Market Update

Good morning,
 
Yesterday while the S&P 500 fell 0.5% market internals were much more favorable. The equal-weight rose 0.4% and the Russell 2000 0.7%. The performance was likely driven by optimism of the NY Giants close to naming John Harbaugh as the next Head Coach. Treasuries were bid with yields falling 3-4bp. Tech and Discretionary sectors saw heavy pressure while the rest of the sectors were mostly higher, with Financials and Materials marginally lower. Mega Caps/growth were hit- the 12 largest companies were all negative. Travel & Leisure, retailers and apparel for Discretionary and software for Tech saw the some of the largest declines. All three of the megabank reporters yesterday were lower despite decent earnings on the surface. Crude rose on Iranian tensions (US personnel withdrawals) while US natural gas fell 9% on weather forecasts and lower export flows. Metals were higher led by another sharp jump in silver as it broke into the $90s. Bitcoin and Ethereum were also higher as the momentum in crypto continued. 
 
The S&P 500 is looking better this morning after ESPN’s Adam Schefter saying the Harbaugh deal “is going to get done”. Futures were trading up before the economic data sent them even higher. Initial claims printed a sub 200k number, moving even lower than prior week’s low print and below estimates.  Continuing claims also remained at low levels, moving back below 1.9m. The Empire and Philly Fed Manufacturing reports improved from last month, contributing to the gains. Tech stocks, especially semis, are among the best performers in the pre-market following Taiwan Semi’s strong earnings overnight (they pre-announced earlier).
 

 
The Q1 guide is above the Street while management upped long-term revenue growth from 20% to 25%, and AI sales to 50%, from 40%. The company also continued the trend of capex increases, taking 2026 spending plans from $46B previously to $52-$56B. TSM is trading up ~5% in the US pre-market. In financial earnings, results continue to be solid but price action is less so. Blackrock is trading up 2%, Morgan Stanley flat and Goldman Sachs down 2% following earnings. Morgan Stanley debt trading revenue rose 93%, and wealth management inflows were strong, driving results. Meanwhile Goldman Sachs’ equities revenue grew 25% y.y. There was a big deal announced in Healthcare with Med Device maker Boston Scientific buying Penumbra for $14B. Penumbra was rumored to be in play yesterday.
 
Treasury yields spiked several basis points following the low jobless/continuing claims prints this morning. That took yields from around flat to up a couple of basis points across the curve. The US Dollar Index is higher, back above 99.

• US 2yr +3bps to 3.55%, 5yr +4bps to 3.75%, 10yr +2bps to 4.16%, 30yr +1bps to 4.79%
• USD index: +$0.32 to $99.23

 Europe is trading higher though France is a bit lower. Tech names are strong on TSM’s earnings. UK GDP improved and Europe’s Industrial Production beat estimates. The Nikkei took a pause overnight following recent strong gains fueled by election tailwinds, as the government moves closer to parliament dissolution and snap elections to consolidate its political strength. Rare earth names in the region are seeing sharp gains. The yen weakened slightly against the Dollar and it looks like most analysts think central bank intervention could trigger in the ¥159-162/$ zone, so we’re right around the lower level. In China, Hang Seng and Shanghai were both lower. Reports are that officials are still denying entry of Nvidia’s H200 chips into the country, while others say that import rules are under consideration.  South Korea is leading on the semiconductor strength.
 

 
Brent crude is pulling back as Iranian tensions come off the boil, at least for now. Precious metals are also lower as is cooper. Ag is broadly higher. Bitcoin is flat and Ether slightly higher. The Senate cancelled a vote on the CLARITY Act and Coinbase pulled its support for bill, with the issue of paying interest on payment stablecoins the major hurdle. The rancor is enough to potentially torpedo a full vote in 2026 according to reports.  
 

 
Economic Data:
US:        

• Export Prices y.y: 3.3%
• Import Prices y.y: 0.1%
• Initial Jobless Claims: 198k vs 215k cons., prior 207k
  • Continuing Claims: 1884k vs 1890k cons., prior 1914k
• Empire Manufacturing Index: 7.7 vs 1 cons., prior -3.7
• Philly Fed Index: 12.6 vs -2 cons., prior -8.8
• Fed speakers: Goolsbee, Bostic (8:15am), Barr (9am), Barkin (12:40)
• 10:30am EIA Nat Gas inventories
• 4:00pm TIC Flows
•  

Global:

• Japan PPI m.m / y.y: 0.1% / 2.4% vs 0.1% / 2.4% cons., prior 0.3% / 2.7%
• South Korea rate decision: Held at 2.5% as expected
• UK GDP Nov m.m / y.y: 0.3% / 1.4% vs 0.1% / 1.1% cons., prior -0.1% / 1.1%
• ECB Economic Bulletin
• Germany GDP 2025: 0.2% vs -0.5% prior
• Europe Trade Balance: €9.9B vs €15.2B cons., prior €17.9B
• Europe Industrial Production m.m / y.y: 0.7% / 2.5% vs 0.5% / 2.0% cons,. prior 0.7% / 1.7%