Market Update
The S&P 500 Index rose by 0.22% today, while the Dow Jones Industrial Average dropped by 0.64%. On the other hand, the Nasdaq 100 Index saw a 0.44% increase. March E-mini S&P futures also mirrored this trend, climbing 0.22%, with March E-mini Nasdaq futures up by 0.49%.
Most stock indexes showed gains today, with the S&P 500 reaching a 1.5-week high and the Nasdaq 100 achieving a 2.75-month high. A key factor in this rally was the surge in chipmaker stocks, particularly Micron Technology, which saw a 4% rise after announcing a $24 billion investment in Singapore to bolster memory chip production.
However, health insurance stocks put pressure on the Dow Jones after the U.S. government suggested that payments to private Medicare plans would remain unchanged next year. This announcement caused losses to widen, especially for UnitedHealth Group Inc., which projected its 2026 revenue would be the first annual decline in over 30 years. Additionally, rising bond yields, with the 10-year T-note yield up by 2 basis points to 4.23%, added to the bearish sentiment for stocks.
Other factors dampening stock performance include President Donald Trump’s renewed threat of imposing 100% tariffs on Canadian imports, potential government shutdown concerns over ICE funding, and disruptions caused by a significant storm. There’s also a cloud of uncertainty surrounding the Fed, as the FOMC is expected to keep interest rates steady in its upcoming meeting, which could spark more threats from Trump if rates are not cut further.
The looming risk of another partial government shutdown adds to market worries. Senate Democrats have threatened to block funding for the Department of Homeland Security, which could affect ICE funding in light of a recent incident involving an ICU nurse in Minnesota. If current funding measures expire this Friday, a partial shutdown could ensue.
According to ADP, U.S. private payrolls grew by an average of 7,750 jobs per week in the four weeks ending January 3, marking the smallest increase in six weeks. Also, the S&P 20 Composite Home Price Index rose by 1.39% year-over-year in November, exceeding expectations of a 1.20% increase.
This week, market attention will shift to possible new tariff developments and ongoing government funding negotiations. The Conference Board’s consumer confidence index for January, due for release later today, is anticipated to rise by 1.9 points to 91.0. The FOMC meeting is expected to maintain the federal funds target range at 3.50% to 3.75%, and analysts will closely analyze Fed Chairman Jerome Powell’s comments post-meeting for hints about future policy directions. Additionally, initial weekly jobless claims are expected to increase by 5,000 to 205,000 on Thursday, while non-agricultural productivity for Q3 is projected to stay steady at 4.9%. The trade deficit is also set to widen to $44.1 billion in November, with factory orders expected to see a 1.6% month-over-month increase. On Friday, PPI final demand in December is anticipated to slow to 2.8% year-over-year from 3.0% in November, while core PPI is expected to similarly decelerate.
The fourth-quarter earnings season is ramping up, with 102 S&P 500 companies slated to report this week. Earnings so far have been favorable, with 78% of the 64 companies reporting exceeding expectations. Bloomberg Intelligence forecasts S&P’s fourth-quarter earnings growth at 8.4%, while excluding major tech firms, the growth is expected to be around 4.6%.
Markets are currently pricing a 3% chance of a rate cut at the upcoming FOMC meeting on January 27 and 28.
Internationally, stock markets are experiencing upward momentum. The Euro Stoxx 50 gained 0.42%, while China’s Shanghai Composite increased by 0.18% and Japan’s Nikkei Stock Average climbed by 0.85%.
Interest Rate Overview
The March 10th T Note is down by three ticks today, with the yield on 10-year T-notes increasing by 1.6 basis points to 4.227%. Stock performance is weighing on T-Note prices, which are under supply pressure ahead of a $70 billion five-year T-note auction.
European government bond yields are also rising today, with the 10-year yield on German federal bonds increasing by 1.4 basis points to 2.881%. The UK’s 10-year bond yield has risen by 1.5 basis points to 4.512%.
New car registrations in the euro area increased by 5.8% in December compared to the previous year, marking six consecutive months of growth. Market expectations show no chance of the ECB raising interest rates by 25 basis points in the next policy meeting on February 5th.
U.S. Securities Update
Chipmaker stocks are on the rise, with shares of Micron Technology up 4% following their investment announcement. Lam Research has gained over 4%, and Applied Materials rose more than 3%. Other notable increases include KLA Corp and Intel, both up more than 2%, and Microchip Technology, which is up over 1%.
On the downside, health insurance stocks are seeing losses after the government proposed flat payments for Medicare plans next year. Humana is down more than 20%, while UnitedHealth Group fell over 19%, anticipating its first revenue decline in 30 years. Other downturns include Alignment Healthcare down over 13% and Centene down over 7%.
Redwire Corp increased by more than 16% after securing a contract with the Missile Defense Agency. Corning stock jumped more than 9% following a major deal with Meta Platforms. HCA Healthcare’s earnings exceeded expectations, leading to gains for the stock.
General Motors also rose over 5% after providing better-than-expected forecasts for its fourth-quarter earnings. Meanwhile, Coreweave saw a 4% increase following a stock upgrade from Deutsche Bank.
RTX Corp. rose more than 1% after reporting fourth-quarter revenues that surpassed consensus estimates. United Parcel Service showed boosted revenues, exceeding forecasts as well.
Sanmina faced a significant drop of over 19% due to below-consensus revenue expectations for Q2, while Agilysys dropped more than 16% after reporting lower-than-expected EPS. Roper Technologies fell over 11% after forecasting lower adjusted EPS for 2026, and Applied Industrial Technologies declined more than 6% after also disappointing on sales estimates.
Upcoming Financial Reports
NextEra Energy Inc, United Parcel Service Inc, Boeing Co/The, PACCAR Inc, UnitedHealth Group Inc, RTX Corp, Roper Technologies Inc, Synchrony Financial, Sysco Corp, Northrop Grumman Corp, HCA Healthcare Inc, Kimberly-Clark Corp, General Motors Co, Invesco Ltd, Union Pacific Corp, Seagate Technology Holdings PL, F5 Inc, Packaging Corp of America, PPG Industries Inc, Texas Instruments Inc, and BXP Inc are set to report financial results soon.
