MARKET WRAP

The week started with selling but several of the major indices eeked out gains: the SPX finished up 9 points, while the DJIA was green all day and finished with a +0.9% gain. Meanwhile, the Nasdaq was taking the brunt of early day selling but recovered a bit to only finish down -0.4% Dan and Guy dive deeper into tech under pressure in today’s MRKT Call. Treasury yields didn’t make significant moves and are most likely waiting to see PPI and CPI data over the next two days. TLT finished unchanged after being in the red most of the day. Oil was sharply higher by nearly 3%. Moderna MRNA was the mover of the day, down -17%. UNH helped the DJIA with its +4% move.

SPX options indicate a 0.8% move for tomorrow (PPI data out 8:30am) and 1.6% for the rest of the week (CPI and bank earnings Wed morn). Check the bottom of this email for more on what’s ahead.

MRKT MATRIX: January 13, 2025

Today’s Top Stories:

• Dow rises, Nasdaq falls on Monday as investors rotate out of tech shares (CNBC)

• Morgan Stanley’s Wilson Sees Big Gap in Profits on Strong Dollar (Bloomberg)

• Trump’s New Economist Makes the Case for 20% Tariffs (WSJ)

• Jamie Dimon Says Tariffs Can Help Resolve Competition, Security Issues (Bloomberg)

• China’s Trade Surplus Reaches a Record of Nearly $1 Trillion (NYT)

• Americans Are Tipping Less Than They Have in Years (WSJ)

• Biden’s administration proposes new rules on exporting AI chips, provoking an industry pushback (AP)

• Nvidia’s Top Customers Face Delays From Glitchy AI Chip Racks (The Information)

• iPhone Sales Drop 5% in Holiday Quarter After AI Disappoints (Bloomberg)

• Moderna stock plunges 20% after company lowers 2025 sales forecast by $1 billion (CNBC)

Today’s MRKT Call is Presented by MoneyLion

Tech Tumble Continues Ahead of Big Earnings Week

On today’s market call Guy and Dan cover continued pressure on big tech stocks, checking in on Dell, Palantir, Oracle, Palo Alto, Tesla, Salesforce and Apple, a look at Bitcoin and Coinbase, then Chart of the Day with Semi-conductors, Nvidia, Meta and SOXX vs SMH. Then your questions! With XOM, oil and SQQQ (beware).

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s On The Tape is Presented by CME Group, iConnections and SoFi

Are Markets Finally Starting to Act Rational?

Guy Adami and Liz Thomas explore the impact of rising interest rates on markets, the widening spread between two-year and ten-year treasuries, and the performance of growth stocks. The conversation includes an analysis of small caps confirming market drawdowns, the implications of a strong US dollar, and potential effects on large multinational companies. They also highlight the significance of upcoming earnings reports from major banks and the influence of oil prices driven by geopolitical risks. The episode closes with a look ahead at the importance of CPI and PPI data releases and their potential market impacts.

The Current Set-up and What’s Next

Stocks began the week under pressure, following weakness overseas, but the second half of the trading day showed some signs of life. We’ve covered some of the negatives weighing on stocks to start 2025, but there a a few potential near-term positives:

1. VIX Action: The VIX hit 21.50 at the open before pulling back to close at 19.20. While not a capitulation signal like August’s spike to 30, a move from 14 to near 22 in a bull market has historically been a decent entry try for equities (you’d be right more often than wrong).

2. Treasury Yields: Mixed moves in treasuries today—short-term yields fell slightly while longer-term yields ticked higher—suggest a breather ahead of this week’s inflation data (PPI and CPI). While rising yields have pressured stocks, with the SPX down 5% from highs earlier today, equities have held up relatively well considering the yield back-drop. Any reversal in yields, even small, could provide a near term bullish boost.

3. Sentiment: Bearish indicators like AAII sentiment hitting a year-low and Fear & Greed Indexes in “extreme fear” reflect widespread caution. While not definitive, those moments tend to provide for contrarian opportunities to buy the dip during bull markets.

Inflation data arrives over the next two days with the release of the PPI and CPI, alongside the kickoff of bank earnings on Wednesday. Both events are significant. If the PPI and CPI push yields higher, equities could face another leg down, potentially testing that 5700 level in SPX. Conversely, if the market absorbs the data without a negative reaction, conditions could support a short-term bounce—at least until earnings season progresses, particularly with the "Fateful 8" reports on the horizon.

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