Stocks Mixed After the Fed Pauses Rate Cuts

The S&P 500 Index ($SPX) (SPY) today is down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.19%.  

Stock indexes are mixed today, after the S&P 500 posting a new all-time high earlier in the day and the Nasdaq 100 posting a 3-month high. Strength in chipmakers and AI infrastructure stocks is buoying market today after a sharp increase in orders at ASML Holding NV added fresh optimism to the sustainability of artificial intelligence spending.  ASML Holding NV, the only producer of lithography machines that are needed to make advanced semiconductors, reported today that Q4 bookings were a record 13.2 billion euros, well above the consensus of 6.85 billion euros.  Also, Seagate Technology Holdings NV and Texas Instruments reported better-than-expected earnings results from.

However, stocks fell back from their best levels after the Federal Reserve announced it would halt its series of interest rate reductions, choosing to keep the benchmark rate steady between 3.5% and 3.75%. This decision met broad market expectations and ended a period of three consecutive quarter-point cuts that were designed to protect the labor market from potential weakness.

The dollar index (DXY00) is moving higher today, recovering some of Tuesday’s plunge to a nearly 4-year low. The dollar sank on Tuesday after President Trump said that he's comfortable with the recent weakness in the dollar.  Meanwhile, Mr. Trump’s comments have pushed gold prices (GCG26) up more than +3% today to a new all-time high.

WTI crude oil (CLH26) climbed to a 4-month high today after President Trump said in a social media post that he wants Iran to come to the table and negotiate a “fair and equitable deal with No Nuclear Weapons.”  He warned Iran that time is running out to make a deal with the US, noting that a fleet of US warships entering the region is ready to complete their mission “with speed and violence.”

US MBA mortgage applications fell -8.5% in the week ended January 23, with the purchase mortgage sub-index down -0.4% and the refinancing mortgage sub-index down 15.7%.  The average 30-year fixed rate mortgage rose +8 bp to 6.24% from 6.16% in the prior week.

Threats to stocks and the dollar remain.  President Trump has threatened new 100% tariffs on US imports from Canada, the possibility of a US government shutdown over ICE funding, and lingering concerns about Greenland.  In addition, there is political uncertainty about the Fed, as the FOMC is expected to leave rates unchanged at today’s meeting, potentially drawing new threats from Mr. Trump for refusing to cut rates further. 

The risk of another partial government shutdown is negative for stocks.  Senate Democrats threatened to block a government funding deal over Department of Homeland Security/ICE funding after the ICE shooting of an ICU nurse in Minnesota on Saturday.  There could be a partial government shutdown when the current stopgap funding measure expires this Friday.

The market’s focus this week will be on new tariff news and the prospects for a continued resolution (CR) to fund the government.  Later today, the FOMC is expected to keep the fed funds target range unchanged at 3.50%-3.75%.  Post-FOMC-meeting comments from Fed Chair Powell will also be scrutinized for clues about the future of Fed policy.  On Thursday, initial weekly unemployment claims are expected to increase by 5,000 to 205,000.  Also, Q3 nonfarm productivity is expected to be unrevised at 4.9%.  In addition, the Nov trade deficit is expected to widen to -$44.10 billion.  Finally, Nov factory offers are expected to increase by +1.6% m/m.  On Friday, Dec PPI final demand is expected to ease to +2.8% y/y from +3.0% y/y in Nov, and Dec PPI ex-food and energy is expected to ease to +2.9% y/y from +3.0% y/y in Nov.  Also, the Jan MNI Chicago PMI is expected to climb by +0.8 to 43.5.

Q4 earnings season is in full swing, with 102 of the S&P 500 companies scheduled to report earnings this week.  Microsoft, Meta Platforms, and Tesla report earnings results after today’s close, and Apple reports after the close on Thursday.  Earnings have been a positive factor for stocks, with 81% of the 83 S&P 500 companies that have reported beating expectations. 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 a 3% chance of a -25 bp rate cut at the conclusion of today’s FOMC meeting.

Overseas stock markets are mixed today.  The Euro Stoxx 50 fell from a 1.5-week high and is down by -0.83%.  China’s Shanghai Composite rose to a 2-week high and closed up +0.27%.  Japan’s Nikkei Stock 225 closed up +0.05%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -4 ticks.  The 10-year T-note yield is up +2.2 bp to 4.255%.  Today’s rally in the S&P 500 to a new record high is curbing safe-haven demand for T-notes.  Also, long liquidation and position squaring are weighing on T-notes ahead of the FOMC decision later today. 

European government bond yields are mixed today.  The 10-year German bund yield is down -1.3 bp to 2.862%. The 10-year UK gilt yield rose to a 5-week high of 4.546% and is up by +1.9 bp at 4.544%.

The German Feb GfK consumer confidence index rose by +2.8 to -24.1, stronger than expectations of -25.5.

Austrian central bank governor Kocher said the ECB would need to consider another interest rate cut if further increases in the euro's value were large enough to lower inflation projections.

Swaps are discounting a 0% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

Chip makers and AI infrastructure stocks are rallying today after positive earnings results from ASML Holding NV, Seagate Technology Holdings Plc, and Texas Instruments, signaling continued strong AI spending.  Seagate Technology Holdings Plc (STX) is up more than +17% to lead gainers in the S&P 500 and the Nasdaq 100.  Also, Intel (INTC), Western Digital (WDC), and Texas Instruments (TXN) are up more than +8%.  In addition, Microchip Technology (MCHP) is up more than +6%, and Sandisk (SNDK) and Micron Technology (MU) are up more than +5%.  Finally, NXP Semiconductors NV (NXPI) and ON Semiconductor Corp (ON) are up more than +4%, and Analog Devices (ADI) is up more than +3%.

F5 Inc. (FFIV) is up more than +7% after reporting Q4 net revenue of $822.5 million, well above the consensus of $758.8 million, and raised its full-year revenue forecast to +5% to +6% from a previous estimate of 0% to +4%.

Elevance Health (ELV) is up more than +5% after it said it will allocate $2.3 billion to share repurchases this year.

AT&T (T) is up more than +3% after reporting Q4 revenue of $33.5 billion, stronger than the consensus of $32.83 billion. 

PPG Industries (PPG) is up more than +3% after reporting Q4 net sales of $3.91 billion, above the consensus of $3.78 billion. 

MSCI Inc. (MSCI) is up more than +2% after reporting Q4 total recurring subscriptions of $2.45 billion, better than the consensus of $2.44 billion. 

Starbucks (SBUX) is up more than +2% after reporting Q1 US comparable same-store sales rose +4%, stronger than the consensus of +1.88%, and forecasting full-year comparable sales of at least +3%, above the consensus of +2.83%.   

Amphenol (APH) is down more than -13% to lead losers in the S&P 500 after Bloomberg Intelligence said the company’s sales forecast “underwhelms,” and after a robust Q4 beat, which suggests potential demand pull-forward.

Textron (TXT) is down more than -9% after forecasting 2026 adjusted EPS of $6.40 to $6.60, below the consensus of $6.86.

Qorvo (QRVO) is down more than -5% after forecasting Q4 adjusted EPS of $1.05 to $1.35, weaker than the consensus of $1.37. 

Otis Worldwide (OTIS) is down more than -3% after reporting Q4 net sales of $3.80 billion, below the consensus of $3.87 billion.

Danaher (DHR) is down more than -2% after forecasting full-year adjusted EPS of $8.35 to $8.50, the midpoint below the consensus of $8.46.

PayPal Holdings (PYPL) is down more than -1% after Rothschild & Co Redburn downgraded the stock to sell from neutral with a price target of $50.

Earnings Reports(1/28/2026)

Amphenol Corp (APH), ASML Holding NV (ASML), AT&T Inc (T), Automatic Data Processing Inc (ADP), CH Robinson Worldwide Inc (CHRW), Corning Inc (GLW), Danaher Corp (DHR), Elevance Health Inc (ELV), Fair Isaac Corp (FICO), GE Vernova Inc (GEV), General Dynamics Corp (GD), International Business Machine (IBM), Lam Research Corp (LRCX), Las Vegas Sands Corp (LVS), Lennox International Inc (LII), Meta Platforms Inc (META), Microsoft Corp (MSFT), MSCI Inc (MSCI), NVR Inc (NVR), Otis Worldwide Corp (OTIS), Raymond James Financial Inc (RJF), ServiceNow Inc (NOW), Southwest Airlines Co (LUV), Starbucks Corp (SBUX), Tesla Inc (TSLA), Textron Inc (TXT), United Rentals Inc (URI), Waste Management Inc (WM).