January 13th Market Overview

Happy Monday.

Markets showing clear sector rotation today as folks are shifting away from tech names into traditional sectors like energy, healthcare, and industrials.

Wednesday’s upcoming CPI data is bring some uncertainty and setting the tempo. Overall Breadth is chopping over the last 2 weeks. Hopefully this week brings us some direction.

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Let's dig in...

Executive Summary

• Tech seeing continued pressure with $NVDA ▼2.78% leading declines amid fresh China chip restrictions
  

• Bond market telling the story - 10-year yield touched 4.8%, highest since November 2023
  

• Energy names catching a bid, sector up ▲2.26% as oil pushes above $79 on Russia sanctions
  

• Bank earnings kickoff Wednesday with $JPM, $GS, $C on deck to set the tone

Market Overview

Key Market Drivers

1. Bond Market Pressure Intensifies:

• 10-year Treasury yield surged to 4.8%, marking 14-month high

• Traders now pricing only 30 basis points of cuts for all of 2025

• LPL's Turnquist warns 5% yields could create significant equity headwinds

• Growth stocks particularly vulnerable as discount rates rise

2. Rate Cut Timeline Shifts Dramatically:

• December jobs report showed 256,000 additions vs 155,000 expected

• CME FedWatch tool showing first cut now September vs March previously

• NY Fed consumer survey shows 3% inflation expectations holding steady

• Wednesday's CPI print becomes crucial inflection point

3. Energy Markets React to Sanctions:

• WTI crude pushing above $79, highest since August

• New sanctions targeting 180+ Russian vessels, total now at 451

• JPMorgan noting China becoming "less-permissive buyer"

• Supply chain rerouting creating additional cost pressures

4. Dollar Strength Creates Headwinds:

• Dollar index hits two-year high at highest level since November 2022

• Euro weakens to $1.02, sterling drops to $1.22

• Multinationals facing increased currency translation impact

• Tech sector particularly exposed given international revenue mix

5. Healthcare Policy Shift:

• Medicare announces larger-than-expected 2026 payment proposal

• Sector outperforms with $UNH leading Dow components

• Insurance providers seeing broad-based strength

• Policy change impacts extend beyond pure-play healthcare names

Stock Spotlight

• $MRNA ▼19.61% - Harsh reaction to vaccine guidance cut, taking 2025 forecast down by $1B
  

• $X ▲6.48% - Lighting up on Cleveland-Cliffs/Nucor potential joint bid chatter
  

• $EIX ▼11.28% - Marking worst day since 2020 on LA wildfire situation, CEO denying equipment issues
  

• $HON ▲3.0% - Breaking higher on potential activist-driven breakup plans per Bloomberg

Big Name Updates

• $AAPL hitting correction territory, now 10%+ off December highs as iPhone sales data weighs
  

• $PLTR extending recent slide, now ▼11% from last week as AI names face pressure
  

• $UNH ▲4.58% providing Dow support on Medicare proposal news
  

• $CMG marking seventh straight red day, longest streak since August 2023

Other Notable Company News

• Retail not getting love despite solid holiday numbers - $ANF ▼18.2%, $AEO ▼4.5% (Abrocrombie & Fitch)

• $JNJ picking up Intra-Cellular Therapies in $14.6B deal

• $PINS sliding on Jefferies downgrade citing performance ad challenges

• $HON popping on Elliott Management breakup pressure

Sector Watch

Bond Market

Treasury yields pressing higher, with the 10-year touching 4.8%. Markets now pricing just 30 basis points of cuts for all of 2025, major shift from previous expectations.

LPL’s chief strategist warning about potential 5% yield creating more equity headwinds.

Policy Watch

New AI chip restrictions hitting semiconductor space as Biden admin tightens China exports. Russia sanctions expanding with 180+ vessels now targeted, creating oil supply chain questions.

Barclays flagging market potentially underpricing Trump immigration and tariff impact.

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What to Watch

1. Bank Earnings Season:

• $JPM, $GS, $C kick things off Wednesday

• $MS, $BAC follow Thursday

• Focus is on commercial real estate exposure and net interest margin guidance

• Trading desk performance after volatile Q4

2. December CPI Wednesday:

• Core numbers key after hot jobs report

• Services inflation still sticky

• Could reset rate cut timeline if hot

• PPI preview Tuesday

3. Oil Dynamics:

• Russian sanction impact on global flows

• China/India buying patterns shifting

• Supply chain rerouting costs

• OPEC+ cut timeline uncertainty

4. Tech Rebound Watch:

• $NVDA, $AAPL leadership key

• Bond yield sensitivity remains

• China restrictions creating headwinds

• Sector rotation sustainability

Thanks for reading 🙂

- John