Stock indexes close down as technology sector falters

Market Recap: Major Indexes Decline Amid Tech Weakness and Geopolitical Tensions

On Wednesday, the S&P 500 Index dropped by 0.53%, the Dow Jones Industrial Average slipped 0.09%, and the Nasdaq 100 fell 1.07%. Futures for March E-mini S&P and Nasdaq also ended lower, losing 0.56% and 1.08% respectively.

Key Drivers Behind the Market Downturn

Both the S&P 500 and Nasdaq 100 reached their lowest levels in over a week, largely due to declines in semiconductor companies and the leading technology stocks known as the Magnificent Seven. Heightened geopolitical uncertainty, particularly surrounding events in Iran, contributed to the market’s cautious tone. Reports indicated that some U.S. personnel were advised to leave the Al Udeid Air Base in Qatar, which had previously been targeted by Iranian airstrikes. Despite these concerns, President Trump later stated he had received assurances that Iran would halt violence against protesters, suggesting a possible delay in any U.S. military action.

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Commodities Surge as Investors Seek Safety

Rising tensions in Iran pushed WTI crude oil to its highest level in two and a half months. Meanwhile, gold, silver, and copper all reached new record highs as investors flocked to safe-haven assets.

Economic Data and Fed Commentary Provide Some Relief

Markets rebounded from their lowest points after the Federal Reserve’s Beige Book indicated that economic activity in most regions had improved modestly since mid-November, marking a positive shift from previous reports. Additional support came from stronger-than-expected U.S. data on November retail sales, producer prices, and December existing home sales. Philadelphia Fed President Anna Paulson’s dovish remarks about potential rate cuts later this year also buoyed sentiment. The yield on the 10-year Treasury note declined by 4 basis points to 4.14%.

Highlights from Recent U.S. Economic Reports

• November’s Producer Price Index (PPI) for final demand rose 3.0% year-over-year, surpassing forecasts of 2.7%.
• Core PPI (excluding food and energy) also increased by 3.0% year-over-year, above expectations.
• Retail sales for November climbed 0.6% month-over-month, beating the anticipated 0.5% gain. Excluding autos, sales were up 0.5%.
• Existing home sales in December jumped 5.1% month-over-month to 4.35 million, a 2.75-year high and ahead of projections.
• Mortgage applications surged 28.5% in the week ending January 9, with both purchase and refinancing activity rising sharply. The average 30-year fixed mortgage rate dropped to 6.18%.

Federal Reserve and Policy Updates

Minneapolis Fed President Neel Kashkari noted the U.S. economy’s resilience and expressed skepticism about the need for a rate cut this month. Anna Paulson of the Philadelphia Fed projected moderating inflation, a stabilizing labor market, and around 2% growth for the year, suggesting that modest rate adjustments could be appropriate later in 2026.

The Supreme Court did not issue a decision regarding challenges to President Trump’s tariffs and has not announced when further opinions will be released.

International Trade and Global Markets

China’s December trade data exceeded expectations, with exports rising 6.6% and imports up 5.7% year-over-year, supporting optimism for global economic growth. Overseas equity markets were mixed: the Euro Stoxx 50 retreated from record highs, China’s Shanghai Composite slipped from a decade peak, while Japan’s Nikkei 225 surged to a new all-time high.

Looking Ahead: Economic Events and Earnings

• Initial jobless claims are expected to rise to 215,000 on Thursday.
• The January Empire State Manufacturing Survey is forecast to improve to 1.0.
• Friday’s data includes December manufacturing production (expected to dip 0.1%) and the NAHB housing market index (projected to rise to 40).
• Fourth-quarter earnings season begins, with S&P 500 profits anticipated to grow 8.4% year-over-year, or 4.6% excluding the largest tech firms.
• Markets currently assign just a 5% probability to a 25 basis point rate cut at the next FOMC meeting on January 27-28.

Interest Rate Developments

March 10-year Treasury note futures closed higher, with yields falling to 4.14% as investors sought safety amid geopolitical uncertainty. Gains were tempered by robust U.S. economic data and hawkish comments from Minneapolis Fed President Kashkari. In Europe, government bond yields also declined, with German bund yields dropping to 2.814% and UK gilts hitting a 13-month low. Comments from ECB Vice President Luis de Guindos and BOE Deputy Governor Ramsden highlighted ongoing economic challenges and labor market weakness in the Eurozone and UK, respectively. Swaps indicate only a 1% chance of an ECB rate hike at the next meeting.

Notable Stock Movements

• Major tech stocks, including Amazon, Meta, and Microsoft, each fell over 2%. Nvidia and Tesla declined more than 1%, while Apple edged down 0.33%. Alphabet managed a slight gain of 0.03%.
• Semiconductor companies faced significant losses: Broadcom dropped over 4%, with ARM Holdings, Marvell Technology, and Lam Research each down more than 2%. Applied Materials and Micron Technology also lost over 1%.
• Travel-related stocks were hit after the U.S. State Department announced upcoming visa suspensions for 75 countries. Airbnb fell over 5%, Expedia Group more than 3%, and Booking Holdings over 2%.
• Energy sector stocks advanced as oil prices climbed. ConocoPhillips gained over 4%, APA Corp rose more than 3%, and several others, including Exxon Mobil and Chevron, were up over 2%.
• Companies with exposure to cryptocurrencies rallied alongside Bitcoin’s surge to a two-month high. Galaxy Digital Holdings jumped over 5%, with MicroStrategy and Riot Platforms up more than 3%. Coinbase and Mara Holdings also posted gains.
• Trip.com ADRs tumbled over 7% following news of an antitrust investigation by Chinese regulators.
• Rivian Automotive dropped more than 7% after UBS downgraded the stock to “sell.”
• Glaukos Corp fell over 5% after issuing a 2026 sales forecast below analyst expectations.
• Wells Fargo declined more than 4% on disappointing Q4 net interest income, and Bank of America lost over 3% after reporting lower-than-expected trading revenue.
• Intuitive Surgical slipped over 2% after projecting slower growth for its da Vinci procedures.
• LyondellBasell Industries led S&P 500 gainers, rising more than 6% after Citigroup removed its downside watch, citing improved margins.
• Mosaic climbed over 5% after Morgan Stanley raised its price target, citing increased demand for potash.
• TG Therapeutics advanced more than 5% after reporting stronger-than-expected preliminary 2025 revenue.
• Weyerhaeuser gained over 4% following a price target increase from Citigroup.
• CNH Industrial rose more than 3% after Goldman Sachs upgraded the stock to “buy.”

Upcoming Earnings Announcements (January 15, 2026)

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