On Tuesday, the S&P 500 Index closed up by 0.41%, while the Dow Jones Industrial Average fell by 0.83%, and the Nasdaq 100 Index increased by 0.88%. E-mini S&P futures for March climbed by 0.42%, and E-mini NASDAQ futures rose by 0.89%.
Most stock indexes finished higher on Tuesday. The S&P 500 reached a new all-time high, and the Nasdaq 100 hit a 2.75-month peak, driven largely by gains in chipmakers and AI infrastructure stocks. Micron Technology’s announcement of a $24 billion investment in Singapore for expanding memory chip production sparked a more than 5% surge in its shares. Additionally, solid corporate earnings in the fourth quarter boosted stock valuations, even as the Conference Board’s Consumer Confidence Index unexpectedly dropped to its lowest in more than 11 years.
However, the Dow faced pressure from health insurance stocks after the U.S. government suggested that payments to private Medicare plans would remain unchanged next year. This concern, alongside UnitedHealth Group Inc.’s forecast of its first annual revenue decrease in over 30 years, contributed to the decline.
Other factors weighing on stocks included President Trump’s renewed threat of imposing 100% tariffs on Canadian imports, a looming government shutdown linked to ICE funding, ongoing unease about Greenland, and disruptions from a large storm across the United States. Political uncertainty surrounding the Federal Reserve also looms, as the FOMC is anticipated to keep interest rates stable at its upcoming meeting.
The risk of a partial government shutdown poses additional downward pressure on the market. Senate Democrats are threatening to block a funding agreement with the Department of Homeland Security in the wake of recent events in Minnesota. A shutdown could materialize when current temporary funding measures expire this Friday.
ADP’s recent report indicated that U.S. private payrolls grew at an average of just 7,750 jobs per week over the four weeks ending January 3, marking the smallest weekly increase in six weeks.
The S&P 20 Composite Home Price Index saw a year-over-year increase of 1.39% in November, exceeding expectations of 1.20%.
The Conference Board’s Consumer Confidence Index fell by 9.7 points to 84.5 in January, reaching its lowest point in over a decade, contrary to predictions of an increase.
Meanwhile, the Richmond Fed’s Manufacturing Business Index dropped from +1 to -6, slightly below the anticipated -5.
This week’s market attention will be focused on updates regarding tariffs and the government’s funding resolution. The FOMC is expected to maintain the federal funds target range between 3.50% and 3.75%. Investors will be looking closely at comments from Fed Chairman Jerome Powell for insights into future policy directions. Initial weekly claims for unemployment benefits are predicted to rise by 5,000 to 205,000. Moreover, non-agricultural productivity for the third quarter is expected to remain constant at 4.9%, while the trade deficit is projected to widen to -$44.1 billion in November. Factory orders are anticipated to increase by 1.6% month-over-month. On Friday, expectations for December’s PPI final demand suggest a slowdown to 2.8% year-over-year from November’s 3.0%, with the PPI excluding food and energy expected to decrease to 2.9% from 3.0%. Additionally, the MNI Chicago PMI is forecasted to rise by 0.8 to 43.5 in January.
As fourth-quarter earnings season progresses, 102 companies within the S&P 500 are scheduled to announce their results this week. Major players like Microsoft, Metaplatforms, and Tesla will share their results after market close on Wednesday, while Apple will report on Thursday. So far, earnings have been favorable; about 81% of companies that have reported exceeded expectations. S&P fourth-quarter earnings growth is projected at 8.4%, and excluding the seven large technology firms, a growth of 4.6% is anticipated.
The markets currently reflect a minimal chance of a 25 basis point rate cut during the FOMC meeting this week, estimating it at around 3%.
Globally, stock markets also showed gains on Tuesday. The Euro Stoxx 50 hit a one-week high with a rise of 0.62%, while China’s Shanghai Composite climbed by 0.18%, and Japan’s Nikkei Stock Average increased by 0.85%.
The March 10-year T-note saw a slight decline of 1 tick, with the yield rising to 4.223%. The stock market rally influenced the T-note’s performance. The recent $70 billion Treasury auction reflected a bid-to-cover ratio of 2.34 times, slightly below the average of the last ten auctions, leading to a decline in bond prices, despite limited declines in T-notes due to the downtrend in consumer confidence.
European government bond yields also rose, with the yield on German 10-year federal bonds increasing by 0.8 basis points to reach 2.875%. The UK 10-year bond yield rose to 4.527%, marking a three-week high, up by 2.8 basis points.
In December, new car registrations within the euro area saw a 5.8% increase compared to the previous year, achieving growth for the sixth consecutive month.
Currently, the market is pricing in virtually no expectation for a 25 basis point hike in interest rates by the ECB at its upcoming policy meeting.
In the U.S. stock market, chipmakers and AI infrastructure stocks made notable gains on Tuesday. Lam Research led the Nasdaq 100’s rise with a gain of over 6%, while Micron Technology closed up by more than 5% following its significant investment announcement. Other notable gainers included Western Digital, Seagate, KLA Corp, and Applied Materials, all closing up by over 4%. Intel climbed more than 3%, along with ASML and Broadcom, both rising by over 2%.
In the broader market, the Magnificent Seven tech stocks also rose. Amazon and Microsoft both increased by more than 2%, while Apple and Nvidia gained more than 1%. Alphabet finished up by 0.39%, and MetaPlatform ended slightly higher. Conversely, Tesla experienced a modest decline of 0.99%.
Health insurance stocks, however, struggled on Tuesday after the government proposed no changes to private Medicare plan payments. Humana was the worst performer in the S&P 500 with a drop exceeding 21%, while UnitedHealth was the biggest loser in the Dow, falling more than 19% after announcing a forecast for its revenue in 2026. Other notable declines came from Elevance Health, CVS Health, and Alignment Healthcare.
Redwire Corp surged over 28% after securing a government contract. Corning led gains among S&P 500 companies with a more than 15% jump due to a $6 billion deal with Meta for fiber and connectivity solutions.
Coreweave elevated by over 9% after Deutsche Bank upgraded it to a buy rating. General Motors saw its stock price increase by more than 8% after positive earnings predictions, and HCA Healthcare surged more than 7% after reporting earnings that exceeded estimates.
RTX Corp. climbed over 2% after solid revenue results, while Sanmina dropped more than 22% due to a revenue forecast that fell short of expectations. Agilysys saw a decline of over 20% after reporting lower-than-expected earnings, and Roper Technologies led the Nasdaq 100 decliners with a drop of over 9%. Applied Industrial Technologies and Brown & Brown also faced losses after reporting lower sales figures.
Upcoming financial results are expected from several significant companies, including Amphenol, ASML, AT&T, ADP, and others.
