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Is AI Enthusiasm Starting to Wane?

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What’s in Today’s Report:

  • Is AI Enthusiasm Starting to Wane?

U.S. futures are modestly higher as traders digest yesterday’s heavy selloff in tech/software names while Chinese economic data topped expectations overnight.

Economically, China’s January Services PMI firmed to 52.3 vs. (E) 51.5 from 52.0 in December.

There are multiple economic reports due out this morning including the ADP Employment Report (E: 45K), Final January Composite PMI (E: 52.8), and ISM Services PMI (E: 53.8). As has been the case recently, the stronger the data the better for stocks.

Additionally, there are two Fed officials scheduled to speak today: Barkin (12:00 p.m. ET) and Cook (6:30 p.m. ET), and while markets have been waiting for commentary out of Warsh, any dovish-leaning comments should be supportive of risk assets.

Finally, earnings season continues with UBER ($0.79), LLY ($6.99), ABBV ($2.66), GOOG ($2.58), ARM ($0.21), QCOM ($2.80), and MCK ($9.31) all due to release Q4 results today.

 

December Market Multiple Table – Deterioration Across Market Influences

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What’s in Today’s Report:

  • December Market Multiple Table – Deterioration Across Market Influences

Futures are seeing a solid rebound thanks to strong tech earnings and positive AI news.

Micron (MU) beat earnings estimates (stock up 11% pre-open) and, more importantly, gave robust guidance and that’s helping to reinforce AI Enthusiasm and lift tech and the entire market this morning.

Today will be a busy day of central bank decisions and economic data.  The most important economic report today is CPI (E: 0.3% m/m, 3.1% y/y), followed by Jobless Claims (E: 225K) and Philly Fed  (E: 2.2).  CPI needs to come in at or under expectations to push back on the hawkish Fed narrative and help support stocks.  Other economic data, meanwhile, needs to stay solidly positive to imply stable economic activity.

On the central bank front, we get a BOE Rate Decision (E: 25 bps cut) and ECB Rate Decision (E: No change) and as long as there are no hawkish surprises from either, they shouldn’t move markets.

Finally, on the earnings front, some reports we’re watching today include:  ACN ($3.74), KMX ($0.32), DRI ($2.09), NKE ($0.37), FDX ($4.05), KBH ($1.79).

 

Why Gemini Could Weigh on AI Enthusiasm

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What’s in Today’s Report:

  • Why Google’s Gemini Update Could Further Pressure AI Enthusiasm

Futures are higher on strong earnings and guidance from MRVL after the close yesterday (shares +10% premarket this morning) ahead of the release of a slew of key economic data today.

Overnight, global Composite PMI data was solid as Chinese, U.K., and Eurozone releases all topped estimates with headlines in expansion territory.

Today, there is a long list of data due out in the U.S. including the ADP Employment Report (E: 20K), Import & Export Prices (E: -0.2% m/m, 0.0% m/m), Industrial Production (E: 0.1%), and the ISM Services PMI (E: 52.1).

There are no Fed officials scheduled to speak today however there is a mid-duration Treasury Bill auction (for 4-Month securities) that could shed light on current Fed policy expectations; the more dovish the outcome/stronger the demand for the Bills, the better.

Finally, Q3 earnings continue today with results due from DLTR ($1.09), M ($-0.13), RY ($2.52), CRM ($2.15), SNOW ($-0.58), and AI ($-0.75), and investors will be looking for more strong results, particularly from the tech companies reporting today.

 

How Much Has the Bullish Case Deteriorated?

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What’s in Today’s Report:

  • How Much Has the Bullish Case Deteriorated?
  • Weekly Market Preview: Can AI Enthusiasm Stabilize?
  • Weekly Economic Cheat Sheet: Important Growth Data Despite the Short Week

Futures are slightly higher as investors digest last week’s volatility following a generally quiet weekend of news.

Most global markets are higher on momentum from Friday’s U.S. rally, except Japanese shares which fell sharply (down more than 2%) after unions negotiated more pay increases, boosting chances for a rate hike.

Economically, the only report was German IFO Business Expectations which missed expectations (90.6 vs. (E) 91.4).

This is a holiday shortened week but the “catch up” in economic data from the government shutdown will continue despite only three and a half trading days.  As a general rule, the more Goldilocks the data (so basically at expectations) the better as it’ll keep growth expectations stable but boost rate cut chances.

Economic reports we’re watching today include the Chicago Fed National Activity Index (E: -0.12) and Industrial Production (E: 0.1%).

 

Can the Rest of the Market Rally If Tech Is Weak?

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What’s in Today’s Report:

  • Can the Rest of the Market Rally If Tech is Weak?
  • Weekly Market Preview: Can AI Enthusiasm Rebound? (NVDA Earnings on Wednesday Are Key)
  • Weekly Economic Cheat Sheet: The First Look at November Data (Flash PMIs on Friday)

Futures are moderately higher mostly on momentum from Friday’s rebound and following a quiet weekend of news.

On trade, there was positive news as the White House confirmed reduced tariffs on numerous food products as it aims to boost affordability.

Economically, the only notable report was Italian CPI which rose 1.3%, as expected.

Today we have the first economic report for November, Empire Manufacturing (6.10), and numerous Fed speakers.  Williams (9:00 a.m. ET) and Waller (3:35 p.m. ET) are the most important speakers today but we will also hear from Jefferson (9:30 a.m. ET), Kashkari (1:00 p.m. ET) and Logan (7:55 p.m. ET).  Bottom line, if Empire manufacturing is stable and the tone of Fed speak today is open to a December cut (especially from Williams and Waller) that should help extend Friday’s rebound.

 

Is Something Wrong with AI Enthusiasm?

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What’s in Today’s Report:

  • Is Something Wrong with AI Enthusiasm?
  • Weekly Market Preview: Can Earnings Help the Tech/AI Stocks Stabilize?
  • Weekly Economic Cheat Sheet: What Will Delayed Data Tell Us (Growth Stable, or Not?)

Futures are moderately higher as the Senate voted to, effectively, end the government shutdown later this week.

The Senate passed an important procedural vote late Sunday night that paved the way for the government to reopen later this week, ending the longest shutdown in U.S. history and removing an increasing economic headwind.

There were no notable economic reports overnight.

There are no economic reports today so focus will be on Fed speak (Daly at 8:30 a.m. ET), and earnings, as AI darling CRWV ($-0.39) reports after the close (and the stronger the report, the better for tech and the market).