The Fuse
Equity futures are mixed this Tuesday morning as a wreck in insurers like UNH is hitting the Industrials. Today starts the first Fed meeting of the year, a two-day meeting where the committee will discuss current monetary policy conditions. Consumer Confidence later in the morning.
Interest Rates are rising slight as fixed income traders position before the next Fed policy decision. High yield spreads remain tight and attractive, we have 2/10 spreads tightening as well, the 30yr yield has been coming down nicely. Fed futures see no rate cut coming at the conclusion of the 2 day meeting.
Stocks in Europe were higher, STOXX up .3% led by gains in France and Germany. The FTSE also added .3%, US dollar was up sharply, by .2%. Yields in Germany and the US 10 yr held steady, stocks in Asia wer up with Japan higher by .8%, Hong Kong climbed 1.4% and Shanghai up .2%. Gold backing away from all time highs, same as silver which has been ripping higher. Crude oil slightly lower.
Strong earnings from GM and RTX are carrying the markets higher, a beat from UPS too and we have Boeing with a nice beat as well. Later today Texas Instruments, F5, Seagate and PPG.
A nice rally following some overnight volatility. Markets are bracing for some big moves this week, and like this recent strong storm there is no hiding place. That’s fine, earnings have been strong and the economy seems to be growing at a strong pace. There is always worry and concern that Chair Powell will throw cold water over the markets with some frigid comments, but that doesn’t seem likely. No question the committee is set to stand by with monetary policy, the futures market agrees with them.
Poor breadth most of the day but some late buying closed that gap to a narrow loss. There is some rotation happening again, this time around perhaps the big tech names are getting the attention. Oscillators still fluttering above zero but it won’t take much to push them over, new highs are crushing new lows, and heavy buy programs are evident each day. All good support for a bull rally.
Low turnover again as the early buying was not followed up with even more volume. The poor weather might have been a good excuse not to buy yet, and frankly with so much news coming later in the week it makes sense to take a pause. End of the month is coming up as well, a good month of January so far and we may see buyers show up later in the week.
Once again we’ll commit to the test last week of the 50 ma as a success. The markets have sprung from that level and may have a bit more to go in order to find an overbought reading. Problem is there we are heading into a seasonally weak period for the markets but still plenty of earnings, so it is hard to get bearish right here.
The Internals
What’s it mean?
Not much changed from Friday, with the VOLD still trapped and the ADD falling from the highs. VIX was mostly muted on the day but did finish slightly higher, the TICKS again were spread evenly. A down session for the small caps kept the market in check, put/calls remain steady while TRIN edged up, that could be a sign of exhausted buyers.
The Dynamite
Economic Data:
- Tuesday:Consumer confidence, Fed meeting begins
- Wednesday:FOMC rate decision, Powell press conference
- Thursday:jobless claims, productivity, trade deficit, inventories, factory orders
- Friday:PPI (dec), chicago biz barometer, Miki Bowman, Alberto Musalem (fedspeak)
Earnings this week:
- Tuesday:UNH, BA, UPS, GM, RTX, SYF, AAL NOC, CVLT, KMB, TXN, STX, NXT, PKG, PPG, FFIV, LRN
- Wednesday:ASML, GEV, T, GLW, GD, SBUX, VF, PGR, ADP, MSFT, META, TSLA, LRCX, NOW, CLS, IBM, WM, LVS, LC
- Thursday:MA, CAT, NOK, NDAQ, RCL, MO, PH, BX, LMT, HZO, AAPL, SNDK, V, WDC, SAP, DECK, EMN, LPLA
- Friday:SOFI, AXP, VZ, CNI, CVX, XOM,, CHTR, LYB, ALV, APD
Fed Watch:
The first fed meeting of the year is upon us and most likely the committee will punt on a rate move. Monetary policy looks to be stable right now, perhaps a cut may be out in the future but for now with a strong economy, job growth happening and some elevated inflation the FOMC is not likely to budge. The market is also in alignment with this thinking.
Stocks to Watch
Tesla – All eyes on Elon Musk this week as many are looking for some new announcements on product development. This is the first quarter the CEO has been focused on the company full-time in a year, perhaps that did some good. Robotics, full service driving metrics should be interesting to read about. The stock has been strong for the past few months.
Apple – All the worry warts are out on Apple this time around, but no question the company had a good holiday period. They often offer soft guidance for the current quarter we are in so that should come as no surprise. The audience is interested in hearing about their AI ambitions and association with Alphabet.
Small cap Stocks – This group has been on fire this year, rising some 9% so far in 2026 but that pace won’t last. IWM is often the driver of the rest of the market, if they sell down we’ll see if that is still the case.
