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Tuesday, January 28

Some of the largest macro moves in the market today: US Dollar Index +0.6%. Noteworthy US mega-cap moves today: Broadcom Inc (AVGO) +2.9%. NVIDIA Corp (NVDA) +2.8%.

Recent market movements have been significantly influenced by the emergence of a low-cost AI model from Chinese startup DeepSeek, which has raised concerns about U.S. tech dominance and led to substantial sell-offs in technology stocks, particularly Nvidia. This development contributed to a historic drop in Nvidia's stock value and triggered fears regarding inflated valuations across the sector.

In economic data releases, new orders for manufactured durable goods in the United States unexpectedly fell 2.2% month-over-month in December 2024, contrasting sharply with forecasts that anticipated an increase. Additionally, France reported improved consumer confidence at its highest level since October as it rose to 92 points this January.

Political developments are also impacting markets; President Trump's recent comments on imposing universal tariffs starting at 2.5%, potentially escalating further over time if implemented fully, have bolstered demand for safe-haven assets like the U.S dollar while weighing down equity indices globally amid heightened inflationary risks associated with such measures.

SPDR S&P 500 ETF Trust (SPY) [+0.3%]
U.S. stock futures have risen following a selloff on Monday, with a rebound in technology shares positively impacting the SPDR S&P 500 ETF Trust (SPY). The S&P 500 and NASDAQ had ended sharply lower due to concerns surrounding China's DeepSeek AI, which also led to a surge in the VIX. Discussions on social media highlighted that 70% of stocks within SPY were up by an average of 2.0% the previous day, despite SPY closing 1.5% lower on October 22. Significant contributors to SPY's performance included Nvidia, Broadcom, and Alphabet, with Nvidia facing stock pressure from competition but analysts remaining supportive. Alphabet's shares rose in after-hours trading following a renaming announcement. Conversations also noted an increase in the percentage of S&P 500 stocks above their 50-day moving average, amidst broader market positioning ahead of the upcoming FOMC meeting.

VanEck Semiconductor ETF (SMH) [+1.4%]
The VanEck Semiconductor ETF (SMH) has seen a price increase of 1.4% since Monday, despite recent turbulence in the semiconductor sector. Nvidia's stock dropped nearly 17%, largely due to competitive pressures from the Chinese AI startup DeepSeek, leading to a broader sell-off in tech shares. This decline erased approximately $593 billion in Nvidia's market capitalization. Analysts have characterized the market's reaction as "overdramatic," suggesting a potential buying opportunity. The ETF currently has an AUM of $23.60 billion and an expense ratio of 0.35%. In terms of performance, the ETF has experienced a six-month return of -1.17%. Social media discussions highlighted that SMH marked its third largest single-day drawdown for semiconductor stocks on record, breaking below its 200-day moving average, which raises concerns about a developing semi bear market.

LMT | -3.5%| -4.1B
Lockheed Martin Corp | Aerospace & Defense
Lockheed Martin Corp reported a significant decline in Q4 earnings, with net income falling to $527 million, or $2.22 per share, down from $1.9 billion, or $7.58 per share, year-over-year. Revenue for the quarter was $18.62 billion, missing the consensus estimate of $18.84 billion. The company attributed losses of approximately $1.29 billion to classified programs within its aeronautics and missiles and fire control units. For FY25, Lockheed Martin expects earnings per share between $27.00 and $27.30, below the consensus estimate of $27.82, while projecting revenue between $73.75 billion and $74.75 billion, also falling short of expectations. Following the earnings announcement, the stock experienced a notable drop during premarket trading.

NVDA | +3.5% | +104.9B
NVIDIA Corp | Semiconductors
NVIDIA Corp's stock has rebounded following a significant decline due to competitive pressures from the Chinese AI startup DeepSeek, which recently introduced a cost-efficient model utilizing NVIDIA's H800 chips. Shares dropped sharply, resulting in a historic loss of market capitalization. Despite this, analysts maintain confidence in NVIDIA's market position, with a top analyst suggesting that the market overreacted to DeepSeek's advancements. Jensen Huang, NVIDIA's CEO, outlined an ambitious vision for future robotics and AI, emphasizing ongoing innovation. Concurrently, retail investors purchased a record amount of NVIDIA stock during the downturn, reflecting active engagement despite the challenges posed by DeepSeek. The stock has shown positive movement in pre-market trading, aligning with broader gains in the Semiconductors sector.

RCL | +4.3% | +2.8B
Royal Caribbean Cruises Ltd | Hotels, Resorts & Cruise Lines
Royal Caribbean Cruises Ltd. reported a fourth-quarter adjusted EPS of 1.63, exceeding the consensus estimate of 1.50 and reflecting a year-over-year increase of 30.4%. Revenue for the quarter reached 3.76 billion, slightly below the expected 3.77 billion, but still marking a 12.9% increase from the previous year. The company anticipates an adjusted EPS for fiscal year 2025 to range between 14.35 and 14.65, surpassing analysts' expectations of 14.41, driven by strong bookings during the WAVE season and projected net yield increases of 2.5% to 4.5% in constant currency. Additionally, Royal Caribbean plans to launch ten river cruise ships by 2027, further expanding its market presence. Social media discussions highlighted these results, noting that net income nearly doubled to 0.6 billion from the previous year's 0.3 billion.

WAL | -2.9% | -295.0M
Western Alliance Bancorp | Regional Banks
Western Alliance Bancorp reported its fourth-quarter financial results on January 27, 2025, achieving earnings per share of 1.95, surpassing the consensus estimate of 1.92. Revenue for the quarter reached 838.4 million, exceeding the analyst estimate of 805.6 million. The company noted total deposits of 66.3 billion and a tangible book value per share of 52.27. Net interest income was reported at 666.5 million, with a provision for credit losses of 60 million. Notably, nonperforming assets to total assets increased to 0.65% from the previous year's 0.45%, while annualized net loan charge-offs rose to 0.25% from 0.20% year-over-year. Social media discussions highlighted a net income of 216.9 million, reflecting an increase from the prior year's net income of 199.8 million and an earnings per share rise from 1.80 to 1.95.

SYF | -4.8% | -1.3B
Synchrony Financial | Consumer Finance
Synchrony Financial reported fourth-quarter results with a diluted EPS of 1.91, slightly below the consensus estimate of 1.92. Revenue for the quarter was 3.80 billion, missing the forecast of 3.83 billion. Net interest income decreased by 0.4% quarter-over-quarter to 4.59 billion, also falling short of the expected 4.62 billion. Total deposits declined by 0.3% to 82.06 billion, against an estimated 84.17 billion. The company provided guidance for FY25 net revenue between 15.2 billion and 15.7 billion, lower than the consensus of 15.54 billion. Following these mixed results, shares of Synchrony Financial dropped significantly in pre-market trading. Social media discussions noted a provision for credit losses of 1.56 billion, exceeding estimates, and an increase in net charge-offs as a percentage of total average loan receivables to 6.45%.

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