Stock Indexes Settle Lower on Tech Weakness

The S&P 500 Index ($SPX) (SPY) on Wednesday closed down -0.53%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.09%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.07%.  March E-mini S&P futures (ESH26) fell -0.56%, and March E-mini Nasdaq futures (NQH26) fell -1.08%.

Stock indexes settled lower on Wednesday, with the S&P 500 and Nasdaq 100 posting 1.5-week lows.  The weakness in chip makers and the Magnificent Seven technology stocks on Wednesday weighed on the broader market.  Rising geopolitical risks also undercut stocks as markets await the US response to the turmoil in Iran.  Reuters reported that some US personnel have been advised to leave the US Al Udeid Air base in Qatar.  The facility was targeted by Iran in retaliatory airstrikes last year after the US attacked Iran’s nuclear facilities.  However, on Wednesday afternoon, President Trump said he had been assured that Iran would stop killing protesters, in a signal he could hold off on a threatened military response to the widespread demonstrations. 

The heightened geopolitical risks in Iran pushed WTI crude oil up to a 2.5-month high on Wednesday, and precious metals soared as investors sought safe-haven assets.  Gold, silver, and copper jumped to new all-time highs on Wednesday.

Stocks bounced from their worst levels on Wednesday afternoon after an upbeat Fed Beige Book noted that US economic activity picked up at a "slight to modest pace" in most parts of the country since mid-November.  "This marks an improvement over the last three report cycles, where a majority of Fed districts reported little change."

Stocks also found modest support on stronger-than-expected US economic news on Nov retail sales, Nov producer prices, and Dec existing home sales, along with dovish comments from Philadelphia Fed President Anna Paulson, who said she sees Fed rate cuts later this year.  The 10-year T-note yield fell -4 bp to 4.14%.

US Nov PPI final demand rose +3.0% y/y, stronger than expectations of +2.7% y/y.  Nov PPI ex-food and energy also rose +3.0% y/y, stronger than expectations of +2.7% y/y 

US Nov retail sales rose +0.6% m/m, stronger than expectations of +0.5% m/m.  Also, Nov retail sales ex-autos rose +0.5% m/m, stronger than expectations of +0.4% m/m.

US Dec existing home sales rose +5.1% m/m to a 2.75-year high of 4.35 million, stronger than expectations of 4.22 million.

US MBA mortgage applications rose +28.5% in the week ended January 9, with the purchase mortgage sub-index up +15.9% and the refinancing mortgage sub-index up +40.1%.  The average 30-year fixed rate mortgage fell -7 bp to 6.18% from 6.25% in the prior week.

Minneapolis Fed President Neel Kashkari said the US economy is showing "resilience" and he doesn't see the "impetus" for the Fed to cut interest rates this month.

Philadelphia Fed President Anna Paulson said, "I see inflation moderating, the labor market stabilizing, and growth coming in around 2% this year.  If all of that happens, then some modest further adjustments to the funds rate would likely be appropriate later in the year."

The Supreme Court didn’t rule on challenges to President Trump’s tariffs on Wednesday.  The court did not say when it will issue its next opinions, but could schedule more decisions for next Tuesday and Wednesday, when the justices are again in session.

Better-than-expected trade news from China on Wednesday is supportive of global growth prospects.  China Dec exports rose+6.6% y/y, stronger than expectations of +3.1% y/y. Dec imports rose +5.7% y/y, stronger than expectations of +0.9% y/y.

Stocks also have some negative carryover from Monday on concerns about Fed independence, after Fed Chair Powell said the Justice Department was threatening a criminal indictment tied to his June testimony on Fed headquarters renovations, in retaliation for the Fed's refusal to go along with President Trump’s calls for lower interest rates. 

The market’s focus this week will be on economic news and any fresh news on the Federal Reserve.  On Thursday, initial weekly unemployment claims are expected to increase by 7,000 to 215,000.  Also, the Jan Empire manufacturing survey of general business conditions is expected to rise by 4.9 points to 1.0.  On Friday, Dec manufacturing production is expected to fall -0.1% m/m.  Also, the Jan NAHB housing market index is expected to increase by +1 to 40.

Q4 earnings season is set to begin this week as bank earnings start to roll in.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting the odds to 5% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets settled mixed on Wednesday.  The Euro Stoxx 50 fell from a new record high and closed down -0.41%.  China’s Shanghai Composite fell from a 10.5-year high and closed down -0.31%.  Japan’s Nikkei Stock 225 rallied to a new all-time high and closed up by +1.48%.

Interest Rates

March 10-year T-notes (ZNH6) on Wednesday closed up by +6.5 ticks.  The 10-year T-note yield fell -3.9 bp to 4.140%.  Concerns over a US response to the protests in Iran have boosted some safe-haven demand for T-notes after Reuters reported that some US personnel have been advised to leave a US air base in Qatar.  The base had been attacked last year by Iran in retaliation for US air strikes on Iranian nuclear facilities.  T-notes added to their gains on Wednesday on dovish comments from Philadelphia Fed President Anna Paulson, who said she sees additional Fed rate cuts later this year.

Gains in T-notes were limited after US Nov retail sales, Nov producer prices, and Dec existing home sales rose more than expected.  Also, hawkish comments from Minneapolis Fed President Neel Kashkari undercut T-note prices when he said he doesn't see the "impetus" for the Fed to cut interest rates this month.

European government bond yields moved lower on Wednesday.  The 10-year German bund yield fell -3.3 bp to 2.814%.  The 10-year UK gilt yield fell to a 13-month low of 4.336% and finished down -5.9 bp to 4.340%.

ECB Vice President Luis de Guindos said Eurozone inflation "remains in a good place," though global uncertainty is weighing on the economy.

UK gilt yields tumbled on Wednesday due to comments from BOE Deputy Governor Ramsden, who said, “The labor market is continuing to weaken,” as UK businesses are beginning to actively lay off workers rather than just scaling back hiring.

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

Weakness in the Magnificent Seven technology stocks on Wednesday was a bearish factor for the overall market.  Amazon.com (AMZN), Meta Platforms (META), and Microsoft (MSFT) closed down more than -2%.  Also, Nvidia (NVDA) and Tesla (TSLA) closed down more than -1%.  In addition, Apple (AAPL) closed down -0.33% and Alphabet (GOOGL) bucked the trend and closed up +0.03%.

Chip makers slid on Wednesday, weighing on the broader market.  Broadcom (AVGO) closed down more than -4%.  Also, ARM Holdings (ARM), Marvel Technology (MRVL), and Lam Research (LRCX) closed down more than -2%.  In addition, Applied Materials (AMAT) and Micron Technology (MU) closed down more than -1%. 

Travel stocks fell after the US State Department said it would soon suspend visas for 75 countries. Airbnb (ABNB) closed down more than -5%, Expedia Group (EXPE) closed down more than -3%, and Booking Holdings (BKNG) closed down more than -2%.

Energy producers and energy service providers are climbing today, with WTI crude oil hitting a 2.5-month high.  ConocoPhillips (COP) closed up more than +4%, and APA Corp (APA) closed up more than +3%.  Also, Marathon Petroleum (MPC), Exxon Mobil (XOM), Devon Energy (DVN), Phillips 66 (PSX), Valero Energy (VLO), Baker Hughes (BKR), Occidental Petroleum (OXY), and Chevron (CVX) closed up more than +2%.

Cryptocurrency-exposed stocks are rallying today with Bitcoin (^BTCUSD) up more than +3% at a 2-month high. Galaxy Digital Holdings (GLXY) closed up more than +5%, and Strategy (MSTR) and Riot Platforms (RIOT) are up more than +3%.  Also, Coinbase Global (COIN) and Mara Holdings (MARA) closed up more than +1%.

Trip.com (TCOM) ADRs closed down more than -7% after Chinese regulators said the company is being investigated over alleged antitrust conduct. 

Rivian Automotive (RIVN) closed down more than -7% after UBS downgraded the stock to sell from neutral with a price target of $15. 

Glaukos Corp (GKOS) closed down more than -5% after forecasting 2026 net sales of $600 million to $620 million, the midpoint below the consensus of $612.3 million. 

Wells Fargo & Co. (WFC) closed down more than -4% after reporting Q4 net interest income of $12.33 billion, below the consensus of $12.43 billion. 

Bank of America (BAC) closed down more than 3% after reporting Q4 FICC trading revenue excluding DVA of $2.52 billion, below the consensus of $2.62 billion. 

Intuitive Surgical (ISRG) closed down more than -2% after forecasting full-year da Vinci Procedure growth of 13% to 15%, below the consensus of 15.2%. 

LyondellBasell Industries (LYB) closed up more than +6% to lead gainers in the S&P 500 after Citigroup removed its 90-day downside catalyst watch on the stock as polyethylene prices improved and ethane prices fell, helping to boost integrated margins. 

Mosaic (MOS) closed up more than +5% after Morgan Stanley raised its price target on the stock to $35 from $33, citing higher potash demand. 

TG Therapeutics (TGTX) closed up more than +5% after reporting preliminary full-year 2025 revenue of $616 million, stronger than the consensus of $606.1 million. 

Weyerhaeuser (WY) closed up more than +4% after Citigroup raised its price target on the stock to $30 from $26.

CNH Industrial NV (CNH) closed up more than +3% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $13. 

Earnings Reports(1/15/2026)

Blackrock Inc (BLK), First Horizon Corp (FHN), Goldman Sachs Group Inc/The (GS), JB Hunt Transport Services Inc (JBHT), Morgan Stanley (MS).