Markets give up gains after White House says tariffs start on Saturday

Dow fell 337, decliners over advancers about 3-1 & NAZ fell 54.  The MLP index sank 9+ to 320 & the REIT index was off fractionally to the 402s.  Junk bond funds traded higher & Treasuries had limited selling which raised yields modestly.  Oil slid lower in the 72s & gold pulled back 16 to 2828 on profit taking after reaching a new record (more on both below).

Dow Jones Industrials

In an apparent ending to weeks of intense speculation, the White House confirmed that Pres Trump will be leveling aggressive tariffs this weekend on major US trading partners.  Karoline Leavitt, the White House press secretary, said Trump will be implementing 25% tariffs on Mexico & Canada as well as a 10% duty on China, in retaliation for “the illegal fentanyl that they have sourced and allowed to distribute into our country.”  The White House provided few details on exactly how the levies will be meted out, saying that they will be available for public inspection at some point tomorrow.  “These are promises made and promises kept by the president,” Leavitt said.  There was no word on potential exemptions to the tariffs; the White House denied an a report that there would be at least some exclusions rather than simply blanket measures covering all products & that the tariffs would be delayed until Mar 1.  Together, the US does about $1.6T in annual business with the 3 countries.  Trump is seeking to use the tariffs as both bargaining chips & methods to affect foreign policy changes, specifically the immigration & drug trade issues.  “We’ve got the Super Bowl coming up, and eerily, the amount of people that fit in the [New Orleans] Superdome are almost exactly equal to the number of people dying every year here in America from fentanyl, and that comes from China and Mexico,” Trump trade adviser Peter Navarro said.  “This is why we have these kind of discussions.”  Economists worry that the tariffs could reignite inflation at a time when it appears price pressures are beginning to abate.  The Commerce Dept reported today that an inflation reading closely watched by the Federal Reserve rose to 2.6% in Dec, but the details in the report appeared more positive.  However, Fed officials have said they are monitoring the impact of fiscal policy.  “It will be very important to have a better sense of the actual policies and how they will be implemented, in addition to greater confidence about how the economy will respond,” Fed Governor Michelle Bowman said.  Chicago Fed Pres Austan Goolsbee said the key will be whether the tariffs are one-off events or lead to retaliation.

Tariffs on Canada, Mexico and China begin Saturday, White House says

Nvidia (NVDA) CEO Jensen Huang is DC & will be meeting with Pres Trump.  The main topic Huang & Trump are expected to discuss is US artificial intelligence policy.  China's DeepSeek is likely to be part of the discussion, but the meeting is seen as a way for both leaders to get to know each other.  Top technology CEOs have embraced Trump in recent months to a degree not seen in his first administration.  But this is the first meeting between Huang & Trump since the pres started his 2nd term last week.  Many other industry leaders were at Trump’s inauguration.  Tesla (TSLA) & SpaceX CEO Elon Musk  has emerged as one of Trump's top advisors, after heavily financing his campaign.  Musk is implementing policy for the Trump administration thru his oversight of an outside advisory council, the Dept of Gov Efficiency (DOGE).  NVDA fell 4.48.

Nvidia CEO Jensen Huang to meet with Trump at White House

As Pres Trump threatens to impose 25% tariffs on imports from Canada & Mexico as soon as tomorrow, the global automotive industry is collectively holding its breath.  For months, automakers have been taking a “wait-&-see” approach to the Trump administration's potential tariffs.  Trump promised to impose duties upon his inauguration this month, then he set a target date of Feb 1 for levies on the key US trading partners.  Amid a media report  that the tariffs could be delayed until Mar, the White House said Trump would follow thru Sat on his proposal to slap 25% tariffs on imports from Canada 2 Mexico, 2 key US trading partners.  If Trump implements the tariffs, automakers such as General Motors (GM), the top seller in the US, may have to change their business strategies to avoid increases in costs, as their supply chains are integrated across North America.  A tariff is a tax on imports, or foreign goods, brought into the US.  Companies importing the goods pay the tariffs & some fear the companies would simply pass any additional costs on to consumers, raising the cost of vehicles & potentially reducing demand.  Uncertainty about trade took a toll on GM yesterday, when the automaker's stock had 1 of its worst days in years even after it beat expectations for its 2025 guidance & its top- & bottom-line for 4th qtr.  “Our key take from GM’s 4Q [earnings] result is that while the opportunity for GM is highly compelling, US policy uncertainty must be navigated for the time being,” Barclays analyst Dan Levy said on Wed.  GM stock fell 8¢.

Trump’s threat for 25% tariffs on Mexico and Canada is challenging the auto industry

Gold prices surpassed the key $2800 mark for the first time, fuelled by a rush to safety following US Pres Trump's tariff threats, which heightened concerns about global economic growth & inflationary pressures.  Spot gold rose 0.3% to $2801 per ounce, after hitting a record peak of $2817 earlier in the session.  US gold futures settled 0.4% lower at $2835, trading a premium to spot gold rates.  There's a lot of uncertainty out there right now & also wait-&-see attitude on the geopolitical stage with tariffs.  Trump has set a Sat deadline to slap a 25% tariff on imports from Canada & Mexico & said he was still considering new tariffs on Chinese goods.  Bullion, a preferred asset during times of economic & geopolitical turmoil, is on track to record its best monthly performance since Mar 2024, rising nearly 7% so far.  The metal surpassed multiple record peaks last year.  Additionally, "the mixed signals coming from the Fed & the Trump administration right now is causing uncertainty in the market.  Trump wants to cut interest rates, while the Fed wants to hold them steady.  Earlier this week, Federal Reserve Chair Jerome Powell said there would be no rush to cut interest rates again, contradicting Trump's earlier calls saving he wants borrowing costs to be lowered.

Gold surges past $2,800 as tariff threats reignite record rally

Crude oil prices were steady but set for weekly declines as markets waited to see if Pres Trump would follow thru on his threat to impose tariffs on Mexico & Canada later this week.  Brent crude for Mar, which expires today, was up pennies at $76.95 a barrel & US West Texas Intermediate (WTI) crude was up 21¢ at $72.94.  For the week, benchmarks Brent & WTI are set to fall 2% & 2.3%, respectively.  Crude oil prices have fallen this week on growing concerns about Trump's tariffs, which are expected to hamper global economic growth.  Investors are weighing the possibility of US tariffs alongside a series of exec orders & policy announcements.  Trump has threatened to impose 25% tariffs as early as Sat on Canadian & Mexican exports to the US if the 2 countries do not stop shipping fentanyl across the US border.  Canada & Mexico are the 2 largest crude oil exporters to the US, but it is unclear whether crude will be included in the tariffs.  Trump said yesterday he would decide soon whether to exempt Canadian & Mexican oil imports from the tariffs.  In 2023, the latest full year, Canada exported 3.9 million barrels per day (bpd) of crude to the US, for 6.5M bpd of total imports, while Mexico exported 733K bpd

Crude Oil Prices Set For Weekly Decline As Trump Tariff Threat Looms

US stocks lost ground after the White House said tariffs against Mexico, Canada & China will take effect on Sat, reigniting fears of a coming trade war with the nation' closest trading partners.  White House Press Secretary Karoline Leavitt said the pres would impose 25% tariffs on goods from Mexico & Canada, as well as a 10% tariff on goods from China.  The looming Sat tariff deadline has revived worries about the impact on the economy from a clampdown on the US's biggest trading partners.  The $ rose, headed for its best week since Nov.  The uncertainty over tariffs has left Federal Reserve Chair Jerome Powell in wait-&-see mode, with the potential for tariffs to inflame inflation in focus.

Markets rise after December inflation data and looming tariff deadline

Dow edged up 19, advancers over decliners about 5-4 & NAZ gained 256.  The MLP index was off 5+ to the 324s & the REIT index added 2+ to the 402s.  Junk bond funds continued to inch higher & Treasuries were little changed, keeping yields steady (more below).  Oil was little changed in the mid 72s & gold added 10 to 2855.

Dow Jones Industrials

The Federal Reserve's preferred inflation gauge showed prices rose as expected in Dec, & it remains above the central bank's target level amid its ongoing efforts to wrestle down inflation.  The Commerce Dept reported that the personal consumption expenditures (PCE) index was up 0.3% from the prior month & 2.6% on an annual basis.  Those figures were in line with the estimates.  Core PCE, which excludes volatile food & energy prices, rose 0.2% for the month & increased 2.8% from a year ago, also in line with estimates.  Federal Reserve policymakers are focusing on the PCE headline figure as they try to slow the pace of price increases to their target of 2%, though they view core data as a better indicator of inflation.  Headline PCE ticked higher from an annual rate of 2.4% in Nov to 2.6% last month, while core PCE has been at 2.8% for 3 consecutive months.  Headline PCE showed prices for goods were flat in Dec, while prices for services rose by 3.8% from a year ago.  Food prices were up 1.6% last month when compared with a year ago, while energy prices were down 1.1% during that period.  Wages & salaries were up 0.4% in Dec compared with the prior month, a slight deceleration after Oct & Nov both saw wage & salary growth of 0.5% in those months.  The personal savings rate as a percentage of disposable income was 3.8% in Dec.  That metric declined from 4.3% in Oct to 4.1% in Nov & had been nearly 5% last spring.

Fed's favored inflation gauge just came out as price fight ramps up

Treasury yields were unchanged as investors parsed the latest inflation data as well as other economic data.  The 10-year Treasury yield was marginally lower at 4.508% & the 2-year Treasury yield was fractionally higher at 4.199%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  The personal consumption expenditures price index (above) increased 0.3% in Dec from a month earlier & 2.6% on an annual basis.  Both readings were in line with forecasts.  Yesterday, yields moved lower as the latest gross domestic product report came in weaker than expected, showing slower economic growth in the US.  The 4th-qtr GDP growth rate was 2.3%, while the forecast was forecasting an increase of 2.5%.  Fed Chair Jerome Powell said at his press conference that the central bank will need to see “real progress on inflation or some weakness in the labor market before we consider making adjustments” to interest rates.  Meanwhile, Trump is planning to go ahead with increased tariffs, which threaten to raise the cost of goods. The pres said that he will impose 25% tariffs on Canada & Mexico starting tomorrow.

Treasury yields are unchanged latest sticky inflation data

Exxon Mobil (XOM), a Dow stock & Dividend Aristocrat, beat the estimate for 4th-qtr profit as higher oil & gas production offset lower oil prices & weaker refining margins.  4th qtr EPS was $1.67, beating estimates of $1.56.  The #1 oil producer reported total earnings of $33.5B for full-year 2024, down from $38.6B the year earlier.  The company became the largest oil producer in the Permian basin in 2024, the biggest US oilfield, after closing its acquisition of Pioneer Natural Resources in May.  Low production costs in the basin & its lucrative & prolific projects in Guyana have bolstered the company's profits despite lower oil prices & a decline in profits for making fuel.  The company signaled earlier this month that sharply lower oil refining margins would cut earnings by $300M - $700M compared to the 3rd qtr.  Shareholder returns via buybacks & divs totaled $36B in 2024, up from $32B the previous year.  Shareholder distributions, a cornerstone of its strategy to court investors, were covered by free cash flow of $36.2B.  The stock was off 60¢.

Exxon beats fourth-quarter estimates with higher Permian, Guyana output

US stocks rose as the Federal Reserve's preferred inflation gauge matched expectations. Investors also braced for a looming tariff deadline.  Trump yesterday doubled down on a threat to impose a first round of 25% tariffs on Canada & Mexico tomorrow.  The looming deadline has revived worries about the impact on the economy from a clampdown on the US's biggest trading partners.

Markets rise in choppy session as traders digest earnings reports

Dow finished up 168, advancers over decliners better than 4-1 & NAZ closed up 49.  The MLP index rose 1+ to the 283s & the REIT index rebounded 6+ to the 404s.  Junk bond funds inched higher & Treasuries were purchased, driving yields lower.  Oil finished slightly higher in the 72s & gold remained hot, up 50 to a record of 2843 (more on both below).

Dow Jones Industrials

Shares of United Parcel Service (UPS) plunged after the company issued weak revenue guidance for the year & said it planned to cut deliveries for Amazon (AMZN), its largest customer, by more than ½.  The shipping giant said in its 4th-qtr earnings report  that it “reached an agreement in principle with its largest customer to lower its volume by more than 50% by the second half of 2026.”  At the same time, UPS said it’s reconfiguring its US network & launching multi-year efficiency initiatives that it expects will result in savings of approximately $1B.  CEO Carol Tome said that AMZN is UPS' largest customer, but it's not the company's most profitable customer.  “Its margin is very dilutive to the U.S. domestic business,” she added.  “We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to become a more profitable, agile and differentiated UPS that is growing in the best parts of the market,” Tome continued.  UPS forecast 2025 revenue of $89B, down from revenue of $91B in 2024.  That's well below estimates for 2025 revenue of $94.9B.  For the 4th qtr, UPS missed on revenue, reporting $25.3B versus $25.4B expected.   UPS has, for its part, taken more aggressive cost-control measures, including catering to more profitable delivery customers.  Tome highlighted healthcare, small business, intl & business-to-business, or B2B, as “the best parts of the market” that it’s leaned into more heavily.  In recent qtrs, UPS has benefited from an influx of volume from bargain retailers Temu & Shein, which have rapidly gained popularity in the US.  Last Jan, UPS laid off 12K employees as part of a bid to realize $1B in cost savings.  The stock tumbled 18.88 (14%).

UPS shares tank 15% after weak guidance, plan to slash Amazon deliveries by more than half

Mortgage rates fell slightly this week, remaining stubbornly high while would-be buyers & sellers continue to wait for steeper declines.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage ticked down to 6.95% from last week's reading of 6.96%.  The average rate on a 30-year loan was 6.63% a year ago.  "The 30-year fixed-rate has hovered between 6% and 7% for most of the last two and a half years. That trend continued this week, with the average rate remaining essentially flat at 6.95%," said Sam Khater, Freddie Mac's chief economist.  "Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines."  The average rate on the 15-year fixed mortgage fell to 6.12% from 6.16% last week.  One year ago, the rate on the 15-year fixed note averaged 5.94%.

Mortgage rates tick lower, hover near 7%

IBM (IBM), a Dow stock, surged 12% on the back of strong 4th-qtr results that showed artificial intelligence growth boosting its software business.  The move put the stock in its best day since Jul 2000, when shares popped 13%.  The company reported adjusted EPS of $3.92 adjusted on $17.55B in revenue.  The forecast had expected EPS to come in at $3.75 & revenues to reach $17.54B.  IBM reported a 1% rise in revenues overall, while its software unit grew 10% on a year-over-year basis amid growing demand for artificial intelligence & its operating system known as Red Hat Linux.  CEO Arvind Krishna also said that the company posted $5B in bookings for its generative AI segment.  “We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat,” he said.  “Clients globally continue to turn to IBM to transform with AI.”  JPMorgan analyst Brian Essex maintained his neutral rating on IBM but said the firm remains “encouraged” by its software strength & growth trajectory.  Goldman Sachs analyst James Schneider reiterated his buy rating, saying that software strength should benefit IBM's turnaround plan.  The stock jumped 29.69 (13%).

IBM rallies 12%, heads for best day since 2000 on strong earnings
 

Gold prices rose to hit a lifetime high, sparked by safe-haven demand due to US tariff threats, while the focus was also on a crucial inflation report for clues on the Federal Reserve's policy path.  Spot gold was up 1.3% at $2794 per ounce, hitting its record high level at $2798 earlier in the session.  US gold futures settled 1.8% higher at $2845.  There is keener uncertainty & anxiety about the Trump administration's new policies on trade & foreign policy & fresh technical buying coming in as prices are trending higher.  Earlier this week, the White House said Pres Trump planned to hit Mexico & Canada with steep tariffs on Sat & was also considering some on China.  The $ fell 0.2%, making gold less expensive for other currency holders, while 10-year Treasury yields fell to their lowest level in over a month.  Gold is shining as a safe haven asset, with investors seeking shelter to weather the storm of unpredictability.  The Fed held rates steady yesterday, in line with expectations, with Chair Jerome Powell saying.

Gold hits record high on safe-haven demand amid tariff threats

West Texas Intermediate (WTI) crude prices continued to decline for a 2nd straight session, trading around $72.20 a barrel.  Investors remained cautious as uncertainty looms over US trade policy, following conflicting statements from the White House regarding Pres Trump's proposed tariffs on Canada &d Mexico—2 of the US' main crude suppliers.  White House spokeswoman confirmed on Tues that Trump remains committed to imposing tariffs on Canada & Mexico as planned on Sat.  Yesterday, Trump's nominee for commerce secretary, Howard Lutnick, suggested that Canada & Mexico could avoid tariffs if they immediately tighten border controls on fentanyl & curb China's advances in artificial intelligence.  Lutnick advocated broad, blanket tariffs that target countries rather than specific products, reinforcing a more aggressive stance toward China.  Crude oil prices also remained under pressure after the Energy Information Administration (EIA) reported a 3.5M barrel increase in US stockpiles last week, the first build in stocks after 9 consecutive weeks of declines, which was in line with expectations for a 3.2M barrel increase.  Recent winter storms across the US have further dented oil demand.  On the supply side, Russian crude exports from western ports are expected to fall by 8% in Feb compared to Jan, as Moscow ramps up refining operations.  The decline comes amid fresh US sanctions, which have tightened restrictions on Russian crude exports.

WTI Drops To $72.00 As Traders Await Clarity On US Trade Policy

US stocks gained steam in the  as investors digested megacap tech earnings & looking for Big Tech stocks for more clues on their prospects.  After the Federal Reserve stood pat on interest rates  as expected, investors have turned to parsing earnings reports & the first wave of results from the tech companies  have driven broader stock market gains.

Markets slide after US economic growth and inflation data

Dow added 48, advancers 4-1 & NAZ slid back 59.  The MLP index hovered in the 322s & the REIT index jumped 7 to the 404s.  Junk bond funds were mixed & Treasuries had limited buying which lowered yields.  Oil edged up in the 73s & gold shot up 53 to a new record at 2847.

Dow Jones Industrials

The US economy grew slower than expected in the 4th qtr, according to new data.  The Commerce Dept's Bureau of Economic Analysis released its advance estimate for 4th qtr gross domestic product (GDP), which found the US economy grew at an annual rate of 2.3% in the 4th qtr, which runs from Oct-Dec.  The forecast had expected the economy to grow at a 2.6% rate in the qtr.  The 4th qtr's 2.3% growth was slower than the 3.1% GDP growth recorded in the 3rd qtr.  GDP growth was driven primarily by growth in consumer & gov spending, but was partly offset by a decrease in investment.  Consumer spending grew 4.2%, with increases in both services & goods, up from 3.7% in the 3rd qtr & 2.8% in the 2nd qtr.  Gov spending was up 2.5%, slower than the 5.1% increase in the 3rd qtr.  Business investment declined 5.6% compared with the 3rd qtr, which was relatively flat at 0.8%.  Investment in equipment declined by 7.8% while investment in structures dipped by 2.2% – which was partly offset by a 5.3% rise in residential investment & a 2.6% uptick in intellectual property products.  Disposable personal income increased by 2.8%, an acceleration from 1% & 1.1% in the 2nd & 3rd qtrs, respectively.  Business investment  were $896B in the 4th qtr, down from $936B in the prior qtr & personal saving as a percentage of disposable personal income was 4.1%.  The BEA's report also included an estimate for real GDP for 2024, which came in as an increase of 2.8%, down slightly from the 2.9% rise recorded in 2023.

US economy grew slower than expected in fourth quarter

Microsoft (MSFT), a Dow stock, shares dropped after issuing weak current-qtr guidance.  The software giant topped fiscal 2nd-qtr estimates, posting EPS of $3.23 on $69.6B in revenue.  That surpassed the EPS of $3.11 & $68.8B forecast.  The decline came as CFO Amy Hood said the company expects revenues for the current qtr to be $67.7 - $68.7B, falling short of the $69.8B forecast.  Revenue grew 12.3% year over year, the slowest growth since the middle of 2023.  MSFT also posted a slowdown in growth in its Azure & other cloud services revenues.  The segment was up 31%, down from 33% in the prior qtr.  Many analysts stood by the technology behemoth despite the disappointing guide & Azure slowdown.  CEO Satya Nadella said that DeepSeek's R1 model is currently available thru GitHub & the company's Azure AI Foundry.  It will also eventually be accessible on Copilot+ PCs, he added.  The stock tumbled 27.53 (6%).

Microsoft stock slumps 5% on disappointing revenue outlook

Treasury yields moved lower as economic data showed slower-than-expected growth for the US in the 4th qtr.  The 10-year Treasury yield was lower by 3 basis points at 4.524%.  Meanwhile, the 2-year Treasury yield was down less than 2 basis points at 4.211%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  The move in yields came as the Commerce Dept's gross domestic product report was weaker than expected (see above).  Yesterday, the central bank’s Federal Open Market Committee left its overnight borrowing rate unchanged at 4.25% - 4.50%, in a move that investors had been anticipating after 3 consecutive cuts since Sep 2024.  Policymakers noted in left its overnight borrowing rate  that “inflation remains somewhat elevated” & “the unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.”  They added that the central bank would need to see “real progress on inflation or some weakness in the labor market before we consider making adjustments.”  At a press conference following the decision, Fed Chair Jerome Powell said he will not be responding to Pres Trump's demands for immediate interest rate cuts, & that he had “no contact” with Trump since the comments were made last week.  “I’m not going to have any response or comment whatsoever on what the president said,” Powell added at his press conference.  “It’s not appropriate for me to do so.”

10-year Treasury yield slides after weaker-than-expected GDP

After the Federal Reserve stood pat on interest rates as expected, investors have turned to parsing earnings reports, & in particular, the first wave of results from tech companies that have driven broader stock market gains.  Faith in Big Tech was put to the test after DeepSeek's cheaper AI model rattled assumptions about the likelihood of a payoff, the focus was on the rationale for their massive AI investments.

Markets fall as cautious Fed pauses and warns about inflation

Dow dropped 136, decliners over advancers 3-2 & NAZ retreated 101.  The MLP index crawled up 1+ to the 321s & the REIT index slid back 5 to then 398s.  Junk bond funds drifted lower & Treasuries were flattish, keeping yields little changed.  Oil was off almost 1 to the high 72s & gold was up 6 to 2773 (more on both below).

Dow Jones Industrials

The Federal Reserve held its key interest rate in check, reversing a recent trend of easing policy as it examines what is likely to be a bumpy political & economic landscape ahead.  In a widely anticipated move, the central bank's Federal Open Market Committee left unchanged its overnight borrowing rate in a range between 4.25%-4.50%.  The decision followed 3 straight cuts since Sep 2024 worth a full percentage point & marked the first Fed meeting since frequent Fed critic Donald Trump assumed the presidency last week & almost immediately made known his intentions that he wants the central bank to cut rates.  The post-meeting statement dropped a few clues about the reasoning behind the decision to hold rates steady.  It offered a somewhat more optimistic view on the labor market while dropping a key reference from the Dec statement that inflation "has made progress toward" the Fed's 2% inflation goal.  "The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid," the new language read.  "Inflation remains somewhat elevated."  A stronger labor market & stubborn inflation would provide less incentive for the Fed to ease policy.  The statement again indicated that the economy "has continued to expand at a solid pace."  Recent statements from policymakers have shown some apprehension about whether progress in bringing down inflation has stalled.  Officials also have said they want to see how the previous cuts are working their way thru the economy though most expect rate cuts this year.  In addition, the decision comes against a volatile political backdrop.  In a little over a week, Trump has cut a swath through DC policy & political norms as he has signed hundreds of exec orders that seek to implement an aggressive agenda.  The pres has backed tariffs as both an economic & foreign policy tool, ordered a wave of deportations against those crossing the border illegally & has put forth a series of deregulatory measures.  Moreover, Trump last week spoke of his confidence that he will bring down inflation & said he would "demand" that interest rates be lowered "immediately."  Though the pres has no authority over the Fed other than to nominate board members, Trump's statement signaled a potentially contentious relationship with the policymakers much like during his first term.

Fed holds rates steady, takes less confident view on inflation

Starbucks (SBUX) reported that its same-store sales slid for the 4th consecutive qtr, but the company's quarterly earnings & revenue beat expectations.  The coffee giant kicked off a turnaround plan last qtr in the hopes of reviving its US business, which has slumped over the past year.  "While we have room for improvement, we're making progress as planned, and have confidence we're on the right track," CEO Brian Niccol said.   He added that the company has seen a "positive response" to the early steps it has taken.  Those tweaks have included removing extra charges for nondairy milk options, focusing its marketing on its coffee & slashing 30% of its food & beverage menu items by the end of fiscal 2025.  Fiscal first-qtr EPS was 69 down from 90¢, a year earlier.  Net sales of $9.4B were unchanged from a year earlier.  Same-store sales fell 4%, fueled by a 6% decline in traffic to its stores.  The forecast was expecting a steeper drop of 5.5%.  Both US & intl locations outperformed expectations.  US same-store sales slid 4% as traffic to its cafes fell 8%.  Under Niccol, who took the reins in Sep, the company has been trying to turn around its US business by getting “back to Starbucks” & returning its focus to coffee & the customer experience.  Niccol also has plans for SBUX corp workforce.  He has been reorganizing the company's structure, including splitting the role of North American pres into 2 jobs.  In early Mar, the company is planning to lay off workers, although SBUX has not yet shared how many jobs will be affected.  The stock jumped 8.17 (8%).

Starbucks earnings top estimates, but same-store sales decline for fourth straight quarter

Kohl's (KSS) is cutting its corp workforce by 10%, the struggling Wisconsin-based company said.  The retailer said that closures of open positions will account for "more than half of the total reduction."  Some current employees who work at KSS corp offices are also losing their jobs, Kohl's added.  The reduction is meant to "support Kohl’s ongoing actions to increase efficiencies and improve profitability for the long-term health and benefit of the business," the company noted.  KSS has already informed employees affected by the workforce reduction.  They received "competitive severance packages to help support their transition," the retailer said.  The company has also been making changes to its real estate footprint in recent weeks.  27 "underperforming" stores across 15 states are slated to permanently close their doors by Apr, KSS previously announced Jan 9.  Its San Bernardino e-commerce fulfillment center in California is also expected to shutter the following month.  Those closures, like the corp workforce reduction, seek to "increase efficiencies and improve profitability" for KSS over the long-term.  The stock fell 37¢.

Kohl's cuts 10% of corporate workforce to improve profitability

Gold's price turned lowery in the US trading session after a very whipsaw start to the week.  Lower US rates are often seen as beneficial for gold to trade higher.   Market expectations show the Fed will likely keep interest rates unchanged in the range of 4.25%-4.50%, so traders will rather focus on Fed Chair Jerome Powell's comments on the central bank's policy outlook.  And here, traders might be in for a huge disappointment.  Powell is not expected to comment on Pres Trump's criticism of the Fed or why or how Trump calls for lower rates.  Instead, Powell is expected to repeat that the central bank remains independent & data-dependent & will focus on its dual mandate: inflation & the jobs market.  The market expectation is for Powell to deliver a dovish pause.  This should see US yields tilt lower, which opens the opportunity for gold to surge higher.

Gold dips despite dovish expectations for the upcoming Fed interest rate decision

Oil prices fell, following a rise in US crude inventories & easing concerns over Libyan supplies, while focus shifted to potential US tariffs on Canadian & Mexican imports.  Brent crude futures were down 59¢ (0.8%) at $77.90 while US crude futures were down 55¢ (0.8%) at $73.22.  The White House said Pres Trump still plans to impose 25% tariffs on Canada & Mexico on Sat.  Crude prices continue to follow the beat of Trump's tariff orchestra, with Canadian tariffs coming into effect on Sat potentially pushing US prices higher.  Canada supplies 3.9M barrels of oil per day to the US in 2023, roughly ½ of all imports for the year, while Mexico supplies 733K barrels per day.  Overall prices traded slightly lower after Libya said exports had resumed & the API reported a weekly increase in US inventories.  Additionally, OPEC+ is expected to stick with the production increases it announced in Apr.  US crude & gasoline stocks rose last week, while distillate inventories fell.

Oil Prices Fall As U.S. Crude Inventories Surge, Tariff Concerns Loom

Tech stocks led markets lower as the broader mood stayed muted after the Federal Reserve's latest interest rate decision saw the central bank keep rates unchanged at 4.25%-4.50%.  In its statement, the Fed notably removed language from its Dec statement indicating that it was making progress towards its goal of 2% inflation, stating simply: "Inflation remains somewhat elevated."  Powell pushed back on that notion, referring to the change as "language cleanup" rather than intending to send a signal.  Markets bounced off their lows of the day on Powell's comments.

Markets slide ahead of Fed decision

Dow went up 71, advancers barely ahead of decliners & NAZ was off 112.  The MLP index added 2+ to the 322s & the REIT index fell 2+ to 401.  Junk bond funds hardly budged & Treasuries had limited buying, letting yields slip lower (more below).  Oil slid lower in the 73s & gold was steady at 2767.

Dow Jones Industrials

Treasury yields were lower as investors awaited the Federal Reserve's first interest rate decision of 2025.  The 10-year Treasury yield declined by 2 basis points to 4.53%, while the 2-year Treasury was marginally lower to 4.203%.  One basis point is equal to 0.01%, & yields & prices move in opposite directions.  Investors are keenly anticipating the Fed's interest rate decision following the central bank's meeting which took place yesterday & today, & the results of which will be released later.  Expectations for an interest rate cut remain low, with traders pricing in a nearly 100% chance that the Fed will keep rates steady at a target of 4.25% - 4.5%.  Pres Trump, who Powell has a contentious relationship with, dating back to Trump's first term has already said that he will “demand that interest rates drop immediately,” during a speech at the World Economic Forum in Davos, Switzerland last week.  “The Fed must follow its legislative mandate,” former Kansas City Fed Pres Esther George said.  “Congress has told us it is to bring prices to a low and stable level. In the long run, this institution has to think about those objectives rather than be swayed by outside commentary and political pressure that will come its way, as it has for its entire existence.”

Treasury yields fall as investors await Fed’s interest rate decision

US railroad operator Norfolk Southern (NSC) posted a quarterly profit that beat estimates, helped by cost cuts implemented to improve margins & better-than-expected insurance recoveries related to a costly derailment.  NSC had taken a hit of about $1.4B in last 2 years due to a derailment in Eastern Ohio in 2023 that released over 1M gallons of hazardous materials & pollutants near the state's border.  NSC implemented voluntary & involuntary job cuts last year that helped offset some of that impact.  Insurance recoveries related to the accident exceeded expenses by $43M in the 4th qtr.  The company reported operating revenue of $2.8B for the qtr ended Dec 31, up 2% from a year earlier.  It reported an adjusted operating ratio of 64.9%, representing a 390-basis-point improvement from a year ago.  The ratio is a keenly watched metric that indicates operating expenses as a percentage of revenue.  A higher operating ratio reflects an increase in costs, suggesting lower profitability.  EPS was $3.04 for the qtr, above estimates of $2.95.  Total revenue fell 2% to $3B & analysts expected revenue of $3.02B.  The stock rose 8.41 (3%).

Norfolk Southern beats profit estimates helped by cost cuts, insurance recovery

Mortgage rates didn't move last week, but demand for new home loans continued to weaken.  Both homebuyers & current homeowners are hampered by today's higher interest rates.  Total mortgage application volume decreased 2% from the previous week, according to the Mortgage Bankers Association's (MBA) seasonally adjusted index.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766K or less) remained unchanged at 7.02%, with points increasing to 0.63 from 0.62 (including the origination fee) for loans with a 20% down payment.  Applications to refinance a home loan dropped 7% for the week & were 5% higher than the same week 1 year ago.  Interest rates are now 24 basis points higher than they were a year ago, so there are precious few who can benefit.  The vast majority of homeowners have mortgages with rates well below what is being offered today.  Applications for a mortgage to purchase a home fell 0.4% from 1 week earlier & were 7% lower than the same week 1 year ago.  “Purchase activity decreased slightly, but applications for FHA purchase loans were a bright spot, increasing by 2 percent,” said Joel Kan, VP & deputy chief economist at the MBA.  “New and existing-home sales ended 2024 on a strong note, and if mortgage rates continue to stabilize and for-sale inventory loosens, we expect a gradual pick up in purchase activity in the coming months.”  Mortgage rates have not moved much to start this week either, & today's Federal Reserve meeting is not expected to bring any surprises or tradeable news.  “Even [Fed Chair Jerome] Powell would be hard pressed to shake things up too much considering the mildly positive cue from inflation data and the ongoing policy uncertainty as a counterbalance,” wrote Matthew Graham, COO at Mortgage News Daily.  “That said, one can never truly rule out a volatile reaction to a Powell presser, but the odds are certainly lower this time around.”

Mortgage demand drops further, even as interest rates settle

Tech led stocks lower as the broader mood stayed muted ahead of the first Big Tech earnings & the Federal Reserve's interest rate decision.  The looming Fed policy verdict is providing reason for markets to tread carefully, even though the central bank is expected to stand pat on interest rates.  Investors will listen for answers to 2 key questions at Fed Chair Jerome Powell's press conference: How much further will the Fed cut rates & has the central bank changed its stance in light of Pres Trump's early tariff moves?

Markets are mixed while Nasdaq surges

Dow recovered 136, decliners over advancers 5-4 & NAZ bounced back 391.  The MLP index gained 4+ to the 319s & the REIT index fell 4+ to the 403s.  Junk bond funds were off a tad & Treasuries saw modest selling which lifted yields a little.  Oil rose higher in the 79s & gold snapped back 34 to 2772 ( more on both below).

Dow Jones Industrials

General Motors (GM) stock fell even as the company beat top- & bottom-line expectations for the 4th qtr, while forecasting continued strong results for 2025.  Concerns on the company’s quarterly earnings call focused on the automaker's preparation for changes under the Trump administration, including the impacts of potential tariffs on vehicle production & policy changes on electric vehicle sales & pricing, signaling an overhang on the auto industry.  Analysts have said there's a lack of enthusiasm by investors for the US automotive industry amid a slowdown in electric vehicles & autonomous vehicles, as well as regulatory volatility.  The automaker believes it can have another solid year despite industry sales slowing, a restructuring of its operations in China, & increased geopolitical & regulatory uncertainty in the US as Pres Trump begins his 2nd term.  GM's 2025 guidance includes net income attributable to stockholders of $11.2 - $12.5B, or $11 - $12 in EPS; adjusted earnings before interest & taxes (EBIT) of $13.7 - $15.7B, or $11 - $12 adjusted EPS; & adjusted automotive free cash flow of $11 - $13B.  “In our view, the guidance for 2025 leaves no room for errors, and also does not include impact from regulatory changes in the U.S., especially on tariffs and BEV support,” analysts at Bernstein said.  GM's 2025 financial guidance met or exceeded many forecasts from analysts.  Most notably, analysts were expecting adjusted earnings of around $14B.  That compares with the automaker's 2024 results of adjusted EBIT of $14.9B, or $10.60 adjusted EPS, & net income attributable to stockholders of $6B, or $6.37 EPS.  The adjusted figures & the $14B in adjusted auto free cash flow were records for the automaker, GM said.   CFO Paul Jacobson said the company's 2025 guidance does not take into account any potential regulatory changes such as tariffs on vehicle imports or tax reform.  GM's $47.7B in revenue in the 4th qtr was up 11% from the same period last year.  Jacobson said the company’s 2024 performance was “outstanding,” citing growth in its EV & traditional internal combustion engine businesses.  GM lost $1.64 per share, in the 4th qtr, which ended Dec 31, compared with EPS of $1.59 in the same period a year earlier.  Quarterly results include $5B in special charges such as $4B in noncash restructuring charges related to its operations in China & $500M in charges related to the decision to stop funding its Cruise robotaxi business.  Excluding those charges & other items, EPS was $1.92 in the 4th qtr.  The stock dropped 4.90 (9%).

GM stock falls even as company beats analyst expectations on earnings

Amid the uncertainty of fiscal policy and the persistence of inflation, respondents to the CNBC Fed Survey dialed back their expectations for interest rate cuts but still believe the central bank will ease this year.  Among the 25 respondents, 65% see 2 rate cuts in 2025, equal to the number penciled in by Federal Reserve officials in their recent forecasts & roughly equal to futures markets expectations.  But that's down from 78% in the prior survey, while 61% forecast at least 1 cut in 2026, down from 70% in Dec.  The fed funds rate is seen ending the year at 3.96%, 12 basis points higher than in the Dec survey, & 3.6% in 2026, up 16 basis points.  A basis point equals 0.01%. The terminal rate, or the long-run nominal rate, edged up again, now standing at 3.4%, one-tenth of a percentage point higher than Dec & three-tenths higher than Mar 2024.  The reduced outlook for rate cuts comes amid a decline in the probability of recession, an increase in inflation forecasts, & a mix of views on the inflationary & growth effects of the new administration’s anticipated policies.  Pres Trump's signature economic policies.  2 of his campaign promises, tariffs & immigration, are seen boosting inflation & reducing growth.  2 other policies, deregulation & tax cuts, are viewed as positive for growth & either neutral or positive for reducing inflation.  Asked to assess the total effects of Trump policies expected to be enacted, 64% say they will be somewhat or very inflationary, 23% believe they will have no effect on inflation either way & 14% say they will be somewhat deflationary.

Wall Street still sees two rate cuts this year, but conviction is getting weaker, CNBC survey finds

Nvidia (NVDA) stock rose as the AI chipmaker began to recover from a massive decline the prior day that shaved nearly $600B off its market cap.  The 17% freefall was prompted by investor anxieties related to a new, cost-effective artificial intelligence model from the Chinese startup DeepSeek.  Some analysts worried that the cheaper costs DeepSeek claimed to have spent training its latest AI models, due in part to using fewer AI chips, meant US firms were overspending on artificial intelligence infrastructure.  That created a concern among the investment community that its high GPU (graphics processing unit, or AI chip) prices could come under pressure & that demand for semiconductors could wane.  NVDA's $589B market cap decline was the largest single-day loss in stock market history.  The DeepSeek announcements drove down not only NVDA but the market at large, with the tech-heavy NAZ dropping 3%.  Chip stocks dropped across the board yesterday, but some names began to recover today.  NVDA itself didn't express much anxiety over the DeepSeek buzz, calling R1 "an excellent AI advancement."  The stock rebounded 10.31 (9%).

Nvidia surges to begin recovery after near-$600B rout

Gold prices are facing pressure for the 2nd straight day, trading around $2735, following a more than 1% drop the previous day after Chinese AI startup DeepSeek rocked the market.  The results were not small, with over $550B in market capitalization wiped out for NVDA alone.  Given the sensitivity of technology, cryptocurrencies such as Bitcoin also suffered, with Bitcoin (BTC) losing over 6.5% at 1 point among the victims of spillover in the financial market asset class.  This has benefited Pres Trump, who has again called for global tariffs.  His belief is that doing so would better protect US tech companies & shield them from China's dumping strategy.  The rule of thumb remains that tariffs are inflationary, which means higher yields, which is a headwind for Bullion.

Gold Prices Flat After Nvidia Rout Extends On Monday

Oil prices rebounded from multi-week lows as disruption to Libyan oil loading operations offset fears of weaker demand linked to soft economic data from China & rising temperatures elsewhere.  Brent crude oil futures were up 91¢ (1.2%) at $77.99 per barrel & US West Texas Intermediate crude futures were up 95¢ (1.3%) at $74.12.  Brent settled yesterday at its lowest since Jan 9, while WTI hit its lowest since Jan 2.  In Libya, local protesters prevented crude oil loading at Es Sider & Ras Lanuf ports, 5 engineers & a shipping source said, putting about 450K barrels per day of exports at risk.  If such disorder spreads, which is not unusual when Libya's oil industry is held to ransom by 1 group or another, the current National Oil Corp evaluated production of 1.4 mbpd will come under threat.  On the other hand, China, the world's largest crude oil importer, reported yesterday an unexpected contraction in Jan manufacturing activity, adding to concerns over global crude demand growth. 

Oil prices bounce back from multi-week lows on Libya supply disruption

NAZ & S&P 500 rebounded, following a steep stock sell-off spurred by concerns of over-confidence in Big Tech's potential payoff from AI investments.  Bellwether NVDA was the standout of the trading day, with shares climbing after it shaved off a record $589B from its market cap in the previous session.  Stocks began to chip away at losses booked in today's tech-led rout.  The risk to US leadership in AI raised questions about whether chipmakers & other tech names can follow thru on high earnings expectations.

Markets had a limited recovery after DeepSeek-inspired tech rout

Dow went up 249, but decliners a little ahead of advancers & NAZ recovered 235.  The MLP index added 1+ to 217 & the REIT index fell 4 to the 404s.  Junk bond funds slid lower & Treasuries had more selling which raised yields.  Oil was steady in the 73s & gold bounded back 22 to 2760.

Dow Jones Industrials

Boeing (BA), a Dow stock, CEO Kelly Ortberg said the company is making progress on its recovery, including by focusing on core businesses & stabilizing production, as he faces investors antsy for answers after the plane maker posted its 6th consecutive annual loss.  Ortberg said that 737 Max deliveries will likely reach the “upper 30s” this month, up from 17 in Dec.  “We’re a little ahead of where I expected,” he said.  He added BA will likely turn cash flow positive in the 2nd ½ of the year, after burning thru more than $14B in 2024.  BA lost $3.8B in the last 3 months of 2024, taking about $3B in charges in its commercial aircraft unit & its defense & space business spanning aircraft from the Boeing 767 to the KC-46 tanker to the long-delayed pair of 747s that are set to serve as new Air Force One planes.  Revenue was down 31% from the same period last year to $15.2B.  Its results were impacted, as expected, by a nearly 2-month machinist strike that idled work on most of its aircraft & lengthened delivery delays to customers, which pay for the bulk of their planes when they're received.  It burned thru $3.5B in the 4th qtr, a difficult end to what was supposed to be a turnaround year.  The company released preliminary results last week showing a wider loss & lower revenue than analysts expected.  The company’s annual loss totaled $11.8B, its largest since 2020, when it was grappling with a grounding of its bestselling plane, the 737 Max, after 2 fatal crashes & the Covid-19 pandemic.  “While it was a challenging year, we are seeing encouraging signs of progress as we work together to turn around our company,” Ortberg said.  “We are also preparing for the path ahead by continuing to make investments in our core businesses while streamlining our portfolio in areas that are not core to our future,” Ortberg added.  The stock rose 9.35.

Boeing CEO upbeat on recovery after company’s biggest annual loss since 2020

US consumer confidence weakened for a 2nd straight month in Jan amid renewed concerns about the labor market & inflation.  The Conference Board said its consumer confidence index fell to 104.1 this month from an upwardly revised 109.5 in Dec.  The forecast had forecast the index rising to 105.6 from the previously reported 104.7.  "Views of current labor market conditions fell for the first time since September, while assessments of business conditions weakened for the second month in a row," said Dana Peterson, the chief economist at the Conference Board.  "Additionally, references to inflation and prices continue to dominate write-in responses."

US consumer confidence deteriorates further in January

The Senate Finance Committee advanced Bessent's nomination to the full Senate with a bipartisan vote of 16 to 11 on Jan 21, the day after Trump's inauguration.  During the presidential campaign, Bessent touted what he called the "3-3-3" plan that was modeled off the late Japanese Prime Minister Shinzo Abe's "three arrows" idea.  The role of treasury secretary carries a great deal of significance for conducting the pres's economic agenda.  Treasury secretaries often lead negotiations with Congress over tax & spending matters.  They also play a key role in dealing with foreign govs & financial institutions, as well as handling the operations of the Treasury Dept & sub-agencies like the Internal Revenue Service (IRS).  During Trump's first term as pres, Steven Mnuchin served as treasury secretary for the duration of the 4-year term after he was confirmed by the Senate on a 53-47 vote a few weeks after.  Mnuchin served as a key negotiator with Congress on the debt limit, tax & spending policies, as well as COVID relief packages that were enacted in 2020 after the pandemic began.

Scott Bessent confirmed by Senate to serve as Trump's treasury secretary

NAZ & S&P 500 rebounded, following a steep stock sell-off spurred by concerns of over-confidence in Big Tech's potential payoff from investments in AI. Investors also assessed a return to a tougher tone on tariffs from Pres Trump, ahead of the start of a Federal Reserve meeting where the impact of his policies is likely to be discussed.  That risk to US leadership in AI raised questions about whether chipmakers & other tech names call follow thru on high earnings expectations.  Stocks began to chip away at losses booked in yesterday's tech-led rout.  With that risk to inflation in mind, investors are keeping a watchful eye on the Fed's 2-day policy meeting that begins later today.  The central bank is expected to leave interest rates unchanged, given recent solid economic readings.

Markets nosedive as AI fears rock Nvidia and tech stocks

Dow added 289 (above AM low), but advancers over decliners about 5-4 & NAZ had a sell-off of 612.  The MLP index sank 8+ to the 314s & the REIT index was up 4+ to the 408s on lower interest rates.  Junk bond funds were little changed & Treasuries continued to see heavy selling.  Oil declined 1+ to the high 72s & gold tumbled 35 to 2743 (more on both below).

Dow Jones Industrials

AT&T's (T) 4th-qtr wireless subscriber growth surpassed expectations, fueled by strong demand for its discounted premium plans combining 5G mobile with high-speed fiber data services.  The US telecom giant added 482K net monthly bill-paying wireless phone subscribers in the holiday qtr, outpacing estimated gains of 424K.  As the pool of potential new wireless customers shrinks in the US,  AT&T's strategy of bundling high-speed fiber internet with wireless phone services has helped drive growth for the company.  Its fiber business added 307K new customers in the 4th qtr, higher than 226K additions in the prior qtr, marking its best 4th-qtr fiber net additions.  The last 3 months of the year are typically strong for telecom operators, driven by factors such as Black Friday promotions, trade-in deals for new iPhone launches & the gift-giving season around Christmas, all of which contribute to higher subscriber additions.  AT&T expects annual adjusted EPS of $1.97 - $2.07 per share, excluding the contribution from its 70% stake in DirecTV, which the company is selling for $7.6B.  It was not immediately clear if the range could be compared with the estimate of $2.18 per share.  Last month it expected free cash flow to be more than $18B in 2027 & would reach more than 50M locations with fiber by 2029.  Excluding items, it reported EPS of 54¢, higher than the estimate of 50¢.  Total revenue rose 1% to $32.3B, compared with an estimate of $32.04B.  The stock gained 1.43 (6%).

AT&T’s bundled 5G, fiber plans boost holiday-quarter subscriptions

The US economy entered 2025 with a steady hand, according to the National Association of Business Economics (NABE), a group of the nation's leading economists, with the chance of a prolonged slowdown falling.  "The odds of a recession continue to diminish according to panelists, with the downside risks largely tied to uncertainty over the implementation and timing of policy proposals from the new administration" said Pres Emily Kolinski Morris, CBE, global chief economist, Ford (F), in the group's January Business Conditions Survey taken from Dec 30, 2024 - Jan 13, 2025.  Pres Trump, who took office a week ago, hit the ground running, rolling out a series of pro-business exec orders tied to making the US more open to cryptocurrency, easing energy restrictions & freezing the hiring of federal workers as his DOGE, Dept of Gov Efficiency arm, assesses areas to cut waste.  Additionally, he announced a $500B investment from OpenAI, Softbank & Oracle (ORCL) to expand artificial intelligence in the US.  He is also threatening tariffs against Canada, Mexico & China.  Still, inflation remains a headwind.  While 65% of NABE's economists see prices stable over the next 3 months, 35% expect price increases, an uptick from 28% polled in Oct.  The consumer price index last month rose 2.9% annually & 0.4% vs Nov.  Core CPI, which excludes volatile food & energy, rose 3.2% annually.  Inflation is well below its 9.1% peak in Jul 2022 but still above the Federal Reserve's preferred 2% goal.  Trump, during his remote appearance before the World Economic Forum marking his return to office, blamed the Biden administration for high inflation.  "Over the past four years, our government racked up $8 trillion in wasteful deficit spending and inflicted nation wrecking energy restrictions, crippling regulations and hidden taxes like never before. The result is the worst inflation crisis in modern history, and sky-high interest rates for our citizens and even throughout the world, food prices and the price of almost every other thing known to mankind went through the roof," Trump told attendees in Davos, Switzerland.  He also took a jab at Fed Chair Jerome Powell.

Odds of U.S. recession declining: NABE economists

Apple (AAPL), a Dow stock, introduced an software update for iPhones, iPads & Macs that turns Apple Intelligence on by default for users with supported devices.  The updates, iOS 18.3, iPadOS 18.3 & macOS Sequoia 15.3, also disable AI summaries for news apps, which have gained a reputation for twisting news push notifications to display inaccurate facts.  The release is a milestone in the rollout of Apple Intelligence, its suite of artificial intelligence features.  Apple Intelligence is a critical product for AAPL as it seeks to distinguish its products from competitors with an AI system integrated into iPhones & other products.  While Apple Intelligence is already featured in the company's marketing for the latest iPhones, the rollout has been deliberate & limited to allow it to test new features & make sure it has enough server capacity.  The entire Apple Intelligence suite is still officially in beta & it's only available in a handful of English-speaking countries.  With the latest updates, Apple Intelligence will be turned on by default when the latest software update is installed, expanding the number of users who are exposed to the software.  Apple Intelligence is marketed as being able to rewrite text, generate images & summarize long emails and message threads.  “For users new or upgrading to iOS 18.3, Apple Intelligence will be enabled automatically during iPhone onboarding,” AAPL said in the developer release notes for the update.  Users will have to navigate to the Apple Intelligence page in the Settings app to turn it off.  AAPL stock rose 7.23 (3%).

Apple turns its AI on by default in latest software update

Gold prices fell below $2770 after a weekend full of headlines & a busy week of central bank interest rate decisions coming up.  Over the weekend, markets understood why Pres Trump has been loosening up on the use of tariffs as a tool.  It appears that tariffs will be used as leverage, for example, for countries that refuse to accept deported US immigrants who are being taken back to their home countries.  Colombia felt the impact when Pres Trump ordered emergency tariffs of 25%, & increased to 50% within a week, because the country did not comply with Pres Trump's deportation demands.  However, the White House later confirmed that "Colombia has agreed to all of President Donald Trump's terms, including the unrestricted admission of all illegal immigrants from Colombia who are being returned from the US," & that Trump's proposed tariffs are "now on hold."  Later this week, the Federal Reserve (Fed) & the European Central Bank (ECB) will decide on their policy interest rates on Wed & Thurs, respectively.  Meanwhile, a Chinese open-source AI startup has spooked markets & called into question the high valuations of tech stocks like Nvidia (NVDA) down $24.04, which dragged NAZ much lower.

Gold Prices Fall As Tech Sector Rout Intensifies On Monday

Oil prices fell after the US dropped an initial threat of sanctions against Colombia, easing immediate concerns about oil supply disruptions, although a show of force by Pres Trump kept markets on edge.  Brent crude was down 60¢ (0.8%) at $77.90 a barrel & US West Texas Intermediate crude was down 57¢ (0.8%) at $74.09.  The US quickly dropped plans to impose sanctions & tariffs on Colombia after the South American country agreed to take in migrants deported from the US, the White House said.  Colombia shipped about 41% of its crude exports by sea to the US last year.  There's a general negative sentiment in the market.  Even if sanctions don't happen, it still creates a nervousness that Trump will bully whoever needs to be bullied to get what he wants.  Gains were capped by Trump's repeated calls on Fri for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt Russia's oil-rich finances & help end the war in Ukraine.  "One way to stop it quickly is to stop OPEC from making so much money and lower oil prices ... The war will be over soon," Trump said.  Trump also threatened to hit Russia "and other participating countries" with taxes, tariffs & sanctions if a deal to end the war in Ukraine is not reached soon.  Russian Pres Vladimir Putin said on Fri that he & Trump should meet to discuss the Ukraine war & energy prices.  They're preparing for negotiations & that is creating volatility in the oil market.  The oil market may be slightly skewed to the downside, with Trump keen to increase US production & try to secure overseas markets for US crude.

Oil Prices Plunge As Trump Sanctions Threat Against Colombia Dropped

Markets have been rattled by claims by China's DeepSeek that its AI assistant uses cheaper chips & less data than leading models, but performs equally well.  A surge in DeepSeek's popularity has spurred investors to question bets that AI demand-driven growth will keep fueling gains for stocks.  In the background, trade war concerns revived during a face-off between Pres Trump & Colombia over the weekend.  Trump threatened to impose 25% tariffs on the country's goods in a row over deported migrants before putting the duties on pause after a deal was reached.

Markets sink as China’s DeepSeek triggers Nvidia rout on Nasdaq

Dow dropped 64, but advancers modestly ahead of decliners & NAZ toppled 586.  The MLP index retreated 5+ to the 317s & the REIT index added 1 to the 404s.  Junk bond funds were flattish & Treasuries saw major buying which lowered yields (more below).  Oil was off 1+ to the 73s & gold plummeted 34 to 2744.

Dow Jones Industrials

Nvidia (NVDA) & other US technology firms plunged, part of a global sell-off as Chinese startup DeepSeek sparked concerns over competitiveness in artificial intelligence & America's leadership in the sector.  NVDA, the chip designer who has been a major beneficiary of the AI hype.  Its losses helped drive other AI trades & the broader US market lower.  DeepSeek launched a free, open-source large language model in late Dec, claiming it was developed in just 2 months at a cost of under $6M — a much smaller expense than the one called for by Western counterparts.  Last week, the company released a reasoning model that also reportedly outperformed OpenAI's latest in many 3rd-party tests.  Marc Andreesen called DeepSeek's product “one of the most amazing and impressive breakthroughs I’ve ever seen” & a “profound gift to the world.”  The Andreessen Horowitz cofounder recently gained notoriety for his support of Pres Trump.  These developments have stoked concerns about the amount of money big tech companies have been investing in AI models & data centers & raised alarm that the US is not leading the sector as much as previously believed.  “DeepSeek clearly doesn’t have access to as much compute as U.S. hyperscalers and somehow managed to develop a model that appears highly competitive,” said Srini Pajjuri, semiconductor analyst at Raymond James.  Pajjuri said DeepSeek could “drive even more urgency among U.S. hyperscalers,” a group of large computing infrastructure players like Amazon (AMZN) & Microsoft (MSFT), a Dow stock.  Specifically, the analyst said these companies can leverage their advantage from access to graphics processing units to set themselves apart from cheaper options.  GPUs are a key part of the infrastructure required to train huge AI models & NVDA is the market leader in GPUs.  NVDA stock tumbled 23.94 (17%), AMZN was off 2.35 (1%) & MSFT retreated 16.33 (4%).

Nvidia plummets 13% to lead global tech sell-off as China’s DeepSeek raises questions about AI chip spending

Treasury yields fell as investors sought out safe-haven assets amid a massive stock market sell-off.  The  10-year Treasury yield slipped 7 basis points to 4.552%, while the 2-year Treasury was last trading at 4.225% after falling close to 5 basis points.  1 basis point equals 0.01% & yields move inversely to prices.  Stocks tumbled, with NAZ being hit hard by a large decline in the technology sector.  On top of the tech rout, investors are bracing for the Federal Reserve's first meeting of the year, with a policy announcement due Wed.  The Fed is facing pressure from newly inaugurated Pres Trump, who said he expects to see interest rates come down during a keynote address at the World Economic Forum in Davos, Switzerland, last week.  “I’ll demand that interest rates drop immediately,” Trump said at the forum, speaking to an audience of global leaders.  “And likewise, they should be dropping all over the world. Interest rates should follow us all over.”  However, traders are pricing in a more than 99% chance that the Fed will leave interest rates unchanged.  At its Dec meeting, the Fed penciled in only 2 interest rate cuts in 2025.

Nvidia plummets 13% to lead global tech sell-off as China’s DeepSeek raises questions about AI chip spending

Pres Trump hit send on a Truth Social post yesterday that seemed to be the start of 25% tariffs on Colombia.  But it was all apparently over about 10 hours later, with White House press secretary Karoline Leavitt saying the South American nation "has agreed to all of President Trump's terms."  The abbreviated trade war holds several important lessons for how future conflicts might unfold ahead of a key Sat deadline for tariffs on Canada, Mexico & China.  It showed that Trump intends to use a strategy of threatening tariffs first & then asking policy questions later, with some of the core issues with Colombia apparently still to be hammered out.  It also confirmed that his administration aims to use a much-watched tariff authority from a 1977 law that grants the pres the power to declare an economic emergency & act quickly to achieve its ends.  Lastly, the episode made clear that the pres has free tariff reign.

Trump's brief trade war with Colombia has key lessons for Mexico and China

NAZ sank to lead a stock sell-off as a Chinese startup rattled faith in US leadership & profitability in AI, taking a hammer to NVDA & other Big Tech stocks.  Markets have been rattled by claims by China's DeepSeek that its AI assistant uses cheaper chips & less data than leading models, but performs equally well.  A surge in DeepSeek's popularity has spurred investors to question bets that AI demand-driven growth will keep fueling gains for stocks.  Investors started to flock to assets seen as safe as stocks plunged.  The 10-year Treasury yield fell as much as 12 basis points to 4.50%, the lowest level in over a month.

Markets hesitate as rally takes a breather

Dow dropped 140 (near session lows), but advancers over decliners 5-4 & NAZ retreated 99.  The MLP index added 1+ to the 323s & the REIT index went 1+ to the 402s.  Junk bond funds remained mixed & Treasuries had a little buying, lowering yields.  Oil hardly budged in the 74s & gold jumped 16 to 2781 (more on both below).

Dow Jones Industrials

Tesla (TSLA) launched an updated version of the Model Y in the US & Europe, bringing some new excitement to its product portfolio, which had been getting long in the tooth.  TSLA said the “new Model Y,” featuring an updated exterior and interior, new suspension tuning, & a slew of other smaller updates, would start at $59,990 before any incentives for the “Launch Series” & would lease for $699 with $2,999 down.  The all-wheel-drive Launch Series Model Y is the only trim available for offer, with deliveries beginning in Mar.  The older version of the Model Y is still on sale, with the long-range rear-wheel drive trim priced at $44,990, the long-range all-wheel drive at $47,990, & the performance all-wheel drive at $51,990.  TSLA did not say how long the older Model Y would remain on sale or when it would be phased out.  Last year, TSLA finally updated the Model 3 sedan for global markets, which was well received by consumers, in part because the original Model 3 launched 7 years earlier & needed a refresh.  “Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter,” TSLA said in late Oct.  Last year, TSLA delivered 1.78M vehicles, missing analyst estimates for 1.8M & resulting in an annual total below 2023's 1.8M vehicles delivered.  It was TSLA's first year-over-year decline, hinting that new competition, demand, & global economic conditions may be hurting the company.  The stock fell 5.80.

Tesla launches refreshed Model Y in bid to boost sales in US, globally

US consumer sentiment weakened in Jan for the first time in 6 months amid worries about the labor market & potential higher prices for goods if Pres Trump's new administration presses ahead with planned tariffs on imports.  The University of Michigan said that its Consumer Sentiment Index fell to 71.1 this month from a preliminary reading of 73.2 & 74.0 in Dec.  The forecast had expected an unchanged reading.  The final survey was closed on Mon, the day when Trump was inaugurated for a 2nd term as pres.  The decline in sentiment was broad-based and seen across income, wealth & age groups.  "Despite reporting stronger incomes this month, concerns about unemployment rose," Joanne Hsu, the director of the University of Michigan's Surveys of Consumers, said.  "About 47% of consumers expect unemployment to rise in the year ahead, the highest since the pandemic recession."  Consumers'1-year inflation expectations were at 3.3%, unchanged from the preliminary estimate, but up from 2.8% in Dec.  The 12-month inflation expectations are now above the 2.3%-3.0% range seen in the 2 years prior to the COVID-19 pandemic.  Long-run inflation expectations were at 3.2%, revised down from a preliminary reading of 3.3% & up from 3.0% in Dec.  "Concerns over the future trajectory of inflation were visible throughout the interviews and were tied to beliefs about anticipated policies like tariffs," Hsu added.

News about Consumer Confidence January 2025 Michigan

The S&P US Global Manufacturing PMI edged up to 50.1 in Jan 2025 from 49.4 in Dec, beating market expectations of 49.7 & signaling a slight improvement in manufacturing conditions after 6 months of decline.  Factory output edged up for the first time in ½ a year, with new orders also returning to modest growth.  Employment rose for a 3rd straight month, with the pace of job creation the fastest since Jul.  Supplier lead times continued to lengthen, reflecting busier supply chains, although the impact on the PMI was less pronounced than in Dec.  On the downside, inventories fell at their sharpest rate in 17 months, partly due to higher-than-expected input usage in production rather than cost-driven stockpiling.  Gold's move towards a fresh all-time high has coincided with a correction in the $, which is lower following remarks by Trump that suggest he may go soft on tariffs & settle for a trade deal with China.

US Factory Activity Recovers from Growth

Gold prices rose nearly 1%, lingering near record high levels scaled in Oct, steered by Pres Trump's calls to lower interest rates & uncertainty surrounding his trade policies.  Spot gold rose 0.9% to $2776 per ounce & was up 2.8% for the week.  Prices are at their highest since Oct 31, when they hit a record high of $2790.  US gold futures for Feb rose 0.7% to $2783 per ounce.  The $ hit a 1-month low, making bullion less expensive for foreign buyers.

Gold surges to near-record high as Trump calls for lower interest rates

Crude oil prices were little changed but headed for a weekly decline after Pres Trump unveiled a sweeping plan to increase US production & demanded that OPEC lower crude prices.  Brent crude futures were up 6¢ at $78.35 a barrel while US West Texas Intermediate (WTI) crude futures were up 4¢ at $74.66.  For the week, Brent is down 3.1% so far & WTI is down 4.1%.  Crude oil prices have eased so far this week, as investors trimmed their war premiums after the Gaza ceasefire while bracing for a shift in Trump's energy policy.  For now, Trump is not as predictable as expected, which makes oil prices prone to volatility on headlines. Trump, in a speech yesterday at the World Economic Forum in Davos, Switzerland, said he would demand the Organization of the Petroleum Exporting Countries & its de facto leader, Saudi Arabia, lower the cost of crude.  He also said he would ask Riyadh to increase the US investment package to $1T, up from the $600B reported by the Saudi state news agency earlier in the day.  Trump declared a national energy emergency on Mon, lifting environmental restrictions on energy infrastructure as part of a sweeping plan to maximize domestic oil & gas production.  On Wed, he vowed to hit the European Union with tariffs & imposed 25% duties on Canada & Mexico, & added that his administration was considering punitive duties of 10% on China.  US crude inventories last week hit their lowest since Mar 2022, according to the US Energy Information Administration.

Crude Oil Prices Drop Due to Trump's Energy Policy

Stocks retreated, stalling the recent rally as investors digested the latest batch of earnings & weighed Donald Trump's hints at a softer stance on China tariffs.  Pres Trump's call at Davos for cuts to US interest rates, oil prices, & taxes spurred investor optimism for his policies, buoying stocks this week.  The major gauges are set to end the holiday-shortened week with gains above 2%, demonstrating the power of Trump's comments even as there are questions his ability to execute the changes.