Stocks Finish Slightly Lower as Bond Yields Climb

The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.17%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.07%.  March E-mini S&P futures (ESH26) fell -0.06%, and March E-mini Nasdaq futures (NQH26) fell -0.08%.

Inventory indexes gave up an early advance on Friday and settled barely decrease as bond yields rose.  The ten-year T-note yield rose +6 bp to a 4.5-month excessive of 4.23% on Friday after President Trump expressed reluctance to appoint Kevin Hassett as Fed Chair.  Hassett was seen by markets as probably the most dovish candidate and the highest contender for the Fed Chair nomination, so nominating somebody like Kevin Warsh, a recognized hawk and the second-most-likely Fed Chair candidate, dampened hypothesis about future Fed price cuts, pushed bond yields greater, and weighed on shares. 

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Shares initially moved greater on Friday, led by energy in chipmakers.   Confidence that spending on synthetic intelligence will proceed is underpinning chip makers and knowledge storage corporations after Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest devoted contract chipmaker, boosted its 2026 capital expenditure forecast on Thursday. 

Friday’s US financial information was blended for shares.  Dec manufacturing manufacturing unexpectedly rose by +0.2% m/m, stronger than expectations of a decline of -0.1% m/m. Additionally, Nov manufacturing manufacturing was revised upward to +0.3% m/m from the beforehand reported unchanged m/m. Conversely, the Jan NAHB housing market index unexpectedly fell -2 to 37, weaker than expectations of a rise to 40.

The primary full week of This autumn earnings season has additionally been a optimistic drive for shares, with 89% of the 28 S&P 500 corporations which have reported to date beating expectations.  In accordance with Bloomberg Intelligence, S&P earnings progress is anticipated to climb by +8.4% in This autumn.  Excluding the Magnificent Seven megacap expertise shares, This autumn earnings are anticipated to extend by +4.6%.

The Supreme Court docket didn’t rule on challenges to President Trump’s tariffs on Wednesday.  The court docket didn’t say when it can situation its subsequent opinions however may schedule extra choices for subsequent Tuesday and Wednesday, when the justices are once more in session.

The markets are discounting the percentages to five% for a -25 bp price reduce on the FOMC’s subsequent assembly on January 27-28.

Abroad inventory markets settled decrease on Friday.  The Euro Stoxx 50 closed down by -0.19%.  China’s Shanghai Composite closed down by -0.26%.  Japan’s Nikkei Inventory 225 closed down by -0.32%.

Curiosity Charges

March 10-year T-notes (ZNH6) on Friday closed down by -15 ticks.  The ten-year T-note yield rose +5.6 bp to 4.225%.  Mar T-notes tumbled to a 4.75-month low on Friday, and the 10-year T-note yield rose to a 4.5-month excessive of 4.231%.  Rising inflation expectations weighed on T-notes after the 10-year breakeven inflation price climbed to a 2.25-month excessive of two.326% on Friday.  Additionally, the surprising enhance in Dec manufacturing manufacturing is hawkish for Fed coverage and is undercutting T-notes. 

Losses in T-notes accelerated on Friday after President Trump expressed reluctance to call Keven Hassett as the subsequent Fed Chair and mentioned he would like to maintain him as Nationwide Financial Council director.  The markets noticed Hassett as probably the most dovish candidate and the highest contender for the Fed Chair nomination, so nominating somebody like Kevin Warsh, a recognized hawk and the second-most-likely Fed Chair candidate, could be bearish for T-note costs.

European authorities bond yields moved greater on Friday.  The ten-year German bund yield rose +1.6 bp to 2.835%.  The ten-year UK gilt yield rose +1.2 bp to 4.400%.

ECB Chief Economist Philip Lane mentioned, “Our baseline state of affairs envisages inflation roughly at goal for a number of years, progress near potential, and low and declining unemployment.  In these circumstances, there is no such thing as a near-term rate of interest debate.”

Swaps are discounting a 1% likelihood of a +25 bp price hike by the ECB at its subsequent coverage assembly on February 5.

US Inventory Movers

Chip makers and knowledge storage corporations are transferring greater at present on renewed optimism for AI spending after TSMC on Thursday boosted its 2026 capital spending plans.  Tremendous Micro Laptop closed up greater than +10% to steer gainers within the S&P 500, and Micron Know-how (MU) closed up greater than +7% to steer gainers within the Nasdaq 100.  Additionally, Utilized Supplies (AMAT), Lam Analysis (LRCX), Broadcom (AVGO), and ASML Holding NV (ASML) closed up greater than +2%.  As well as, Superior Micro Units (AMD), KLA Corp (KLAC), Seagate Know-how Holdings Plc (STX), and Texas Devices (TXN) closed up greater than +1%. 

Energy provides are underneath stress at present on President Trump’s transfer to push for an emergency wholesale electrical energy public sale and make tech giants pay for surging energy prices.  Talen Vitality (TLN) closed down greater than -11%, and Constellation Vitality (CEG) closed down greater than -9% to steer losers within the S&P 500 and Nasdaq 100.  Additionally, Vistra (VST) closed down greater than -7%, and NRG Vitality (NRG) closed down greater than -4%.

State Avenue (STT) closed down greater than -5% regardless of reporting better-than-expected This autumn EPS after it mentioned it sees full-year bills this 12 months up 3% to 4%.

Mosaic (MOS) closed down greater than 4% after saying North American phosphate market shipments are estimated to be down about -20% y/y in This autumn. 

QXO Inc (QXO) closed down greater than -4% after in search of to boost $750 million from an in a single day block commerce marketed at $23.80 to $24.00 per share, under Thursday’s $25.02 closing value. 

Brown-Forman Corp (BF.B) closed down greater than -3% after BNP Paribas SA downgraded the inventory to underperform from impartial with a value goal of $24.

Molson Coors Beverage Co (TAP) closed down greater than -3% after BNP Paribas  SA downgraded the inventory to underperform from impartial with a value goal of $40. 

Areas Monetary (RF) closed down greater than -2% after reporting This autumn EPS of 58 cents, weaker than the consensus of 62 cents.

Kraft Heinz Co (KHC) closed down greater than -2% after Morgan Stanley downgraded the inventory to underweight from equal weight with a value goal of $24. 

JB Hunt Transport Companies (JBHT) closed down greater than -1% after reporting Q3 gross sales of $3.10 billion, under the consensus of $3.11  billion. 

GE Vernova (GEV) closed up greater than +6% after Jeffries mentioned the corporate will profit from President Trump’s transfer to push for an emergency wholesale electrical energy public sale and make tech giants pay for surging energy prices. 

Rocket Lab Corp (RKLB) closed up greater than +6% after Morgan Stanley upgraded the inventory to obese from equal weight with a value goal of $105. 

Eaton Corp Plc (ETN) closed up greater than +3% after HSBC upgraded the inventory to purchase from maintain with a value goal of $400. 

PNC Monetary Companies Group (PNC) closed up greater than +3% after reporting This autumn non-interest revenue of $2.34 billion, greater than the consensus of $2.26 billion. 

Dave & Buster’s Leisure (PLAY) closed up greater than +2% after Benchmark Co. upgraded the inventory to purchase from maintain with a value goal of $30. 

Honeywell Worldwide (HON) closed up greater than +2% after JPMorgan Chase upgraded the inventory to obese from impartial with a value goal of $255.

Earnings Studies(1/20/2026)

3M Co (MMM), DR Horton Inc (DHI), Fastenal Co (FAST), Fifth Third Bancorp (FITB), Interactive Brokers Group Inc (IBKR), KeyCorp (KEY), Netflix Inc (NFLX), United Airways Holdings Inc (UAL), US Bancorp (USB).

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