MARKET WRAP

Stocks began the day (and entered the FOMC decision) in the red, giving back some of yesterday’s gains. Post Fed Decision stocks showed some volatility but essentially ended where they started. Part of that volatility came from changes in the statement that Powell then walked back during the press conference. SPX finished the day -0.5%, QQQ -0.25% and IWM -0.2%. Treasury yields were a tick higher but we did not see large moves given the FOMC/Powell volatility. The US10yr is now 4.55%. (TLT was -0.2%). The VIX closed the day 16.50. After hours we’re seeing reports from TSLA (-3% after hours), MSFT (-3% AH) and META (-1% AH). After hours also saw a statement from Trump bashing the Fed and Powell. We’ll discuss more of the after hours action in detail during tomorrow’s trading.

MRKT MATRIX: January 29, 2025

Today’s Top Stories:

• S&P 500 falls as Fed pauses rate cuts, Nvidia resumes slide (CNBC)

• Powell Says Fed Doesn’t Need to Be in a Hurry to Lower Rates (Bloomberg)

• Steve Cohen says the stock market may top out over the next few months, if it hasn’t already (CNBC)

• Microsoft Probing If DeepSeek-Linked Group Improperly Obtained OpenAI Data (Bloomberg)

• White House to Push Out Federal Workers Through Buyout Offer (WSJ)

• Apollo’s Wealthy Customers Want In on the Private Markets Boom (Bloomberg)

• Apple and SpaceX Link Up to Support Starlink Satellite Network on iPhones (Bloomberg)

• Alibaba Unveils Upgraded AI Model, Claims It Surpasses Rival DeepSeek-V3 (WSJ)

• Trump’s Plans Are Already Making Your Life More Expensive (NYTimes)

• Meta Overhauls Reality Labs Business Unit Ahead of Earnings Report (The Information)

• Moderna gets a downgrade from Goldman Sachs on vaccine revenue struggles (CNBC)

Today’s MRKT Call is Presented by SoFi

Markets Brace for Fed Decision, Big Tech Earnings

Liz joins Guy and Dan to break down the treasury yield environment before and after today’s FOMC meeting. She argues that this period differs from last year’s inflation scares and that, in the near term, bonds could be more volatile than equities. However, if the 10-year yield pushes toward 5%, equities could come under significant pressure. The discussion then shifts to sector rotations following the DeepSeek news, including strength in healthcare and the ongoing software vs. SOXX dynamic. Dan points out that SOXX has struggled to move higher since the fall, while Liz highlights how companies are rethinking spending—potentially creating a tailwind for software. The Call of the Day focuses on AAPL ahead of earnings, followed by a look at key upcoming reports, including TSLA and MSFT.


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What’s Next?

In a previous email, we highlighted how the recent monthly options expiry was significant—not only by clearing some overhead supply in the market but also by triggering the expiration of a large number of contracts in individual stocks. This set the stage for heightened volatility heading into earnings season. That volatility was further amplified by the DeepSeek news and the accompanying VIX spike.

Now, with mega-cap tech names heading into earnings, they have plenty of room to move, especially if day-to-day market swings persist. Watch how earnings reactions compare to what options were pricing in—this will give insight into how offsides traders might be. In this environment, earnings misses can lead to sustained selling beyond the initial drop, while beats could trigger extended short squeezes beyond the first pop. In hose scenarios it is often the case that traders have bought options towards the tails of risk, and when that initial move happens more than what was priced in, those on the other side of the trade have to chase the stock to limit losses and get back to delta neutral.

Thursday’s Earnings

• Pre-market

  • UPS 6%

  • MA 3%

• After hours

  • INTC 10%

  • V 3%

  • AAPL 4%
    
    

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