The Fuse
Equity futures are up slightly this morning with a modest bid that would put the SPX 500 right back near the 7K mark. Yesterday’s historic run may have run out of gas as we are approaching a seasonally weak period for the markets. Indicators are looking mildly bearish.
Interest Rates are slightly lower as the fixed income market remains steady. Long term bonds are not moving much, on the short end of the curve (and the belly) there is ssome bid. 2/10 spreads are tight as are high yield, fed futures now see little chance of a rate cut until June.
Stocks in Europe reacted to the fed’s no move meeting with a rise of .5% in STOXX, led by strong gains in France but a drop in Germany. The FTSE added a solid .6%, US dollar index fell .2%. Another robust day for the metals, gold up 4% and silver up about 5%, but crude oil is just starting to make a move, right near $65. Yields were up in Germany (1bp) and the US 10 yr (3bps), Asia stocks were mixed with Japan flat, Hong Kong up .5% and Shanghai up .2%.
Earnings from Meta last night were terrific as was IBM, both stocks are flying in the pre-market. Microsoft not so much as they showed a modest decline in Azure. WDC also good earnings along with Sandisk. This morning strong numbers from Caterpillar and Lockheed Martin along with Nasdaq. Mastercard later in the day. Also Apple, Sandisk, Visa, Deckers, KLA and SAP.
A rather slow start to the morning as some profit taking took hold. Good earnings reports but some were already priced in, Starbucks launched higher early but flopped, as did ASML. The big names were reporting after the close and some were good. The SPX 500 touched 7K for the first time ever but closed well below it, the Fed meeting ended with no change in policy.
It was a weak day of breadth, we’ll find out later this week if it was meaningful or not. The small capts were the achilles heel yesterday, but the Nasdaq was very strong and rallied smartly. It was impressive, but we have to wonder if this was some window dressing before month end. Oscillators went down a bit but new highs still impressive.
Moderate volume yesterday but we could see much higher turnover today and tomorrow. Given the big earnings and rips higher and selloffs that would not be a shocker. We like to see strong volume on the up days like yesterday for Nasdaq and SPX 500, but a distribution day logged for the IWM. No problem, this index is up huge this month.
Not much time to test support when the hype of earnings season is upon us. Someone told me long ago, ‘do you really want to be short during earnings season’? Clearly not, given the chance for stocks to make big runs whether earnings are good or bad. Short term moving averages are ready to make a move.
The Internals
What’s it mean?
I’d have to say the internals were not impressive yesterday, but they could improve later today with some good earnings. The VOLD was down all day and finished near the lows, ADD also weak as was ADSPD, the TICKS were heavy in the red for both NYSE and Nasdaq, and the VIX jumped a bit but closed flat. we’ll call this a consolidation and boring session.
The Dynamite
Economic Data:
- Thursday:jobless claims, productivity, trade deficit, inventories, factory orders
- Friday:PPI (dec), chicago biz barometer, Miki Bowman, Alberto Musalem (fedspeak)
Earnings this week:
- 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.
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