Stocks Slightly Lower into Final Hour on Higher Long-Term Rates, Diminished Fed Rate-Cut Odds, Technical Selling, Financial/Airline Sector Weakness

Economic/Market Gauges:

• North American Investment Grade CDS Index 50.3 -.4%
• Bloomberg US Securitized MBS/ABS/CMBS Avg. OAS .20 unch.
• BofA Global Financial Stress Indicator -.12 -1.0 basis point
• European Financial Sector CDS Index 53.9 +1.0%
• Emerging Market CDS Index 125.5 -.01%
• Bloomberg Global Trade Policy Uncertainty Index 1.5 -.4

• Citi US Economic Surprise Index 38.5 +4.1 points

• Citi Eurozone Economic Surprise Index 26.8 +.3 point

• Citi Emerging Markets Economic Surprise Index 34.2 +.6 point
• S&P 500 Current Quarter EPS Growth Rate YoY(333 of 500 reporting) +13.0% -.2 percentage point
• S&P 500 Blended Forward 12 Months Mean EPS Estimate 317.94 +.29:  Growth Rate +18.1% +.1 percentage point, P/E 21.8 -.1
• S&P 500 Current Year Estimated Profit Margin 12.52% -6.0 basis points
• NYSE FANG+ Current Quarter EPS Growth Rate YoY(7 of 10 reporting) +19.1% unch.
• NYSE FANG+ Blended Forward 12 Months Mean EPS Estimate 502.18 +.70: Growth Rate +22.2% +.2 percentage point, P/E 29.0 -.6
• Bloomberg US Financial Conditions Index .73 -5.0 basis points
• US Yield Curve 66.0 basis points (2s/10s) -3.0 basis points 
• Bloomberg Industrial Metal Index 171.6 +.9% 
• US Recession Within 6 Months Probability(3M/18M Forward Yld Curve Spread) 28.8% +.1 percentage point
• US Atlanta Fed GDPNow Q4 Forecast +3.7% unch.
• US 10-Year T-Note Yield 4.17% +3.0 basis points
• 1-Year TIPS Spread 3.43 +4.0 basis points

• Highest target rate probability for April 29th FOMC meeting: 78.5% (+20.1 percentage points) chance of 3.5%-3.75%. Highest target rate probability for June 17th meeting: 48.1%(-.9 percentage point) chance of 3.25%-3.5%. (current target rate is 3.5-3.75%)
  

Overseas Futures:

• Nikkei 225 Futures: Indicating +620 open in Japan 
• China A50 Futures: Indicating -23 open in China

• DAX Futures: Indicating +150 open in Germany

Portfolio:

• Higher: On gains in my tech/industrial/biotech sector longs and index hedges
• Disclosed Trades: None
• Market Exposure: 75% Net Long

Bear Radar

Style Underperformer:

• Small-Cap Growth -.6%

Sector Underperformers:

• 1) Computer Services -5.5% 2) Airlines -3.2% 3) Defense -2.6%

Stocks Falling on Unusual Volume: 

• TOST, TYL, TTAN, TRMB, DOCU, TPG, MLM, TTEK, UPWK, RDDT, UPWK, TWLO, TEAM, DFIN, OTEX, INTA, SPSC, MIR, ICLR, CRTO, CVNA, TEO, AIZ, SHOP, HUBS, PATH, DUOL, PTRN, CRL, TNET, EVER, HOOD, CACI, APPN, COMP, SDGR, ASGN, JLL, ATRC, KRMN, PEGA, UPST, CWK, MBC, PEGA, MBC, FTRE, VERX, NSP, NP, PSN, SAIC, VPG, LYFT, Z, ZG, LEU, ALAB, U, MAT and UFB

Stocks With Unusual Put Option Activity:

• 1) COMP 2) AVTR 3) VRT 4) CWAN 5) JETS

Stocks With Most Negative News Mentions:

• 1) MAT 2) HOOD 3) LEU 4) PSN 5) U

Sector ETFs With Most Negative Money Flow:

• 1) XLK 2) IGV 3) KRE 4) IYW 5) XLF

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value +.3%

Sector Outperformers:

• 1) Semis +2.5% 2) Energy +2.5% 3) Healthcare Providers +2.2%

Stocks Rising on Unusual Volume:

• MNTN, AEHR, TDC, DIOD, KRNT, VRT, BWA, GNRC, THC, NKTR, SOLS, GFS, QXO, HCSG, WOLF, TEX, VNET, HNGE, ACHC, LSCC, AGX, AEIS, SUZ, SNDK,SW, KC, CCCX, SFL, ACMR, BETA, SN, AXTI, VAL, SITE, MU, NG, CCSI, CC, KD, PLSE, ETON, TIMB, SQM, GXO, CIM, JHX, PAG, OSCR, AIG, HCA, AMSC, NET, TK, SDRL, GTX, RACE, RDWR, AMKR, BDX, AZN, ROAD, WCC, ON, COHU, GLDD, EGO, SYNA, MT, R, BP, WELL, KYIV, STM, ETN, EHC, ARLP, ARMK, NESR, PBR, EOG, TSM, CNQ, SGRY, AMX, TECX, TTE, CAT, WMB, ZBH, ENSG, GLW, GPRE, VALE, NE, AAON, BMI, LYB, LASR, BKR, HWM, DD, T, SKWD, Q, BHP and PBR/A

Stocks With Unusual Call Option Activity:

• 1) QNXC 2) TDC 3) MAT 4) GLDD 5) CART 

Stocks With Most Positive News Mentions:

• 1) VRT 2) TDC 3) GNRC 4) DIOD 5) ACHC

Sector ETFs With Most Positive Money Flow:

• 1) XBI 2) GRID 3) SMH 4) GDX 5) XLY

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:

• (AEP)/1.15
• (BAX)/.54
• (BIRK)/.26
• (CBRE)/2.68
• (CHKP)/2.76
• (CROX)/1.91
• (EXC)/.55
• (HWM)/.97 
• (H)/.37
• (IRM)/1.39
• (TRN)/2.28
• (ZTS)/1.40 

After the Close: 

• (AEM)/2.66
• (ABNB)/.67
• (AMAT)/2.21
• (ANET)/.76
• (CALY)/-.42
• (COIN)/1.02
• (DKNG)/.09
• (EXPE)/3.35
• (IR)/.90
• (CART)/.51
• (PSA)/4.20
• (TOST)/.24
• (TWLO)/1.23
• (USAR)/-.16
• (WYNN)/1.47
• (YELP)/.54 

Economic Release 

8:30 am EST

• Initial Jobless Claims are estimated to fall to 224K versus 231K the prior week.
• Continuing Claims is estimated to rise to 1850K versus 1844K prior. 

10:00 am EST

• Existing Home Sales for Jan. is estimated to fall to 4.15M versus 4.35M in Dec.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Miran speaking, 30Y T-Bond auction, IEA monthly report, weekly EIA natural gas inventory report, Fed's weekly balance sheet report, (DDOG) investor day and the TD Cowen Aerospace/Defense could also impact global trading tomorrow.

US Equity Market Hours

• 9:30 am - 4:00 pm EST

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running +21.3% Above 100-Day Average 
• Nasdaq/NYSE Volume Ratio 12.7 +.9
• 3 Sectors Declining, 8 Sectors Rising
• 52.9% of Issues Advancing, 44.9% Declining 
• TRIN/Arms .97 -16.4%
• Non-Block Money Flow +$93.4M
  
• 382 New 52-Week Highs, 69 New Lows
• 69.1% (-.6%) of Issues Above 200-day Moving Average
• Average 14-Day RSI 69.9 +.7

Polymarket:

• Supreme Court Rules in Favor of Trump's Tariffs? 27.0% -1.0 percentage point
• Another US government shutdown by February 14th? 83.0% +9.0 percentage points 
• Will China invade Taiwan by end of 2026? 11.0% -1.0 percentage point
• US strikes Iran by June 30th 54.0% +1.0 percentage point

Other:

• Bloomberg Global Risk-On/Risk-Off Index 103.2 +.2%
• US High-Yield Tech Sector OAS Index 473.75 -7.75 basis points
• Bloomberg Cyclicals/Defensives Index 255.1 -1.0%
• Morgan Stanley Growth vs Value Index 135.9 -1.6%
• CNN Fear & Greed Index 49.0 (NEUTRAL) unch.
• 1-Day Vix 11.2 -17.7%
  
• Vix 17.7 -.6%
  
• Total Put/Call .87 -8.4%

Wednesday Watch

Night Trading 

• Asian equity indices are unch. to +1.0% on average. 
• Asia Ex-Japan Investment Grade CDS Index 64.75 -.25 basis point.
• China Sovereign CDS 41.75 -.75 basis point.
• China Iron Ore Spot 100.4 USD/Metric Tonne +.2%. 
• Gold 5,066.8 USD/t oz. +.7%. 
• Swiss Franc/Offshore Chinese Renminbi Cross 9.01 -.14%.
• Bloomberg Emerging Markets Currency Index 36.31 +.04%.
• Bloomberg Global Risk-On/Risk Off Index 102.9 -.2%.
• US 10-Year Yield 4.14% unch.
• Japan 30-Year Yield 3.51% -6.0 basis points. 
• Volatility Index(VIX) futures 19.5 -.08%.
• Euro Stoxx 50 futures +.02%. 
• S&P 500 futures +.30%.
• NASDAQ 100 futures +.43%.

Morning Preview Links

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher.  The Portfolio is 75% net long heading into the day.