Stock Index Futures Muted as Rally Stalls, U.S. Economic Data Awaited

March S&P 500 E-Mini futures (ESH26) are down -0.06%, and March Nasdaq 100 E-Mini futures (NQH26) are up +0.07% this morning, taking a breather after the AI-driven rally seen in the first trading days of 2026.

Higher bond yields today are weighing on stock index futures. The 10-year T-note yield rose two basis points to 4.19%.

Investors look ahead to a slew of key U.S. economic data this week for more clues on the monetary policy outlook.

In yesterday’s trading session, Wall Street’s main stock indexes ended in the green, with the Dow notching a new all-time high. Energy stocks rallied after President Trump proposed a U.S.-led effort to revive Venezuela’s oil industry, with Valero Energy (VLO) surging over +9% to lead gainers in the S&P 500 and Chevron (CVX) climbing more than +5% to lead gainers in the Dow. Also, most chip stocks advanced, with KLA Corp. (KLAC) rising over +6% and Applied Materials (AMAT) gaining more than +5%. In addition, International Business Machines (IBM) rose more than +1% after Jefferies upgraded the stock to Buy from Hold with a price target of $360. On the bearish side, Versant Media Group (VSNT) plunged over -13% and was the top percentage loser on the S&P 500 and Nasdaq 100 after the company was spun off from Comcast Corp.

Economic data released on Monday showed that the U.S. December ISM manufacturing index unexpectedly fell to 47.9, weaker than expectations of 48.3. This marked the lowest reading of the year and the 10th consecutive month of contraction in the factory sector.

“A continuation of soft data would likely reinforce expectations of a more dovish Federal Reserve stance in 2026, with markets currently pricing in two rate cuts by the end of the year,” said Naga’s Frank Walbaum.

Minneapolis Fed President Neel Kashkari said on Monday that interest rates may now be near a neutral level for the U.S. economy, leaving incoming data to steer the central bank’s next moves.

Meanwhile, U.S. rate futures have priced in an 83.9% probability of no rate change and a 16.1% chance of a 25 basis point rate cut at the conclusion of the Fed’s January meeting.

Today, investors will focus on the U.S. S&P Global Composite PMI, set to be released in a couple of hours. Economists forecast that the final December figure will be unrevised at 53.0.

The U.S. S&P Global Services PMI will also be released today. Economists expect the final December figure to be unrevised at 52.9.

In addition, market participants will be looking toward a speech from Richmond Fed President Tom Barkin.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.189%, up +0.50%.

The Euro Stoxx 50 Index is down -0.44% this morning, taking a breather after hitting a record high in the previous session. Technology stocks retreated on Tuesday due to profit-taking. At the same time, healthcare and energy stocks advanced. A survey released on Tuesday showed that the Eurozone economy grew at a slower pace in December, but finished 2025 with its strongest quarterly expansion in over two years, as solid momentum in services helped offset a continued contraction in manufacturing. Separately, preliminary data from statistics agency Insee showed that France’s annual inflation rate cooled slightly in December, reinforcing the European Central Bank’s view that the Eurozone remains in a “good place” after leaving rates unchanged last month. Investors now await preliminary inflation data from Germany due later in the session. Meanwhile, Goldman Sachs on Tuesday raised its 12-month STOXX 600 target to 625 from 615, citing stronger global growth, improved corporate earnings, and appealing valuations. “Valuation is supported by strong global growth and falling interest rates in the U.S.,” Goldman said. In corporate news, Adidas AG (ADS.D.DX) slid over -6% after Bank of America double-downgraded the stock to Underperform from Buy.

France’s CPI (preliminary), Eurozone’s Composite PMI, and Eurozone’s Services PMI data were released today.

The French December CPI rose +0.1% m/m and +0.8% y/y, weaker than expectations of +0.2% m/m and +0.9% y/y.

Eurozone’s December Composite PMI came in at 51.5, weaker than expectations of 51.9.

Eurozone’s December Services PMI stood at 52.4, weaker than expectations of 52.6.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.50%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.32%.

China’s Shanghai Composite Index closed higher today, hitting its highest level in more than a decade as investor sentiment remained upbeat. Non-ferrous metal stocks led the gains on Tuesday. Insurance stocks also climbed as investors anticipate stronger product sales this year. In addition, technology stocks advanced, driven by continued optimism over domestic AI developments. Meanwhile, HSBC Global Research analysts said that China’s equity market could see a rally driven by technology and consumer stocks this year. AI is likely to remain the primary driver for tech stocks, supported by DeepSeek’s new framework, which calls for a rethink of the core architecture used to train foundational AI models, the analysts said. They also noted that consumer stocks are likely to benefit from a re-rating, supported by low valuations, light positioning, muted expectations, and policy support. In corporate news, Hesai Group rose over +5% in Hong Kong after the sensor maker was chosen by Nvidia as a hardware partner for its autonomous-driving technology platform. Investors are now awaiting China’s December inflation data, scheduled for release on Friday, which will provide insight into the strength of domestic demand.

Japan’s Nikkei 225 Stock Index closed higher and hit a record high today. The benchmark index’s gains were broad-based, tracking an overnight rally on Wall Street. Bank and brokerage stocks were among the biggest gainers on Tuesday amid continued expectations for gradual rate hikes from the Bank of Japan. Data released on Tuesday showed that Japan’s monetary base, or cash in circulation, fell for the first time in 18 years in 2025 as the BOJ scaled back its massive policy support. Meanwhile, Japan’s 10-year government bond yield reversed course to climb on Tuesday, reaching a fresh high since 1999 after a same-maturity bond auction drew relatively soft demand. In other news, Julius Baer analyst Louis Chua said in a note that Japanese companies are expected to post strong earnings growth in 2026, supporting near-term equity performance. In corporate news, Chubu Electric Power sank over -9% after the company said its methodology for seismic wave simulation differed from what it reported to Japan’s nuclear regulator for safety assessment. Investor focus this week is on Japan’s wage data for November. In addition, the BOJ will convene its branch managers’ meeting and release its regional economic report this week. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +5.09% to 26.62.

Pre-Market U.S. Stock Movers

Microchip Technology (MCHP) rose over +4% in pre-market trading after the chipmaker raised its Q3 revenue guidance.

Vistra Corp. (VST) gained more than +4% in pre-market trading after the company said it had agreed to buy Cogentrix Energy from Quantum Capital Group in a deal valued at about $4 billion.

Zeta Global (ZETA) jumped over +11% in pre-market trading after announcing a partnership with OpenAI to support the company’s conversational intelligence and agentic applications.

D.R. Horton (DHI) fell more than -1% in pre-market trading after Wells Fargo downgraded the stock to Equal Weight from Overweight.

AT&T (T) slid about -1% in pre-market trading after Arete downgraded the stock to Sell from Neutral with a $20 price target.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - January 6th

AAR (AIR), AngioDynamics (ANGO).