March S&P 500 E-Mini futures (ESH25) are up +0.49%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.67% this morning as a report indicating the U.S. might take a gradual approach to hiking tariffs boosted sentiment, while investors awaited crucial producer inflation data and comments from Federal Reserve officials.
Bloomberg reported that members of President-elect Donald Trump’s incoming economic team are considering gradually increasing tariffs on a monthly basis. One proposal involves a schedule of graduated tariffs that would rise by approximately 2% to 5% each month, and would rely on executive authorities under the International Emergency Economic Powers Act, the report said. Such a plan may alleviate inflation worries and bring down elevated Treasury yields, giving the Fed room to lower interest rates this year.
In yesterday’s trading session, Wall Street’s main stock indexes ended mixed. Mosaic (MOS) surged over +8% and was the top percentage gainer on the S&P 500 after Piper Sandler upgraded the stock to Neutral from Underweight. Also, health insurance stocks advanced after the U.S. Centers for Medicare & Medicaid Services proposed raising government payments to Medicare Advantage plans by an average of 4.3% in 2026, with CVS Health (CVS) climbing more than +7% and Humana (HUM) rising more than +6%. In addition, Intra-Cellular Therapies (ITCI) soared over +34% after Johnson & Johnson agreed to buy the biotech firm for about $14.6 billion. On the bearish side, Moderna (MRNA) plunged more than -16% and was the top percentage loser on the S&P 500 after the company slashed its 2025 revenue guidance. Also, megacap technology stocks lost ground, with Nvidia (NVDA) sliding about -2% to lead losers in the Dow and Apple (AAPL) falling more than -1%.
Market watchers are keenly awaiting the U.S. consumer inflation report for December and the start of the fourth-quarter earnings season this week.
“While even cooler-than-expected inflation data this week won’t nudge the Fed into another rate cut this month, it may help ease some of the bearish momentum, as could a solid start to earnings season,” said Chris Larkin at E*Trade from Morgan Stanley.
Meanwhile, U.S. rate futures have priced in a 97.3% chance of no rate change and a 2.7% chance of a 25 basis point rate cut at this month’s policy meeting.
Today, all eyes are focused on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. December PPI will come in at +0.4% m/m and +3.4% y/y, compared to the previous figures of +0.4% m/m and +3.0% y/y.
The U.S. Core PPI will also be closely monitored today. Economists expect December figures to be +0.2% m/m and +3.7% y/y, compared to November’s numbers of +0.2% m/m and +3.4% y/y.
In addition, market participants will be anticipating speeches from Kansas City Fed President Jeffrey Schmid and New York Fed President John Williams.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.784%, down -0.44%.
The Euro Stoxx 50 Index is up +0.95% this morning, snapping a two-day losing streak as risk sentiment in the region improved. Automobile, chemical, and technology stocks led the gains on Tuesday. The rebound came amid the report indicating that the Trump administration is contemplating a more gradual approach to tariffs. At the same time, European government bond yields edged lower, halting their recent rally and offering investors some respite. Meanwhile, French stocks outperformed, gaining extra momentum from the potential of a political deal that could avert a government collapse. In other news, data from the statistics agency Istat, released Tuesday, showed that Italy’s seasonally adjusted industrial production in November rose at the fastest pace since June. In corporate news, Jd Sports Fashion Plc (JD-.LN) tumbled over -9% after the British sportswear retailer slashed its full-year profit guidance.
European Central Bank policymaker Robert Holzmann said Tuesday that the ECB cannot reduce its key interest rate too quickly due to challenges such as persistently high core inflation.
Italy’s Industrial Production data was released today.
The Italian November Industrial Production came in at +0.3% m/m, stronger than expectations of 0.0% m/m.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +2.54%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.83%.
China’s Shanghai Composite Index closed sharply higher today, logging its best single-day gain since November 7th, after the nation’s securities regulator pledged to stabilize the market. Software services and automobile stocks led the gains on Tuesday. Sentiment received a boost after the China Securities Regulatory Commission said on Monday that it will work with the PBOC to improve the effectiveness of two structural monetary policy tools and strengthen the construction of a market-stabilization mechanism. The news that members of President-elect Donald Trump’s economic team discussed a gradual approach to hiking tariffs further bolstered investor sentiment. Meanwhile, data released by the People’s Bank of China on Tuesday showed that Chinese banks issued 990 billion yuan ($135 billion) in new yuan loans in December, an increase from November and exceeding analysts’ expectations as Beijing’s stimulus efforts spur credit demand. Leading investment banks, including UBS and Goldman Sachs, upheld an optimistic view on Chinese equities, citing robust corporate earnings and continued policy support. In corporate news, Contemporary Amperex Technology rose over +3%, extending yesterday’s gains following reports that the battery giant had hired banks, including JPMorgan and Bank of America, for a second listing in Hong Kong this year.
Japan’s Nikkei 225 Stock Index closed lower today as trading resumed after a holiday, with U.S. AI chip restrictions and speculation of a potential interest rate hike by the Bank of Japan next week weighing on sentiment. Chip stocks led the declines on Tuesday after the U.S. government announced it would tighten restrictions on AI chip and technology exports. Automobile stocks also underperformed. Data from the Ministry of Finance released Tuesday showed that Japan’s current account surplus increased sharply in November, driven by strong services and primary income balances. Separately, data showed that the gauge for Japan’s service sector unexpectedly rose to a 10-month high in December. Meanwhile, Japanese government bond yields climbed across the curve on Tuesday, reaching their highest levels in over a decade, amid a global debt selloff and expectations that the Bank of Japan will hike policy rates in the future. BOJ Deputy Governor Ryozo Himino indicated the possibility of an interest rate increase next week by stating that the board will be discussing it. He also noted that the probability of the central bank’s outlook being realized is steadily increasing. In corporate news, Media Do gained over +2% after raising its full-year dividend forecast to 35 yen per share. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up +11.78% to 24.30.
The Japanese November Current Account n.s.a. came in at 3.353T yen, stronger than expectations of 2.691T yen.
The Japanese December Economy Watchers Current Index stood at 49.9, stronger than expectations of 49.4.
Pre-Market U.S. Stock Movers
H&E Equipment Services (HEES) spiked about +105% in pre-market trading after United Rentals agreed to acquire the company for $92 per share.
KB Home (KBH) climbed over +10% in pre-market trading after the home builder posted upbeat Q4 results and issued solid FY25 guidance.
Advanced Micro Devices (AMD) rose more than +1% in pre-market trading after Loop Capital initiated coverage of the stock with a Buy rating and a $175 price target.
Visa (V) gained about +0.8% in pre-market trading after Seaport Research upgraded the stock to Buy from Neutral.
Aehr Test Systems (AEHR) tumbled over -19% in pre-market trading after the company swung to an FQ2 loss.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - January 14th
Applied Digital (APLD), Karooooo (KARO), Calavo Growers (CVGW), Park Aerospace (PKE).
