Stocks Climb on AI Spending Optimism and Strength in Energy Producers

The S&P 500 Index ($SPX) (SPY) today is up +0.54%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.99%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.78%.  March E-mini S&P futures (ESH26) are up +0.58%, and March E-mini Nasdaq futures (NQH26) are up +0.80%.

Stock indexes are climbing today, with the Dow Jones Industrial Average posting a new all-time high.  Optimism about AI spending is boosting chipmakers and data storage companies. Also, energy companies are rallying today after President Trump said a team of US officials will “run” Venezuela after capturing Venezuelan President Maduro and that the US requires “total access” to the country, including its oil reserves.  In addition, mining stocks are moving higher as escalating geopolitical risks in South America boost demand for precious metals as haven assets, with gold up more than 2% and silver up more than 5%. 

Dovish comments on Saturday from Philadelphia Fed President Anna Paulson were supportive for equity prices after she said she sees “inflation moderating, the labor market stabilizing, and growth coming in around 2% this year.  If all that happens, then some modest further adjustments to the funds rate would likely be appropriate later in the year." 

However, today’s comments from Minneapolis Fed President Neel Kashkari were slightly hawkish for Fed policy when he said that US interest rates may be "close to neutral" for the economy.

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 market’s focus this week will be on US economic news, including today’s Dec ISM manufacturing index, expected up +0.2 to 48.4.  On Tuesday, the Dec S&P manufacturing PMI is expected to be unrevised at 52.9.  On Wednesday, the Dec ADP employment change is expected to increase by +48,000.  Also, the Dec ISM services index is expected to slip -0.3 to 52.3.  In addition, the JOLTS job openings are expected to climb by +9,000 to 7.679 million.  Finally, on Wednesday, Oct factory orders are expected to decline by -1.1% m/m.  On Thursday, Q3 nonfarm productivity is expected to climb by +4.7%, and unit labor costs are expected to rise by +0.3%. Also, weekly initial unemployment claims are expected to increase by +12,000 to 211,000.  On Friday, Dec nonfarm payrolls are expected to increase by +59,000, and the Dec unemployment rate is expected to slip by -0.1 to 4.5%. Also, Dec average hourly earnings are expected to be up +0.3% m/m and +3.6% y/y.  In addition, Oct housing starts are expected to increase by 1.4% m/m to 1.325 million, and Oct building permits are expected to rise by 1.1% m/m to 1.350 million.  Finally, the University of Michigan's Jan consumer sentiment index is expected to climb by 0.6 points to 53.5. 

The markets are discounting the odds at 16% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets are moving higher today.  The Euro Stoxx 50 rose to a new all-time high and is up by +0.85%.  China’s Shanghai Composite rallied to a 1.5-month high and closed up by +1.38%.  Japan’s Nikkei Stock 225 climbed to a 2-month high and closed up sharply by +2.97%.

Interest Rates

March 10-year T-notes (ZNH6) today are up by +4 ticks.  The 10-year T-note yield is down -1.6 bp to 4.175%.  Mar T-notes are moving higher today on dovish comments from Philadelphia Fed President Anna Paulson, who said she sees the Fed cutting interest rates later this year if inflation moderates.  Also, heightened global geopolitical risks boosted safe-haven demand for T-notes after the US raided Venezuela and captured Venezuelan President Maduro. 

Strength in stocks today is limiting the upside in T-note prices. Also, comments from Minneapolis Fed President Neel Kashkari undercut T-notes when he said that US interest rates may be "close to neutral" for the economy.

European government bond yields are moving lower today.  The 10-year German bund yield is down -1.8 bp to 2.882%.  The 10-year UK gilt yield is down -3.4 bp to 4.503%.

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

Chip makers and data storage companies are moving higher today, supporting gains in the overall market.  ARM Holdings Plc (ARM) and KLA Corp (KLAC) are up more th +5%, and ASML Holding NV (ASML) and Lam Research (LRCX) are up more than +4%.  Also, Applied Materials (AMAT), ON Semiconductor (ON), Marvell Technology (MRVL), Microchip Technology (MCHP), Advanced Micro Devices (AMD), and NXP Semiconductors NV (NXPI) are up more than +3%.  In addition, Analog Devices (ADI), Intel (INTC), and Qualcomm (QCOM) are up more than +2%.

Energy producers and energy service providers are rallying today after President Trump said a team of US officials will “run” Venezuela and that the US requires “total access” to the country, including its oil reserves.  Valero Energy (VLO) is up more than +9% to lead gainers in the S&P 500.  Also, Halliburton (HAL) and SLB (SLB) are up more than +7%, and Marathon Petroleum (MPC) and Phillips 66 (PSX) are up more than +6%.  In addition, ConocoPhillips (COP) and Baker Hughes (BKR) are up more than +5%, and Chevron (CVX) is up more than +4% to lead gainers in the Dow Jones Industrials. 

Mining stocks are moving higher today, with the price of gold up more than +2%, copper up +3%, and silver up more than +5%.  Barrick Mining (B), Newmont Mining (NEM), Freeport McMoRan (FCX), Hecla Mining (HL), and Coeur Mining (CDE) are up more than +2%. 

Cryptocurrency-exposed stocks are climbing today with Bitcoin (^BTCUSD) up more than +3% at a 4-week high. Coinbase Global (COIN) and Galaxy Digital Holdings (GLXY) are up more than +5%.  Also, Strategy (MSTR) and Mara Holdings (MARA) are up more than +4%, and Riot Platforms (RIOT) is up more than +3%. 

GH Research Plc (GHRS) is up more than +34% after it said the FDA lifted the clinical hold on its Investigational New Drug Application for its GH001 drug, advancing the company toward initiating its global Phase 3 trial for treatment-resistant depression. 

QXO Inc (QXO) is up more than +7% after saying that Apollo Global and other investors agreed to invest $1.2 billion in the company through a new series of convertible perpetual preferred stock.

Mobileye Global (MBLY) is up more than +5% after Barclays upgraded the stock to overweight from equal weight with a price target of $16. 

Estee Lauder (EL) is up more than +3% after Raymond James upgraded the stock to strong buy from market perform with a price target of $130.

Fortive Corp (FTV) is down more than -4% after Mizuho Securities double-downgraded the stock to underperform from outperform with a price target of $51.

Uber Technologies (UBER) is down more than -1% after Melius Research LLC downgraded the stock to sell from hold with a price target of $73.

Pentair Plc (PNR) is down more than -1% after TD Cowen downgraded the stock to sell from hold with a price target of $90.

Earnings Reports(1/5/2026)

None.