Hello, I'm Eric Criscuolo, Market Strategist at the New York Stock Exchange, and this is Market Storylines. Every week we’re here to keep you up to date on the key trends and events driving global markets. As we record on Thursday, January 15, let’s dive into this week’s Market Storylines.
Well, the Supreme Court is keeping us waiting. There was a lot of anticipation on Wednesday that the court would announce its decision on the legality of the IEEPA tariffs. But after issuing a few opinions on other cases, they closed up shop for the day. Legal analysts, of which I am not one, have said that each week without a decision increases the likelihood of the administration prevailing. However, most still believe Trump will lose the case. Others noted that the Justices may view this as a, quote, blockbuster case. For those, decisions are often held until the end of the Court’s term in June.
One person not keeping us waiting is John Harbaugh, who will be taking the helm as the next head coach of the NY Giants. We’re taking this opportunity to be the first financial digital media team, we think, to say Welcome to New York, and New Jersey, John! Now get us to .500!
With this week’s most important news addressed, we’ll move on to financial markets. It’s been an interesting start to the year, much of it due to the geopolitical news. Equities have largely managed to shrug off the events. We also see a different performance profile across the markets compared to last year. The S&P 500 is up about 2% YTD. But unlike last year, it’s not tech leading everything higher. Three very cyclical sectors- Energy, Industrials and Materials- are the best performing sectors. They’re joined at the top by one very defensive sector, Consumer Staples. Meanwhile, the two heavily-weighted tech sectors- Communication Services and Info Tech- are only up modestly and are underperforming the index. That’s playing out in the S&P equal-weight index outperforming the regular S&P 500 by over 200 basis points YTD. Mid cap and Small cap indexes are outperforming by around 500 basis points.
Looking more closely at this week, the main event was the kickoff of earnings season, with Financials and the major banks up first. While results from JP Morgan were generally solid, the stock sold off. Bank of America, Citigroup and Wells Fargo saw a similar pattern. Morgan Stanley and Goldman Sachs saw strong gains after their earnings, but they’re much less involved in traditional banking functions than those others.
Another major topic for markets this week was the DOJ’s investigation of Jay Powell and the Fed’s major construction project. This took the prior tensions between the administration and the Fed to a whole new level. The administration has seen significant blow back from across the globe and yields have been calm considering the news.
That wasn’t the only news from D.C. that affected markets. President Trump also mentioned looking into capping credit card interest and swipe fees. All of this pressured financial stocks. In addition, homebuilders became the latest group to have their repurchase programs come under scrutiny from the administration, following defense contractors. Welcome to the club.
For the week, mid and small caps are beating large caps. Utilities along with Staples and Real Estate- two sectors at the bottom of last year, are the leading sectors, along with Energy, as oil was very strong for most of the week, pushed by the geopolitical situation. Brent crude has risen from $60 to almost $67 before pulling back today as Iranian tensions ease up a bit.
The JP Morgan Healthcare conference took place this week- basically the sector’s Super Bowl. Let’s see if John Harbuagh can win it next year. It didn’t provide much of a tailwind for the sector, which is trading slightly lower for the week.
Today, Thursday, is a bit more like the environment we were in for most of last year. Large tech regained a leadership role, with semis strong on the back of very strong earnings from Taiwan Semiconductor, especially the increase in their capex spending plans this year, from $46 billion to around $54 billion. That’s proving most of the lift for the semis group this week. Other tech news this week included Apple’s selection of Alphabet’s Gemini to run its AI platform, and Microsoft’s plan to keep its energy demands from causing consumer electricity prices to rise. It’s a mid-term election year so keep an eye on that trend.
In other assets, we mentioned crude earlier but precious metals continued to hit progressively higher records. Silver is up another 10%-plus. Bitcoin had started to wake up after bouncing around $88 thousand. However, the Senate cancelled a vote on the CLARITY Act and Coinbase pulled its support for the bill, with the issue of paying interest on payment stablecoins the major hurdle. The rancor is enough to potentially torpedo a full vote in 2026 according to reports.
Let’s take a look at what’s on the calendar for next week. Markets will be closed on Monday for Martin Luther King Jr. Day. Earnings will get heavier, led by Financials again but broadening. The biggest US data will come towards the end of the week with the PCE price index- the Fed’s preferred measure of inflation. Flash S&P Manufacturing and Services PMIs will be released as well. In more Supreme Court news, oral arguments in the Lisa Cook case (around her firing) will be held. We also get Pending Home Sales, weekly jobless claims and final Q3 GDP.
On a more global scale, the World Economic Forum will take place in Davos. President Trump will lead the largest US delegation ever to attend the event, after the administration spent the first year of Trump 2.0 resetting global trade and foreign policy pillars. Trump has said he will unveil a strategy to make housing more affordable in the US at the gathering. The ECB will release the minutes from its latest monetary policy meeting, and for commodities the monthly IEA Oil Market Report will be released. China will release Q4 GDP and Japan’s central bank will have a policy rate decision.
That’s a wrap for this week. You can watch Market Storylines on TV.NYSE.com or on the NYSE YouTube Channel. You can also listen on the Inside the ICE House Podcast feed. Thanks for joining me. I’m Eric Criscuolo. We’ll see ya next week. Go Big Blue!