The S&P 500 Index ($SPX) rose by 0.62% today, while the Dow Jones Industrials Index ($DOWI) increased by 0.10%, and the Nasdaq 100 Index ($IUXX) was up 1.16%. March E-mini S&P futures (ESH26) recorded a gain of 0.59%, and March E-mini Nasdaq futures (NQH26) climbed 1.14%. Strength in semiconductor manufacturers, large technology firms, and companies focused on artificial intelligence infrastructure drove the upward momentum in U.S. stock indexes. This positive sentiment in the U.S. markets was further boosted by strong performance in European equities, where the Euro Stoxx 50 reached a record high, up 0.99%.
Despite the overall market gains, rising bond yields presented a challenge for stocks, with the 10-year T-note yield hitting a 1.5-week high of 4.19%. The U.S. December S&P manufacturing PMI remained unchanged at 51.8, aligning with expectations. Market participants are pricing a 15% chance of a 25 basis point rate cut during the upcoming Federal Open Market Committee (FOMC) meeting scheduled for January 27-28.
Internationally, stock markets showed a positive trend. In addition to the record rise in the Euro Stoxx 50, the Chinese Shanghai Composite and Japan’s Nikkei Stock 225 were closed today in observance of the New Year’s Day holidays. In the bond market, March 10-year T-notes (ZNH6) fell by two ticks, and the yield increased by 0.8 basis points to 4.163%. The 10-year T-note yield reached a peak of 4.191%, reflecting reduced safe-haven demand due to stock market strength and rising inflation expectations. The 10-year breakeven inflation rate also climbed to a 2.5-week high of 2.259%.
European government bond yields also saw upward movement today, with the 10-year German bund yield rising to 2.910% and the 10-year UK gilt climbing to 4.530%. In contrast, the Eurozone December S&P manufacturing PMI was revised downward to 48.4 from the previously reported 49.2, and the UK December S&P manufacturing PMI was adjusted to 50.6 from 51.2. Additionally, Eurozone November M3 money supply increased by 3.0% year-on-year, surpassing expectations of 2.7%, marking the strongest annual growth in four months.
In the U.S. stock market, chip makers and AI-focused companies led the charge, with Sandisk (SNDK) soaring more than 8% to top S&P 500 gainers. ASML Holding NV (ASML) followed closely, rising over 7% after Alethia Capital double-upgraded the stock to a buy rating with a price target of $1,500. Micron Technology (MU) and Lam Research (LRCX) also performed well, each gaining more than 7% and 6%, respectively. Other notable performers included Applied Materials (AMAT), ARM Holdings Plc (ARM), and Advanced Micro Devices (AMD), all rising more than 4%. The so-called Magnificent Seven—Nvidia (NVDA), Alphabet (GOOGL), Amazon.com (AMZN), Apple (AAPL), and Tesla (TSLA)—also contributed to the market’s gains, with most of these stocks seeing increases of over 1%.
However, the insurance sector faced challenges, with Progressive (PGR) dropping more than 7% to lead the S&P 500 decliners. Other insurance companies, including Erie Indemnity (ERIE) and Allstate (ALL), also experienced declines. In a notable exception, Sable Offshore (SOC) surged over 18% after a federal appeals court ruled in favor of the company, allowing it to restart its California pipeline and commence oil pumping from its offshore platforms.
RH (RH) gained more than 7%, and Wayfair (W) rose over 5% following President Trump’s decision to delay tariff increases on upholstered furniture until next year. Moreover, Vertiv Holdings (VRT) advanced more than 7% after Barclays upgraded its stock rating to overweight, setting a price target of $200.
As the year progresses, investors will be closely monitoring economic indicators and central bank actions, especially the upcoming FOMC meeting, which will likely influence market sentiment and trader strategies. Overall, the resilience demonstrated by the broader markets amid rising bond yields underscores an ongoing battle between inflation concerns and economic growth prospects.
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