March S&P 500 E-Mini futures (ESH25) are up +0.50%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.55% this morning as Treasury yields fell after cash trading resumed following the Martin Luther King Jr. Day holiday, with investors digesting President Donald Trump’s return to the White House and awaiting economic data and corporate earnings reports.
Treasury yields dropped on Tuesday following President Donald Trump’s inaugural speech, with the lack of an immediate imposition of broad tariffs easing investor concerns about quicker inflation. At the same time, the dollar initially opened lower but later surged after President Trump threatened to impose tariffs of up to 25% on imports from Canada and Mexico as soon as February 1st.
In Friday’s trading session, Wall Street’s major equity averages ended higher, with the benchmark S&P 500 and tech-heavy Nasdaq 100 notching 1-1/2 week highs and the blue-chip Dow posting a 1-month high. Intel (INTC) surged over +9% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after a report from the website SemiAccurate said the beleaguered chipmaker may be an acquisition target. Also, chip stocks gained ground, with Marvell Technology (MRVL) climbing more than +6% and GlobalFoundries (GFS) advancing over +5%. In addition, Qorvo (QRVO) jumped more than +14% after the Wall Street Journal reported that activist investor Starboard Value had built a 7.7% stake in the company. On the bearish side, J.B. Hunt Transport Services (JBHT) slumped over -7% and was the top percentage loser on the S&P 500 after reporting weaker-than-expected Q4 EPS.
Economic data released on Friday showed that U.S. housing starts rose +15.8% m/m to a 10-month high of 1.499M in December, stronger than expectations of 1.330M. Also, U.S. building permits, a proxy for future construction, fell -0.7% m/m to 1.483M in December, stronger than expectations of 1.460M. In addition, U.S. industrial production rose +0.9% m/m in December, stronger than expectations of +0.3% m/m, while manufacturing production rose +0.6% m/m, stronger than expectations of +0.2% m/m.
Cleveland Fed President Beth Hammack said in an interview published in the Wall Street Journal on Friday that “we still have an inflation problem,” and the central bank can be “very patient” regarding further rate cuts.
Meanwhile, U.S. rate futures have priced in a 99.5% chance of no rate change at next week’s monetary policy meeting.
The fourth-quarter earnings season heats up this week, with investors looking forward to fresh reports from major companies including Netflix (NFLX), Johnson & Johnson (JNJ), American Airlines Group (AAL), United Airlines Holdings (UAL), American Express (AXP), Abbott Laboratories (ABT), Verizon Communications (VZ), The Procter & Gamble Company (PG), 3M (MMM), and NextEra Energy (NEE). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.5% increase in quarterly earnings for Q4 compared to the previous year.
Market watchers will also be monitoring several economic data releases this week, including the U.S. S&P Global Manufacturing PMI (preliminary), the S&P Global Services PMI (preliminary), the Conference Board’s Leading Economic Index, Initial Jobless Claims, Crude Oil Inventories, Existing Home Sales, and the University of Michigan’s Consumer Sentiment Index.
Federal Reserve officials are in a media blackout period before the late-January meeting, so they are prohibited from making public comments this week.
The U.S. economic data slate is empty on Tuesday.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.566%, down -0.98%.
The Euro Stoxx 50 Index is down -0.06% this morning as cautious sentiment prevailed, with investors evaluating the initial actions of Donald Trump in his second term as U.S. President. Healthcare and financial stocks led the gains on Tuesday. At the same time, automobile stocks, which are especially vulnerable to tariffs, underperformed. The decline also followed Trump’s revocation of a 2021 executive order aimed at ensuring that half of all new vehicles sold in the United States by 2030 would be electric. Data from the Office for National Statistics released on Tuesday showed that the British unemployment rate unexpectedly rose in the three months through November, increasing the likelihood that the Bank of England will reduce its key interest rate early next month. Separately, the ZEW Economic Research Institute said that the gauge of economic sentiment for the Euro Area unexpectedly improved in January. Meanwhile, U.S. President Donald Trump refrained from imposing any tariffs on day one but outlined plans to reverse the U.S. trade deficit with the European Union, either through tariffs or increased energy exports. In corporate news, Vestas Wind Systems A/S (VWS.C.DX) fell over -2%, and Orsted As (ORSTE.C.DX) plunged more than -14% after Trump ordered a freeze on offshore wind-power developments, with the latter announcing a $1.7 billion impairment on its U.S. projects.
U.K.’s Average Earnings ex Bonus, U.K.’s Unemployment Rate, Germany’s ZEW Economic Sentiment Index, and Eurozone’s ZEW Economic Sentiment Index were released today.
U.K. Average Earnings ex Bonus stood at 5.6% in the three months to November, stronger than expectations of 5.5%.
U.K. Unemployment Rate was 4.4% in the three months to November, weaker than expectations of 4.3%.
The German January ZEW Economic Sentiment Index arrived at 10.3, weaker than expectations of 15.2.
Eurozone January ZEW Economic Sentiment Index came in at 18.0, stronger than expectations of 16.9.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.05%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.32%.
China’s Shanghai Composite Index closed just below the flatline in choppy trade today after U.S. President Donald Trump held off implementing promised tariff increases on Chinese imports. Technology and real estate stocks outperformed on Tuesday. At the same time, energy stocks lost ground after Trump indicated the U.S. would increase crude production. Investors found some relief on Tuesday as Trump initially refrained from introducing any new tariffs on the country, though analysts cautioned against drawing too many conclusions from Trump’s first day in office. Still, Trump directed his administration to address unfair trade practices worldwide and investigate whether Beijing had adhered to an agreement signed during his first term. “Trump appeared more focused on revamping the U.S. government and rejigging ties with neighbors, rather than suppressing China,” said Yang Tingwu, fund manager at Tongheng Investment. Meanwhile, the People’s Bank of China maintained its loan prime rates unchanged for the third consecutive month on Monday, though market participants expect a reduction in banks’ reserve requirements soon. In corporate news, China Vanke climbed more than +7% after the developer announced an interest payment on a maturing bond.
Japan’s Nikkei 225 Stock Index closed higher today after U.S. President Donald Trump refrained from imposing new tariffs, alleviating worries about the outlook for Japanese exporters. Chip and chemical stocks led the gains on Tuesday. Meanwhile, Japan’s top currency official, Atsushi Mimura, vowed to remain vigilant against possible fluctuations in the foreign exchange market due to President Trump’s policies, which have already prompted movements in the yen on Tuesday. Investor attention this week is also on the Bank of Japan’s policy decision. The BOJ is widely expected to raise short-term borrowing costs to 0.5% on Friday, a move that would elevate interest rates to levels not seen since the 2008 global financial crisis. In corporate news, Sumitomo Pharma gained about +4% following the announcement of a co-promotion partnership with Janssen to market schizophrenia drugs Xeplion and Xeplion Tri in Japan. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -1.42% to 21.50.
Pre-Market U.S. Stock Movers
Nuclear stocks are climbing in pre-market trading after Energy Secretary Chris Wright announced plans to focus on boosting domestic nuclear energy production. Oklo (OKLO) and Vistra (VST) are up more than +5%.
Apple (AAPL) fell over -1% in pre-market trading after Jefferies downgraded the stock to Underperform from Hold with a price target of $200.75.
General Motors (GM) gained over +2% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with a $60 price target.
Roku (ROKU) rose more than +1% in pre-market trading after JMP Securities initiated coverage of the stock with an Outperform rating and a $95 price target.
Walgreens Boots Alliance (WBA) slid over -7% in pre-market trading after the DOJ sued the company for allegedly contributing to the opioid crisis.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Tuesday - January 21st
Netflix (NFLX), Charles Schwab (SCHW), Prologis (PLD), Interactive Brokers (IBKR), 3M (MMM), Capital One Financial (COF), DR Horton (DHI), United Airlines Holdings (UAL), Fifth Third (FITB), Seagate (STX), KeyCorp (KEY), New Oriental Education&Tech (EDU), Pinnacle (PNFP), Wintrust (WTFC), Zions (ZION), Old National Bancorp (ONB), Hancock Whitney (HWC), Fulton (FULT), Agilysys (AGYS), Community Bank System (CBU), Simmons First National (SFNC), Progress (PRGS), FB Financial (FBK), Pathward Financial (CASH), Forestar (FOR), Peoples Bancorp (PEBO), Mercantile (MBWM), Great Southern Bancorp (GSBC), TrustCo Bank NY (TRST), SmartFinancial Inc (SMBK), Guaranty Bancshares (GNTY), RBB Bancorp (RBB).
