launching strategies in ETFs or other vehicles is whether they fit into a diversified strategic asset-allocation strategy. Bitcoin ETFs and cryptocurrency generally have high levels of volatility. Bitcoin is four times the volatility of the S&P 500 index. There is no income and no intrinsic value, and we don't see how they would fit into a diversified long-term strategy.

Thanks, George.

Write to editors@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Health care stocks were lower late Thursday afternoon, with the NYSE Health Care Index down 0.8% and the Health Care Select Sector SPDR Fund (XLV) shedding 1%.

The iShares Biotechnology ETF (IBB) dropped 1.3%.

In corporate news, Eli Lilly reported in-line Q4 sales on Thursday while reiterating 2025 revenue guidance that implies the top line will grow at the same pace as last year. Its shares rose 3.3%.