Stocks Give Up Early Gains as Megacap Tech Shares Fall

The S&P 500 Index ($SPX) (SPY) today is down -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.28%.  March E-mini S&P futures (ESH26) are down -0.04%, and March E-mini Nasdaq futures (NQH26) are down -0.28%.

Stock indexes gave up early gains today and turned lower on weakness in megacap technology stocks.  Higher bond yields are a negative factor for stocks as the 10-year T-note yield climbed to a 1.5-week high today at 4.19%.  In addition, weakness in insurance stocks is a drag on the overall market.

The strength in chip makers, megacap technology stocks, and AI-infrastructure companies is a supportive factor for stocks.  Also, strength in European stocks today is providing carryover support to US equity markets after the Euro Stoxx 50 rallied to a new record high.

The US Dec S&P manufacturing PMI was kept unrevised at 51.8, right on expectations.

The markets are discounting the odds at 15% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets are higher today.  The Euro Stoxx 50 rallied to a new all-time high and is up by +0.77%.  China’s Shanghai Composite and Japan’s Nikkei Stock 225 are closed today for the New Year’s Day holidays.

Interest Rates

March 10-year T-notes (ZNH6) are down -4 ticks.  The 10-year T-note yield is up +2.6 bp to 4.181%.  Mar T-notes fell to a 1.5-week low today, and the 10-year T-note yield rose to a 1.5-week high of 4.191%.  T-notes are modestly lower today as stock market strength has reduced safe-haven demand for government debt securities.  Also, rising inflation expectations are weighing on T-notes as the 10-year breakeven inflation rate rose to a 2.5-week high today at 2.262%. 

European government bond yields are moving higher today.  The 10-year German bund yield rose to a 1.5-week high of 2.910% and is up +3.6 bp to 2.890%.  The 10-year UK gilt climbed to a 1.5-week high of 4.530% and is up +4.3 bp to 4.521%.

The Eurozone Dec S&P manufacturing PMI was revised downward by -0.4 to 48.4 from the previously reported 49.2.

The Eurozone Nov M3 money supply rose +3.0% y/y, stronger than expectations of +2.7% y/y and the highest in four months.

The UK Dec S&P manufacturing PMI was revised downward by -0.6 to 50.6 from the previously reported 51.2.

Swaps are discounting a 1% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

The Magnificent Seven stocks gave up early gains today and turned lower, weighing on the broader market. Microsoft (MSFT), Amazon.com (AMZN), and Meta Platforms (META) are down more than -2%.  Also, Tesla (TSLA) is down more than -1% after reporting Q4 vehicle deliveries of 418,227, weaker than the consensus of 440,907.  In addition, Alphabet (GOOGL) is down -0.60% and Apple (AAPL) is down -0.50%.

Chip makers and AI-infrastructure stocks are moving higher today to lead the overall market higher.  Sandisk (SNDK) is up more than +12% to lead gainers in the S&P 500, and ASML Holding NV (ASML) is up more than +8% to lead gainers in the Nasdaq 100 after Alethia Capital double-upgraded the stock to buy from sell with a price target of $1,500.  Also, Micron Technology (MU) is up more than +7%, and Lam Research (LRCX), Western Digital (WDC), and Intel (INTC) are up more than +6%.  In addition,  ARM Holdings Plc (ARM) is up more than +5%, and Applied Materials (AMAT), KLA Corp (KLAC), Advanced Micro Devices (AMD), Marvell Technology (MRVL), and Seagate Technology Holdings (STX) are up more than +4%.  Finally, Broadcom (AVGO) is up more than +3%. 

Cryptocurrency-exposed stocks are climbing today with Bitcoin (^BTCUSD) up more than +1%.  Riot Platforms (RIOT) is up more than +9% and Mara Holdings (MARA) is up more than +8%.  Also, Galaxy Digital Holdings (GLXY) is up more than +7% and Strategy (MSTR) and Coinbase Global (COIN) are up more than +2%.  

Insurance stocks are under pressure today. Progressive (PGR) is down more than -7% to lead losers in the S&P 500.  Also, Erie Indemnity (ERIE) is down more than -3%, and Allstate (ALL), American International Group (AIG), Hartford International Group (HIG), and Travelers (TRV) are down more than -1%.

Sable Offshore (SOC) is up more than +17% after a federal appeals court said the company can restart its California pipeline and can begin pumping oil from its three platforms off the coast of Santa Barbara, California.

RH (RH) is up more than +6%, and Wayfair (W) is up more than +5% after President Trump delayed tariff increases on upholstered furniture until next year. 

Vertiv Holdings (VRT) is up more than +8% after Barclays upgraded the stock to overweight from equal weight with a price target of $200.

Earnings Reports(1/2/2026)

Lifecore Biomedical (LFCR).