General Market News

US stock futures edged lower on Wednesday following Wall Street's recent rally to record highs, as investors reacted to a surprise oil supply announcement and awaited key labor market data. The Dow crossed 49,000 for the first time while crude prices fell below $57 per barrel after Donald Trump announced Venezuela would release up to 50 million barrels for US sale.

• Crude oil prices extended their early-year decline, with US crude falling below $57 per barrel and Brent approaching $60, pressuring energy stocks after Trump's Venezuela supply announcement
• Markets are awaiting Wednesday's ADP private-sector hiring report and November JOLTS data, followed by Friday's official payrolls report, to gauge labor market cooling
• Nasdaq 100 and S&P 500 futures declined modestly from record levels, while Dow Jones futures remained steady after crossing the 49,000 milestone

Euro zone inflation reached 2% in December 2024, meeting both economist forecasts and the European Central Bank's target rate. Core inflation declined to 2.3% and services inflation cooled to 3.4%, both showing modest decreases from November. The ECB has held its key deposit rate at 2% for four consecutive meetings following a rate-cutting cycle earlier in the year.

• Core inflation (excluding energy, food, alcohol, and tobacco) fell to 2.3% from 2.4% in November, while services inflation decreased to 3.4% from 3.5%
• The ECB maintained its deposit facility rate at 2% for the fourth straight meeting in December after cutting rates in June 2024 as part of a broader easing cycle
• The central bank continues to emphasize a meeting-by-meeting, data-dependent approach to future rate-setting decisions

European markets are expected to open mixed on Wednesday as concerns grow over U.S. President Donald Trump's threats to annex Greenland, an autonomous Danish territory. The White House confirmed it is considering 'a range of options' including military force to gain control of the Arctic island. European leaders have issued a joint statement rejecting the notion, stating that Greenland's status is solely for Denmark and Greenland to decide.

• White House press secretary confirmed the U.S. is considering 'utilizing the U.S. Military' among options to acquire Greenland, citing national security concerns and Russian and Chinese activities in the Arctic region
• European leaders issued a unified statement Tuesday affirming 'Greenland belongs to its people' and rejecting external interference in Denmark-Greenland matters
• Flash euro zone inflation data for December is expected Wednesday at 2%, in line with the European Central Bank's target rate

Chat platform Discord has confidentially filed for an IPO in the United States, according to Bloomberg News sources. The filing comes as the U.S. IPO market regained momentum in 2025 after nearly three years of sluggish activity, though the recovery faces headwinds from tariff volatility and market uncertainty. Discord, founded in 2015, provides voice, video, and text chat services primarily for gamers and streamers.

• Discord confidentially submitted IPO filing documents, though specific timing and valuation details were not disclosed
• The U.S. IPO market showed renewed activity in 2025 after a three-year slowdown, but faces challenges from tariff-driven volatility, government shutdown, and AI stock selloff
• Discord offers communication tools targeted at the gaming and streaming community since its 2015 founding

Axel Merk of Merk Investments argues the post-WWII economic order has collapsed, replaced by an era of 'state activism' where power rather than efficiency drives markets. With silver breaching $80/ounce and copper near $6/pound, he warns traditional investment signals like yield curves are failing as geopolitical fractures reshape capital flows. The shift is evidenced by central banks diversifying from sovereign debt amid record U.S. deficits and rising jurisdictional risks for mining operations.

• U.S. federal deficit hit $1.8 trillion in FY2025, pushing debt to 99.8% of GDP, with net interest payments surpassing $1 trillion for the first time, creating a 'mathematical feedback loop' forcing more debt issuance
• Despite gold finishing 2025 up 67% (strongest since 1979), Merk warns mining stocks face jurisdictional risks from government intervention, with North American gold production projected to decline 2% in 2026 while costs rise to $1,600/ounce
• Copper's rally reflects physical scarcity from geopolitical supply chain disruptions, with analysts estimating a refined copper deficit exceeding 300,000 tons in 2026, supporting Merk's view that 'you cannot print copper'

Directors at eight of the Federal Reserve's 12 regional banks voted against changing the discount rate in December, revealing internal disagreement before the Fed's decision to cut its policy rate by 0.25 percentage points in a contested 9-3 vote. The opposition suggests broader reservations among Fed officials about further rate cuts amid strong investment demand and tariff concerns.

• Only four Fed banks (New York, Philadelphia, St. Louis, and San Francisco) supported the discount rate cut, while eight opposed it, including banks whose presidents cast dissenting votes
• Directors cited strong AI and data center investment demand and anticipated tariff-related cost increases in 2026 as reasons for caution on rate cuts
• Boston Fed President Susan Collins voted for the policy cut despite her directors opposing the discount rate change, later calling it a 'close call'

Federal Reserve Governor Stephen Miran stated that more than 100 basis points in rate cuts are justified in 2026, arguing that inflation is already near the Fed's 2% target when adjusted for measurement distortions. Miran believes current policy remains overly restrictive and risks holding back economic growth as the labor market gradually cools.

• Miran cited distortions in housing inflation data and portfolio management services figures as exaggerating actual inflation pressures beyond the Fed's 2% target
• The Fed cut rates three times in the previous year to a range of 3.50% to 3.75%, with markets expecting a pause at the upcoming meeting later this month
• Miran was nominated by Trump to the Federal Reserve Board in 2025 and currently serves as chair of the White House Council of Economic Advisers

Venezuela's defaulted bonds have surged dramatically, with benchmark 2026 notes more than doubling to 43 cents on the dollar since August. The rally follows political upheaval including the U.S. capture of Maduro and investor hopes for debt restructuring, though major risks remain around the country's $98.3 billion in total bondholder claims.

• Venezuela and PDVSA have $56.5 billion in outstanding eurobonds, with total claims including past-due interest reaching $98.3 billion or 119% of GDP
• The country's economy has shrunk 30% and oil production nearly halved over the past eight years since defaulting in late 2017
• Major holders include Fidelity and T. Rowe Price, while analysts warn the rally may be 'running ahead of reality' given political uncertainties and the complexity of restructuring

The Santa Claus Rally failed to materialize for the third consecutive year, with the S&P 500 falling 0.11% during the traditional rally period from late December through early January 2026. While some market strategists remain optimistic about 2026 returns, others are watching January's performance closely, as historically weak Santa rallies have sometimes preceded major market downturns.

• The S&P 500 has averaged 1.3% returns during the Santa Rally period since 1950, but posted losses in 2000 and 2008 before the dot-com crash and financial crisis respectively
• Market experts are divided on 2026 outlook: Fundstrat's Mark Newton sees potential for the S&P to move above 7,000, while others await January results as a key indicator
• The S&P 500 started 2026 up 0.8% over the first two trading days despite the absent Santa Rally, with some strategists noting institutional 2026 targets imply modest gains ahead

Oil stocks retreated Tuesday after President Trump said the U.S. could subsidize oil companies rebuilding Venezuela's energy infrastructure following the military capture of President Nicolas Maduro. Venezuela, which holds some of the world's largest oil reserves but currently produces less than 1% of global consumption at 900,000 barrels per day, could see production recovery over several years with U.S. investment. Refiners and oil services companies initially surged Monday but gave back gains as analysts cautioned that significant political stability and investment clarity is needed before major commitments materialize.

• Chevron is viewed as best positioned to scale up Venezuelan production given its existing operations, while refiners like Valero and Marathon could benefit from access to cheaper heavy crude for Gulf Coast facilities
• Venezuelan oil production peaked at 3.5 million barrels per day in the late 1990s but has declined to about 900,000 barrels currently; near-term removal of U.S. sanctions could return approximately 200,000 barrels per day to global markets
• Oil services companies including Halliburton, SLB, and Baker Hughes fell 0.4%-4% Tuesday after surging over 7% Monday, as analysts noted political clarity is needed before billions in infrastructure investment begins

The US services sector expanded at its slowest pace since April, with the S&P Global Services PMI falling to 52.5 in December from 54.1 in November. The slowdown was driven by weaker new business inflows, stagnant hiring, and rising cost pressures, signaling fading post-pandemic economic resilience. Business confidence also weakened amid uncertainty over tariffs and government policy heading into 2026.

• New business growth slowed to its weakest rate in approximately 20 months, with export business declining at the steepest pace since May due to tariffs and foreign demand uncertainty
• Employment growth stalled for the first time since February, ending a nine-month hiring streak, as firms cited cost concerns and weakening demand
• Input costs rose at a seven-month high, driving service price inflation to its highest level since August, while business confidence remained below long-term averages

Stock futures were mixed Tuesday following Monday's rally that pushed the Dow to record highs, as investors digested AI chip announcements from Nvidia and AMD at CES and assessed geopolitical developments in Venezuela. Oil stocks extended gains on prospects of U.S. investment in Venezuelan oil infrastructure, while gold and silver approached record highs amid ongoing uncertainty.

• Nvidia and AMD unveiled new AI chips at CES, with Nvidia's Rubin chips targeting robotics and self-driving cars, while AMD revealed chips for PCs, servers, and physical AI applications
• Oil stocks including Chevron (up 5% Monday) rallied on news of Maduro's capture and Trump administration statements about U.S. companies investing in Venezuela's oil infrastructure
• Gold futures rose to $4,475 per ounce (near the Dec. 26 record of $4,580) and silver climbed to $78.15 (approaching last month's all-time high of $83) as investors sought safe-haven assets

US stock futures held steady on Tuesday following Monday's record rally, as investors paused to assess developments in the AI sector. Major chip makers Nvidia and AMD presented competing AI platforms at the Consumer Electronics Show in Las Vegas, keeping AI investment themes in focus. Markets largely ignored geopolitical developments while copper prices surged above $13,000 per tonne on tariff concerns and US stockpiling.

• Nvidia unveiled its Vera Rubin platform and robotics ambitions while AMD showcased its Helios system promising major data-centre performance improvements at CES
• Copper prices reached fresh highs above $13,000 per tonne driven by tariff concerns and aggressive US stockpiling, tightening global supply
• S&P 500 and Dow futures remained flat while Nasdaq 100 futures edged lower as investors digested the prior day's gains

New Federal Reserve research published January 5, 2026, suggests that high tariffs may reduce inflation rather than increase it, contrary to conventional theory. The study examined the 15% increase in average U.S. tariff rates in 2025—the largest in the modern era—and found that historically, tariff shocks have been associated with lower inflation and higher unemployment due to reduced demand and economic uncertainty.

• The 2025 tariff increase of 15% was the largest in the modern era, with the last comparable rates occurring between World War I and World War II
• Researchers Barnichon and Singh found that tariff shocks suppress demand through increased uncertainty, lowering consumer and investor confidence, which paradoxically reduces inflation while raising unemployment
• Nearly half of product leaders at goods-producing companies report tariffs are already impacting operations, forcing high-stakes decisions amid delayed economic data and an information vacuum

Global stocks continue reaching new highs despite minimal market reaction to Venezuela's political upheaval following Nicolas Maduro's capture. The dollar weakened and oil prices remained stable as initial safe-haven demand proved short-lived, with markets focusing on upcoming U.S. jobs data and Federal Reserve rate cut expectations.

• U.S. December ISM manufacturing index fell below 48 to its lowest level since October 2024, with declining order backlogs suggesting potential employment risks ahead
• Markets showed remarkable calm following Maduro's capture, with the VIX volatility index near rock-bottom levels and MSCI's world stocks benchmark hitting its second record high of 2025
• Expectations that reviving Venezuela's oil industry would require years and billions of dollars dampened initial concerns about crude oil oversupply

Chinese AI company DeepSeek caused major market turbulence in January 2025 when it released models rivaling Western leaders at a fraction of the cost, causing Nvidia and Broadcom to plunge 17% in one day. However, its seven subsequent model updates through the year failed to generate similar market reactions, as they were incremental improvements rather than breakthrough releases. Markets have been reassured by continued U.S. AI leadership and accelerating infrastructure spending, though analysts warn more shocks could come.

• DeepSeek's January R1 model challenged assumptions about AI development costs and China's competitive position, directly threatening semiconductor and hyperscaler revenue narratives with its efficient, low-cost approach
• Limited access to advanced computing power due to U.S. chip export controls has constrained DeepSeek's ability to release new frontier models, with its R2 model delayed from May over difficulties training on Huawei chips
• Western AI labs responded with major releases including OpenAI's GPT-5, Anthropic's Claude Opus 4.5, and Google's Gemini 3, easing fears of sudden commoditization while AI infrastructure spending accelerated in 2025

The S&P 500 delivered an 18% total return in 2025, its third consecutive year of 15%+ gains, but only three sectors outperformed the index. Technology led with 24.6%, followed by communications at 23% and industrials at 19.5%, with AI adoption serving as the dominant driver across all three sectors. Key contributors included NVIDIA, Broadcom, Alphabet, Meta Platforms, GE Aerospace, and Micron Technology.

• Technology sector topped performance at 24.6%, driven by AI chip demand with NVIDIA up 39%, Broadcom up 51%, and Micron surging 240% as the company sold out its entire 2026 HBM production capacity
• Communications sector returned 23%, powered by AI-fueled revenue growth at Meta (up 13%) and Alphabet (up 66%), plus a 172% surge in Warner Bros. Discovery amid acquisition activity
• Industrials gained 19.5% on aerospace/defense strength (GE Aerospace up 86%, RTX up 61%) and data center power infrastructure demand, with backlog visibility providing strong forward revenue indicators

The Dow Jones Industrial Average surged over 800 points (roughly 1.7%) to a record high above 49,000 on Monday, driven by investor confidence that the US military's weekend capture of Venezuelan President Nicolás Maduro would remain a contained geopolitical event. The S&P 500 and Nasdaq each rose 0.8% as traders rotated into energy, financials, and defense stocks, signaling markets can compartmentalize the Venezuela operation without broader economic spillover.

• Energy stocks led the rally with Chevron up 11%, Halliburton and Schlumberger each surging 8%, and ConocoPhillips jumping 7% on speculation about reconstruction contracts and asset recovery in Venezuela.
• Treasury yields remained stable with the 10-year dipping just 2 basis points to 4.17%, indicating traders do not expect inflation spirals or forced Fed action from the Venezuela operation.
• Commodity markets showed mixed signals: gold surged 2% to near $4,440 per ounce and silver jumped 7%, while WTI crude rose modestly 0.82% to $57.79 per barrel as traders assessed supply dynamics.

Major Wall Street banks have set 2026 S&P 500 targets all above the current level of approximately 6,900, creating a contrarian concern about excessive bullish consensus. The article warns that unanimous optimism may signal increased volatility and market rotation ahead rather than continued smooth gains. Active traders may benefit from pullbacks created by sector rotation in what could remain a durable but choppy bull market.

• All major banks' 2026 S&P 500 targets exceed current levels around 6,900, marking rare unanimous bullish consensus that historically precedes increased volatility
• Wall Street targets were similarly optimistic in early 2025 but ultimately proved correct as markets closed significantly higher than projections
• Market rotation has already begun, with the first trading day of the year showing significant sector shifts that create opportunities for active swing traders

Defense stocks surged Monday as geopolitical tensions escalated following the U.S. capture of Venezuelan President Nicolas Maduro and ongoing anti-government protests in Iran entering their ninth day. Multiple defense contractors broke out above key buy points, with AeroVironment leading gains at 13% as investors positioned for potential military conflicts in multiple regions.

• L3Harris and Heico broke out above buy points, while AeroVironment rallied 13% and Kratos jumped 11% as defense stocks advanced broadly across the sector
• Iran's currency collapsed to historic lows against the dollar, sparking protests across 220 locations in 26 of 31 provinces, with at least 20 killed and over 990 arrested
• President Trump warned the U.S. is 'locked and loaded' to intervene if Iran violently suppresses protesters, while also supporting Israeli action against Iranian missile production and nuclear sites