Stocks Reversing Higher into Final Hour on More Dovish Than Expected Fed, Stable Long-Term Rates, Earnings Outlook Optimism, Metals & Mining/Healthcare Sector Strength

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 36.2 +.2%
• US 10-Year T-Note Yield 4.14% -1.0 basis point
• 3-Month T-Bill Yield 3.65% -2.0 basis points

• China Iron Ore Spot 102.2 USD/Metric Tonne +.7%
• Dutch TTF Nat Gas(European benchmark) 26.8 euros/megawatt-hour +.8%

• Citi US Economic Surprise Index 25.6 -5.2 points

• Citi Eurozone Economic Surprise Index 31.5 -.2 point

• Citi Emerging Markets Economic Surprise Index 32.6 +1.0 point
• S&P 500 Current Quarter EPS Growth Rate YoY(2 of 500 reporting) +41.3% n/a
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 307.44 +1.13:  Growth Rate +14.2% +.4 percentage point, P/E 22.4 unch.
• S&P 500 Current Year Estimated Profit Margin 13.74% +25.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(0 of 10 reporting) +n/a +n/a
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 511.29 +.28: Growth Rate +24.6% +.1 percentage point, P/E 32.2 -.2
• Bloomberg US Financial Conditions Index .72 +4.0 basis points
• Bloomberg Euro-Zone Financial Conditions Index 1.36 unch.
• Bloomberg Global Trade Policy Uncertainty Index 1.9 -.4
• US Yield Curve 61.0 basis points (2s/10s) +1.5 basis points
• US Atlanta Fed GDPNow Q2 Forecast +3.6% +10.0 basis points
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 28.4% +1.1 percentage points

• Cleveland Fed Inflation Nowcast Core PCE YoY +2.76% unch.: CPI YoY +2.96% unch.
• 1-Year TIPS Spread 2.45 -3.0 basis points
• 10-Year TIPS Spread 2.26 -1.0 basis point
• Highest target rate probability for March 18th FOMC meeting: 52.0% (-1.8 percentage points) chance of 3.5%-3.75%. Highest target rate probability for Arpil 29th meeting: 42.8%(+3.3 percentage points) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +892 open in Japan 
• China A50 Futures: Indicating +12 open in China

• DAX Futures: Indicating +105 open in Germany

Portfolio:

• Higher: On gains in my consumer discretionary/financial/utility/tech/industrial sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 100% Net Long

Bear Radar

Style Underperformer:

• Large-Cap Growth unch.

Sector Underperformers:

• 1) Energy -1.2% 2) Semis -1.0% 3) Social Media -.5%

Stocks Falling on Unusual Volume: 

• GEV, VVX, AHR, SBLK, HXL, ELVN, CNTA, RIVN, FULC, ORCL, WVE and OXM

Stocks With Unusual Put Option Activity:

• 1) KGS 2) CMCSA 3) FISV 4) CARR 5) NTR

Stocks With Most Negative News Mentions:

• 1) RZLT 2) OXM 3) VRA 4) ORCL 5) GAUZ

Sector ETFs With Most Negative Money Flow:

• 1) XLK 2) IGV 3) XBI 4) FXR 5) XLP

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.4%

Sector Outperformers:

• 1) Gold & Silver +5.3% 2) Nuclear +2.9% 3) Insurance +2.7%

Stocks Rising on Unusual Volume:

• PL, GEMI, RYTM, PPTA, IDR, ENVA, HL, CDE, DXYZ, ADUR, FLY, RKLB, AG, MTN, ASND, ENR, IMVT, ROIV, CIEN, W, RCL, HYMC, NCLH, CBRL, TYRA, AXTI, FTRE, ELV, CUK, ATI, LMND, AMR, EGO, V, ARCB, OLLI, HLF, LC, DRD, CRS, SKE, MANU, ATEX, FLYW, ASTS, WPP, NMAX, YUM, ASTS, RYAAY, MIDD, BVN, OMC, SEZL, AZTA, SE, AAOI, TECK, GWW, WTW and AAUC

Stocks With Unusual Call Option Activity:

• 1) TTI 2) EMN 3) FIP 4) COMP 5) CIEN 

Stocks With Most Positive News Mentions:

• 1) PL 2) AXIL 3) NXDR 4) RYTM 5) GEMI

Sector ETFs With Most Positive Money Flow:

• 1) XLF 2) XLI 3) XLU 4) XLY 5) SMH

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume

Tomorrow's Earnings/Economic Releases of Note; Market Movers

Earnings of Note 
Company/Estimate 

Before the Open:

• None of note

After the Close: 

• None of note

Economic Release 

8:30 am EST

• None of note

10:00 am EST

• None of note

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Goolsbee speaking, US Baker Hughes weekly oil rig count, weekly CFTC speculative net positioning reports, San Antonio Breast Cancer Symposium, (WDFC) annual meeting and the KeyBanc Consumer Conference could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Afternoon Market Internals

NYSE Composite Index:

• Volume Running -6.3% Below 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.4 +.2
• 3 Sectors Declining, 8 Sectors Rising
• 66.8% of Issues Advancing, 30.7% Declining 
• TRIN/Arms .96 -15.8%
• Non-Block Money Flow +$250.2M
  
• 223 New 52-Week Highs, 11 New Lows
• 65.5% (+4.0%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 65.0 +8.2

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 27.0% +2.0 percentage points
• Will there be another US government shutdown by January 31st? 38.0% -4.0 percentage point
• Will China invade Taiwan by end of 2026? 14.0% unch.
• US-Venezuela military engagement by Dec. 31st 22.0% -5.0 percentage points

Other:

• Bloomberg Global Risk-On/Risk-Off Index 94.8 -.8%
• US High-Yield Tech Sector OAS Index 423.25 +.25 basis point
• Bloomberg Cyclicals/Defensives Index 264.6 +.3%
  
• Morgan Stanley Growth vs Value Index 161.4 +.01%
• CNN Fear & Greed Index 43.0 (FEAR) +12.0
• 1-Day Vix 10.2 -12.6%
  
• Vix 15.4 -2.4%
  
• Total Put/Call .80 -9.1%

Thursday Watch

Around X:

• @Business  

• China’s robust stockpiling of crude is expected to continue next year, helping to cushion global markets from a swelling surplus, but masking a broader trend of slowing oil demand growth.
• BREAKING: Mexico approves wide-ranging tariffs of up to 50% on China and other Asian nations. 
• Butter, milk and cheese prices are falling as a surge in global milk production floods the market, prompting warnings of a looming period of weak prices.
• Batteries are getting cheaper and allowing solar power to be used beyond daylight hours, according to a new analysis from clean energy think tank Ember.
• Google DeepMind will open its first research lab for discovering new materials, like those used in batteries or semiconductors, as part of its push to apply AI to more scientific fields.
• The dollar logs its worst day in nearly three months after Fed Chair Jerome Powell highlighted labor market risks while downplaying inflation concerns.
• BlackRock Chief Executive Larry Fink is back in the conversation around rebuilding Ukraine — this time with the Trump administration.
• Get up to speed on what's moving global markets.
• Here's what you need to know to start your day. 

• @ZeroHedge

• UPDATE: The journal Nature has officially retracted the fake climate study that JP Morgan used in its ESG report. The Biden admin relied on this junk research as well. And numerous financial institutions and European central banks continue to employ it in policymaking.
• Republicans Taking Note After Miami Mayor's Office Flips Blue For First Time In Decades. 
• Musk Says DOGE Was "Somewhat Successful," But Wouldn't Do It Again After Swamp's Attack On Tesla
  . 
• Elon Musk Confirms SpaceX Is Going Public, Space-Based Data Centers Secured. 
• Letitia James Moves To Silence Debate Over Transgender Policies.
• 11 Signs That Our World Is Rapidly Becoming A Lot More Orwellian.
• Musk Reveals Life On "Hardcore Mode" As Serious Security Concerns Linger Amid Radical Left Threat.
• Russell breaking up big here. Upper part of the channel is way higher... 
• Bloomberg chief economist Anna Wong: "Even though the dot plot shows just one 25-bp cut in 2026 — markets are pricing two — our view is that the Fed will end up cutting by 100 bps next year... we anticipate weak payroll growth and scant signs of an inflation resurgence".
• Wall Street Reacts To Powell's "More Dovish Than Expected" Rate Cut.  
• Stocks, Bonds, Bullion, & Bitcoin Bid as Fed Cuts Rates, Launches 'Not QE'
  . 

• @CNBC

• CNBC Daily Open: Investors find cheer amid Fed's hawkish cut. 
• Thursday's big stock stories: What’s likely to move the market in the next trading session.
• Asia-Pacific markets set to climb after third Fed cut of the year.
• Stock futures are little changed after Dow rallies on Fed rate cut: Live updates.
• Here are the five big takeaways from Wednesday's Fed rate decision.
• GOP lawmakers seek Trump aid for agricultural equipment after tariff pressure.

• @WSJ  

• Wall Street cheered the Federal Reserve’s decisions to cut interest rates and keep the door open for more cuts, bringing the S&P 500 within striking distance of a record high. 
• More Republicans in the House and Senate are breaking with party leaders and saying the GOP should extend expiring Affordable Care Act subsidies to avert big cost increases for millions of U.S. households and buy time for a bigger overhaul
  . 
• Startups and venture capital are joining the nationwide push to develop new sources of metals the U.S. desperately needs.
• The Federal Reserve is ready to once more expand its balance sheet by buying short-term Treasury securities.
• The U.S. seized an oil tanker off the coast of Venezuela, President Trump said, marking a major escalation in the administration’s pressure campaign against the country’s leader Nicolás Maduro
  . 
• Here’s some surprising political news: A referendum campaign is gaining support in Massachusetts, of all places, to reverse the state’s 2016 legalization of recreational marijuana.
   
• If progressives want to know why so many Americans don’t believe claims of the climate apocalypse, it’s because so much of climate science has been shown to be unbelievable
  . 

• @TheTranscript 

• $ORCL Oracle CFO: "Remaining Performance Obligations (RPO) increased by $68B in Q2—up 15% sequentially to $523B—highlighted by new commitments from Meta, NVIDIA, and others". 
• Oracle CEO: "We are more than halfway through building 72 Oracle Multicloud datacenters to be embedded throughout the Amazon, Google and Microsoft clouds." $ORCL: -6% AH. 
• Adobe double beat. CFO: "Adobe delivered another outstanding year, fueled by strong global demand for our AI solutions..." $ADBE: -1% AH.

Night Trading 

• Asian equity indices are -.5% to +.25% on average. 
• Asia Ex-Japan Investment Grade CDS Index 65.75 unch.
• China Sovereign CDS 43.5 -.25 basis points.
• China Iron Ore Spot 102.4 USD/Metric Tonne -.3%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 8.83 +.08%.
• Bloomberg Emerging Markets Currency Index 36.1 -.02%.
• Bloomberg Global Risk-On/Risk Off Index 95.7 +.1%.
• US 10-Year Yield 4.14% -1.0 basis point.
• Japan 30-Year Yield 3.39% -1.0 basis point. 
• Volatility Index(VIX) futures 19.2 +1.8%.
• Euro Stoxx 50 futures +.16%. 
• S&P 500 futures -.6%.
• NASDAQ 100 futures -1.0%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon.  The Portfolio is 75% net long heading into the day.