Stock Indexes Mixed on Big Tech Weakness and Higher Bond Yields

The S&P 500 Index ($SPX) (SPY) today is up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.45%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.77%.  March E-mini S&P futures (ESH26) are up +0.02%, and March E-mini Nasdaq futures (NQH26) are down -0.75%.

Stock indexes are mixed today, as the broader market is under pressure from weakness in chipmakers, data storage companies, and software makers. However, losses are contained as defense stocks rally after President Trump signaled plans to ramp up military spending to $1.5 trillion next year. 

Higher bond yields today are another negative factor for stocks. Yields rose after announced layoffs at US companies dropped to a 17-month low in December, and weekly jobless claims rose less than expected, signs of labor market strength that are hawkish for Fed policy.  The 10-year T-note yield is up +3 bp to 4.18%. 

Stocks found some support on today’s better-than-expected US economic news, which showed that Q3 nonfarm productivity increased, unit labor costs fell more than expected, and the trade deficit shrank to a 16-year low.

US Dec Challenger job cuts fell -8.3% y/y to 35,553, a 17-month low and a supportive factor for the US labor market.

US weekly initial unemployment claims rose +8,000 to 208,000, showing a stronger labor market than expectations of 212,000.

US Q3 nonfarm productivity rose by +4.9%, close to expectations of +5.0% and the biggest increase in 2 years.  Q3 unit labor costs fell by -1.9%, a bigger decline than expectations of -0.1%.

The US Oct trade deficit unexpectedly shrank to -$29.4 billion, better than expectations of widening to -$58.7 billion and the smallest deficit in 16 years.

The market’s focus this week will be on US economic news.  On Friday, Dec nonfarm payrolls are expected to increase by +70,000, 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 by 0.3% m/m and 3.6% y/y. In addition, Oct housing starts are expected to increase by 1.8% m/m to 1.33 million, and Oct building permits are expected to rise by 1.5% m/m to 1.35 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 12% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets are lower today.  The Euro Stoxx 50 is down -0.16%.  China’s Shanghai Composite closed down -0.07%.  Japan’s Nikkei Stock 225 closed down -1.63%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -9 ticks.  The 10-year T-note yield is up +3.0 bp to 4.177%.  T-notes are under pressure today after Dec Challenger job cuts fell to a 17-month low and weekly jobless claims rose less than expected, both positive for the US labor market and hawkish for Fed policy.  Losses in T-notes are limited after Q3 unit labor costs fell more than expected, a sign of easing wage pressures that are dovish for Fed policy. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +6.2 bp to 2.874%.  The 10-year UK gilt yield is up +0.7 bp to 4.423%.

The Eurozone Dec economic confidence indicator unexpectedly fell -0.4 to 96.7, weaker than expectations of an increase to 97.1. 

The Eurozone Nov unemployment rate unexpectedly fell -0.1 to 6.3%, showing a stronger labor market than expectations of no change at 6.4%.

Eurozone Nov PPI fell -1.7% y/y, right on expectations and the biggest decline in thirteen months.

The ECB's Nov 1-year inflation expectations were unchanged from Oct at 2.8%, stronger than the 2.7% expected.  The Nov 3-year inflation expectations remained unchanged from Oct at 2.5%, right on expectations.

German Nov factory orders unexpectedly rose +5.6% m/m, stronger than expectations of -1.0% m/m and the biggest increase in 11 months.

ECB Vice President Luis de Guindos said, "The current level of ECB interest rates is appropriate; the latest data are aligning perfectly with our projections.  Headline inflation is at 2%, and services inflation, which was our concern, is slowing."

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 falling today, weighing on the broader market.  Sandisk (SNDK) is down more than -10% to lead losers in the S&P 500, and Western Digital (WDC) is down more than -7% to lead losers in the Nasdaq 100.  Also, Seagate Technology Holdings (STX) is down by more than -6%, and Micron Technology (MU) and Applied Materials (AMAT) are down more than -4%.  In addition, ARM Holdings Plc (ARM), ASML Holding NV (ASML), Broadcom (AVGO), Lam Research (LRCX), and KLA Corp (KLAC) are down more than -3%. 

Software stocks are sliding today and weighing on the overall market.  Autodesk (ADSK) is down more than -6%, and Datadog (DDOG) is down more than -4%.  Also, Oracle (ORCL) is down more than -2%, and Salesforce (CRM) and Microsoft (MSFT) are down more than -1%. 

Mining stocks are moving lower today, with silver down more than -2% and copper down more than -1%.  Hecla Mining (HL), Freeport McMoRan (FCX), and Newmont Mining (NEM) are down more than -2%.  Also, Barrick Mining (B) is down more than -0.70%. 

Defense stocks are sharply higher today after President Trump said he wants to increase the US military budget by about 50% to $1.5 trillion in 2027. As a result, AeroVironment (AVAV) is up more than +8%, and Huntington Ingalls Industries (HII) is up more than +7% to lead gainers in the S&P 500.  Also, Lockheed Martin (LMT) and L3Harris Technologies (LHX) are up more than +6%, and Northrop Grumman (NOC) and General Dynamics (GD)are up more th a+4%.  In addition, RTX Corp (RTX) is up more than +1%. 

Revolution Medicines (RVMD) is down more than -4% after AbbVie said it is not in talks to acquire the company. 

Alcoa (AA) is down more than -3% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $50.

DoorDash (DASH) is down more than -2% after Bloomberg Second Measure said the company’s Q4 adjusted observed sales rose +25% y/y, below the consensus of +39% y/y.

Toast Inc (TOST) is down more than -1% after Wolfe Research LLC downgraded the stock to peer perform from outperform. 

Walmart (WMT) is down more than -1% after Deutsche Bank downgraded the stock to hold from not rated. 

Omnicell Inc (OMCL) is up more than +6% after KeyBanc Capital Markets upgraded the stock to overweight from sector weight with a price target of $60.

Globus Medical (GMED) is up more than +5% after forecasting full-year adjusted EPS of $4.30 to $4.40, stronger than the consensus of $4.12. 

Costco Wholesale (COST) is up more than +4% to lead gainers in the Nasdaq 100 after reporting Dec comparable sales ex-gas rose +6.3%, stronger than the consensus of +4.4%.

Generac Holdings (GNRC) is up more than +4% after Citibank upgraded the stock to buy from neutral with a price target of $207. 

Constellation Brands (STZ) is up more than +3% after reporting Q3 comparable net sales rose by $2.22 billion, above the consensus of $2.16 billion.

Steve Madden Ltd (SHOO) is up more than +2% after Needham & Co upgraded the stock to buy from hold with a price target of $50.

Earnings Reports(1/8/2026)

Acuity Inc (AYI), RPM International Inc (RPM), TD SYNNEX Corp (SNX).