Markets Today
The stock market futures for both the U.S. and Europe are set to start the day flat to slightly lower, marking a cautious start to global trading as a number of macroeconomic and geopolitical events continue to impact investor sentiment. Futures related to the Dow Jones Industrial Average are down by approximately 0.1%, while those related to the S&P 500 and Nasdaq 100 indices are marginally lower and up by less than 0.1%, respectively. Meanwhile, Euro Stoxx 50 and DAX futures start the day with modest gains, although these have been tempered by investor sentiment related to the upcoming U.S. inflation figures and earnings announcements from several major banks, including Bank of America, Citigroup, and Wells Fargo. The trading day yesterday saw the S&P 500 decline by 0.2%, the Dow lose close to 400 points, and the Nasdaq decline by 0.1%, led by declines in the financial sector and uncertainty related to Trump administration policies. With both PPI and earnings announcements scheduled, traders find themselves in a risk assessment posture as they start trading today.
A significant factor that has led to this muted market tone is the combination of soft earnings and the pressure on the finance sector. JPMorgan Chase was down more than 4% on Tuesday following disappointing earnings in its investment banking business, taking its peers Goldman Sachs and Bank of America with it. Simultaneously, President Trump’s reiteration of his criticism of the Fed for undermining American industries, coupled with his suggestion that credit card interest rates be capped at 10%, introduced regulatory risk into an already risk-averse market. Defensive stocks such as Moderna were market outperformers, signifying that the market is continuing its rotation into safe-haven assets in anticipation of both inflation stickiness and political risk.
In Europe, the futures index is trading flat as investors prepare for possible shocks from US macroeconomic data and signals from central banks. Market mood remains fragile as a combination of sluggish growth in some euro zone countries and rising geopolitical tensions persists. Crude oil prices jumped over 2% after Trump called off meetings with Iranian leaders and showed support for Iranian protesters, implying the White House is ready to increase tensions in the Middle East. Despite the rise in oil prices boosting energy stocks worldwide, it also added to inflation concerns, making it even more difficult for the European Central Bank and Federal Reserve to determine their policies. Overall, the positioning of global futures represents a market in transition – stuck between momentum and uncertainty. Inflation figures, central bank credibility, global politics, and tech earnings expectations are all simmering in the background, and it’s hard to take strong views. Today’s PPI reading and earnings from leading banks will be crucial in ascertaining the level of resilience in demand and the way forward for monetary easing. Until then, markets are likely to be range-bound, with investors selectively positioning in quality sectors and using pullbacks to reposition in advance of Q1 events. Zaye Capital Markets traders are keenly awaiting confirmation signals to help break out of the indecisive market in global futures.
Major Index Performance as of Tuesday, 13 Jan 2026
- Nasdaq: Trading near 23,709.87, down ~0.1% as tech responds to mixed earnings and breadth pressure.
- S&P 500: Trading near 6,963.74, down ~0.2% as financials weigh on the benchmark.
- Russell 2000: Trading near 2,633.10, down ~0.1% with small caps seeing selective rotation.
- Dow Jones: Trading near 49,191.99, down ~0.8% as cyclical and financial pressure bites.
The Magnificent Seven and Broad Market Context
Though the “Magnificent Seven” data for the current period is not yet available, the general index trend indicates the dynamics of concentrated leadership. Mega-cap tech is an important driver, although weakness in bank earnings and concerns over credit policy have capped the upside. Charts indicate the Nasdaq is attempting to breakout from its sideways trend, although weakness in the financial sector is holding the S&P 500 index back.
Factors Propelling Market Movement – Wednesday, January 14, 2026
While U.S. and European markets are navigating a complex of new economic information, escalating headlines, and international tensions, a number of major factors are influencing investor sentiment today.
1. U.S.-Iran Tensions and Tariff Threat
However, the geopolitical risk factor is also a prominent market driver as the tension between the US and Iran escalates. This is because the Trump administration has canceled negotiations with Iranian officials and has used robust language in urging the Iranian people to “take over” government buildings. Furthermore, the Trump administration has also kept the military option open and has imposed tariffs on nations conducting trade with Iran. This has contributed to rising oil prices and has triggered a risk-off environment in the global markets, with gold and the dollar being the prominent safe-haven assets.
2. Cautious Positioning Before Key Economic Data
Markets are trading in a stable manner as investors eagerly await key economic data from the U.S. today, which includes Core PPI, Retail Sales, and the Producer Price Index (PPI). Yesterday’s positive CPI reading encouraged investors, and today, the market is looking for confirmation that inflation is indeed cooling down. If the economic data today indicates slower inflation and lower retail sales, this could boost the prospects of interest rate cuts, which would be beneficial for the market. On the other hand, positive economic data could spark fears of interest rate hikes, resulting in bond and stock market repricing.
3. Trump’s Pressure on the Fed and Credit Market Disruption
The constant criticism by Trump of the Fed’s policies has also given the market an unusual political element. Trump’s recent address in Detroit blamed the Fed for the destruction of the manufacturing sector in the U.S. and urged the Fed to adopt bold cuts in interest rates. At the same time, his efforts to impose a maximum rate for credit cards and a prohibition on stock repurchases by companies in the defense sector have weighed seriously on the market performance of financial stocks such as JPMorgan, Bank of America, and Goldman Sachs.
In brief, the current state of the market is being influenced by the intersection of geopolitics that are flaring up, politically motivated economic interventionism, and pivotal inflation data. It is pushing market participants into a more defensive posture as they weigh their options for the future.
Digesting Economic Data
The TRUMP Tweets and Their Implications
The current sequence of remarks by President Trump establishes a new axis of volatility in the geopolitical and financial sectors. The aggressive rhetoric regarding the Iranian protests, including his exhortations for the protesters to “take over” government buildings and his threat to take “very strong action,” is being taken as a possible signal for escalation in an already volatile area. The sudden cancellation by the Trump administration of diplomatic talks with Iran and the failure to explain what “help is on the way” have contributed to the uncertainty. The market response to the risk environment includes the usual suspects for risk-averse assets. The price for gold continues to skyrocket, the price for oil continues to be high, and other risk assets have been unable to establish solid market foundations. The warnings by the U.S. Embassy for American citizens to depart Iran, along with the possibility of military action still “on the table,” have been taken by the market as serious risk factors rather than as mere threats.
Adding to the Middle Eastern pressure on Trump is his decision to stir up controversy at home by criticizing the Federal Reserve in public speeches. At an event in Detroit, Trump lambasted the Fed for “sabotaging” America’s industry and even threatened to renew his efforts to limit credit card interest rates. These developments add to the bond market volatility as investors now have to factor in the implications of possible government intervention in monetary policy at a time when inflation numbers are moderating and the Fed is likely to start a rate-cutting cycle. If Trump persists in his campaign of publicly pressuring the central bank and pursuing his robust industry policy, investors may be forced to repriced the independence premium on which the credibility of the US financial system is based.
The mix of Trump’s electioneering and foreign policy provocation is not only causing market tremors, it is also driving a wedge between the U.S. and its allies in Europe. Trump’s policies, including tariffs on Iran-linked organizations and general executive orders related to Middle East security, are coming under fire from EU leaders who see the American leader’s actions as a form of unilateralism. A lack of global coordination is causing diplomatic rifts that have a direct effect on commodities, trading, and the capital of emerging markets. The National Security Council is said to have held emergency meetings, and foreign leaders are trying to make sense of whether Trump is acting on a calculated policy or simply acting on impulse.
Ultimately, this intersection of geopolitical tensions, the interference by the Fed, and tariff uncertainty is creating a new landscape for investors globally. This policy mashup by Trump, where he combines economic nationalism, aggressive diplomacy, and the rhetorical style of populists, is no longer simply campaign politics. It is indeed an actual market influence. As we head into the 2026 midterms, the intersection of his foreign policy and economic policy may well determine the next six to eight months. Market participants across commodities, stocks, and bond yields must, from this day on, account for the uncertainty introduced by the unpredictable nature of President Trump.
December CPI Matches Forecasts but Shows Slower Path to Fed’s 2% Target
The Consumer Price Index in December 2025 posted a year-over-year gain of 2.7%, matching market expectations and November’s reading. Core inflation, on the other hand, moderated slightly to 2.6%, just shy of estimates of 2.7%. This is now the third successive month of stable inflation, supporting the view that the rate of rapid disinflation is now complete, and that which follows may be a less straightforward path to achieving the Fed’s target of 2%. The inflation trend, as indicated by inflation charts, is now on a clear downward path from peaks in 2022; however, reaching the end of this journey is turning out to be quite sticky.
Underlying inflation factors were more mixed. Air transport fares jumped 5.2% and gas prices increased 4.4% as demand factors continued to exert pressure. However, these increases were tempered by prices that fell for used cars of -1.1% and fuel oil prices of -1.5%, extending the process of disinflation in goods. However, prices in the services sector remain firm, emphasizing that inflationary pressure has shifted to the services sector. Although the monthly change in CPI inflation is not significant, persistent inflation in shelter, insurance, and medical services suggests that there is a structural component of inflation that may defy attempts to curb it through monetary policy.
In the given scenario, it seems that Prologis Inc. remains undervalued. Being one of the preeminent players in the industrial and logistics property sector, their inflation-hedged lease terms enable their rental revenues to escalate with price increases, thereby shielding their cash flows even in a scenario of entrenched service price inflation. With their presence in e-commerce and logistics facilities in high demand, they are poised to enjoy steady demand even in a scenario of goods disinflation. Analysts need to concentrate on the developments pertaining to leasing spreads, tenant rollover, and cap rate assumptions in the coming earnings cycle. Furthermore, investors need to keep an eye on the shelter price component of the CPI and long-term inflation forecasts to derive further insight into whether asset-intensive corporations possessing inherent inflation escalators continue to be undervalued in the disinflationary plateau scenario.
New Home Sales Defy Forecasts, But Deep Discounts Signal Affordability Stress
New home sales in the U.S. for October 2025 were at an annualized 737,000 units, down only 0.1% from the previous month but strongly beating estimates of a change of -10.6%. Following a robust increase of 20.5% in sales in the previous month, this data is evidence of the remarkable resilience of new home sales despite mortgage rates being at their current high levels. It is also significant that homebuilders are able to maintain their sales figures despite the unavailability of existing homes at reasonable prices.
But what the surface doesn’t show is the true cost reflected in the pricing. Median new home prices fell 8% from last year, with the median new home price coming in at $392,300, the lowest since mid-2021. Builders are pulling out all the stops with rate buydowns, appliance packages, and paying closing costs to encourage reluctant buyers to come back into the market. This is not an inflation reprieve; this is an adaptation on the demand side. Buyers have been constrained by rates, and builders have no choice but to react to clear the inventory and protect their market share.
In this light, we believe that D.R. Horton, Inc. (DHI) remains an undervalued stock. As the largest homebuilder by volume in the U.S., it has the size and ability to absorb more cost and incentivize more than smaller competitors, which allows it to support margins and stay competitive on pricing at the same time. DHI’s product lines targeting entry and mid-market housing markets also correspond with the most elastic segment of demand – those customers wanting relief on monthly payments more than on pricing changes. Analysts should focus on cancellation rates, unit incentives, and future order estimates for more insights on this stock.
Small Business Optimism Tops Forecasts, But Capex and Hiring Lag Sentiment
The NFIB Small Business Optimism Index rose to 99.5 in December 2025, its second consecutive increase, beating market forecasts of 99.2. Not only did it surpass the previous month’s level of 99.0, but it remained above the 52-year average of 98, which shows that sentiment remains remarkably strong in the US small business sector. The main factor behind the increase was the jump in the Economic Outlook sub-index, which rose to 24.0, its highest level since August, showing that small businesses feel that the overall macro-economic scenario is stable as it approaches 2026. This comes as no surprise, given the disinflationary pressures building in the economy, which have, in turn, contributed to the stabilizing rate scenario, making it easier for small businesses to forecast input costs.
Even with this more optimistic forecast, the gap between sentiment and action remains. Job intentions eased slightly, while capital spending intentions eased modestly, reflecting the view that business owners are optimistic about the future but are cautious about committing capital to the future. Compensation intentions held steady, reflecting the overall caution about increasing offers of compensation. Our view is that this gap between optimism about the future and cautious action reflects the vulnerability of business optimism: small business owners are more optimistic about the future than they are about betting on the future.
Under these circumstances, Intuit Inc. seems to be an undervalued stock. Intuit, being one of the most important platforms catering to small and midsize businesses with financial automation solutions ranging from accounting to payroll and tax management, would be able to harness even a slight boost in optimism and small business formation and confidence. Most importantly, it would be able to harness these without necessarily depending on high labor growth figures. With operating leverage inherent in software, even a slight boost in business activity would be able to boost margins. Analysts would need to watch for forward-looking guidance on small business optimism, loan applications, and hiring software demand as indicators of actual developments under the optimism.
Older Workers Reclaim Labor Market as New Hire Age Hits Post-2022 High
The new labor market figures that have been brought to light by Revelio Labs illustrate a dramatic change in the demographic structure of the workforce, as the average age of new entrants has increased from 40.0 in 2016 to 41.9 by the end of 2025, with an increasingly steep trajectory since 2022. The current data points to a figure over 42, indicating a dramatic demographic shift in the workforce. The reason for this seems to be two-pronged, as older employees are postponing their retirement due to inflation, as well as a cost-of-living crisis, while companies are increasingly valuing experience, maturity, and readiness over new hires.
Macro-economically, it’s important to note that this particular labor market trend corresponds with stable wage growth and tempered hiring in high-turnover industries. The fact that these businesses favor experienced employees means that there’s less risk associated with the hiring process, as well as less risk associated with productivity, which could translate to less overall turnover. At the same time, it’s difficult not to wonder about the long-term development of young talent within these firms, as well as its effect on innovation cycles. Companies readjusting their hiring structures to factor in these longer career paths will be able to take advantage of institutional knowledge, as well as decreased costs associated with training, but will have to factor in the costs associated with health care, as well as succession planning, due to these compressed career paths.
In this kind of setting, the company that seems undervalued is Automatic Data Processing (ADP). Since the company is a major player in the provision of human capital management and workforce analytics services, it is poised to help businesses in the monitoring of demographic changes, the adjustment of benefits, as well as the management of multigenerational workforces. The company’s comprehensive payroll management services, retirement planning services, and workforce analytics services will become even more valuable as businesses deal with transitions. Analysts need to focus on the adoption of retirement readiness services, the demand for labor segmentation services among different age groups, and the adoption rates of the software among industries experiencing a boost in late-career employment.
Housing Starts Reach Cycle Low As Multifamily Construction Breaks Under Rates
October data in the US showed that the housing market remains under increasing pressure, with the total number of housing starts tumbling by 7.4% to a seasonally adjusted annual rate of 1.246 million units, the weakest since the cycle began. While the decline was paced by a sharp decline of 22% in multi-family housing, there was a gain of 5.4% in single-family housing, which reflects an increasing schism between the rental and the ownership markets. However, the number of building permits merely softened by 0.2% to 1.412 million units, indicating that there are plans to proceed with future developments – although the pace of breaking ground has been stalled by high borrowing costs. At a mortgage rate above 6.5%, the data reflects the increasing sensitivity to credit markets, particularly in the capital-intensive sectors.
The precipitous drop in starts relative to permits indicates construction market pauses and cash flow management on the part of builders, who seem to be growing more circumspect about inventory and demand. Though the single-family market indicates strength, it could be supported by a dearth of resale listings and demographic support. However, the overall slowdown indicates potential trouble for consumption patterns related to housing, from durables to construction products, and construction jobs. The housing market is an important indicator, and the fall in construction starts could indicate a potential slowdown in contributions to GDP from residential investment in the near term, entering 2026, in the absence of a substantial reduction in mortgage rates.
With this in mind, Lennar Corporation is currently undervalued. With its focus on single-family homebuilding and a cost structure and cancellation cushion reflective of this model, Lennar has been strategic in its discipline. With a balance sheet and land management strategy allowing for the advancement of projects selectively without overcommitting capital resources, analysts need to watch new order volume and margin guidance as Lennar continues to selectively pursue new land acquisitions. With a possible moderating of mortgage rates and a stable single-family housing demand level, Lennar will be poised to capitalize on a recovery in entry-level housing as the multi-family segment continues to contract.
Global Equity ETFs See Biggest Weekly Net Inflows as Investors Shift Portfolios Away from US Small Caps
In the first week of January 2026, worldwide equity ETFs saw net inflows of $10.24 billion, the largest of all asset classes, indicating a strong willingness to rebalance and diversify globally as U.S. equity markets demonstrate fatigue in terms of volatility. The strong inflow of funds into worldwide equity ETFs is in contrast to domestic patterns, as U.S. small-cap and mid-cap ETFs saw outflows of $1.06 billion and $1.31 billion, respectively. Despite recent reversals in these areas, the trend of investor allocations remains towards larger, more globally diversified portfolios. The message here remains clear: money prefers stability over high-beta convergence trades, indicating continued wariness about the resilience of U.S. earnings and policy and macro concentration.
This can be the beginning of the ‘Great Rotation’ – not from stocks to bonds, but from one stock market to another. As the global macro risks become less U.S.-centric, there is now interest in the undervalued international markets, particularly in markets that have yet to fully normalize monetary policy. On the other hand, the withdrawal from the small-cap market in the U.S. reflects the concern about the refinancing risks, cost inflation, and earnings volatility in the higher-for-longer interest-rate environment. This development can be seen as the redefinition of ‘quality’ and ‘size’ in the risk markets, and it is not indiscriminate de-risking.
Within this backdrop, the company that appears to be undervalued is BlackRock Inc. This is because the world’s largest asset manager and leader in the development and distribution of exchange-traded funds stands to directly benefit from the increase in global exchange-traded fund flows and the move to high-quality large caps. Its iShares business model is inherently connected to these investment trends and, through this, the company can capitalize on the increase in exchange-traded fund flows and platform dominance. Analysts should pay attention to the divisional data related to exchange-traded fund flows and the management’s discussion related to the structure of international funds and the distribution of exchange-traded funds across borders.
Revisions to 2025 Payrolls Reflect Labor Force Overstatement, Slowest Job Growth Since 2003
However, new data for the labor market reveals that all months in 2025 have seen revisions in the non-farm payrolls, with the November jobs number slashed in half from the original 112,000 to 56,000 jobs. Even the December jobs number added only 50,000 jobs, down from the expected 60,000, thus continuing the theme of slowdown. This is in contrast to the jobs data for 2024, which included both upward and downward revisions and indicates that the preliminary data has overstated the strength of the jobs market. The jobs market has now added only 584,000 jobs in the year, the lowest since 2003, thus challenging the view that the jobs market is strong.
Such changes have profound implications regarding policy and positioning. A slowdown in payroll growth, together with disinflation and stalled wage growth, increases the prospects of preponed Fed rate reductions, especially when the economy loses further momentum. Far more seriously, however, the persistence inherent in such changes suggests not merely cooling, but potentially the failure of precision regarding the measurement of the labor market. Markets are likely to place ever-growing reliance upon revised data, rather than headline numbers, regarding the labor market and private sector hiring patterns as the true barometers of the economy.
In such a setting, it would appear that Automatic Data Processing, or ADP, is undervalued relative to its worth as a company that provides real-time payroll and employment data analysis to the markets. In fact, the company’s real-time data analysis capabilities are generally considered to be ahead of the government’s data revisions when it comes to labor trends and other employment-related statistics. In such a setting, it would appear that analysts need to monitor ADP’s data on the number of workers in the labor force, client retention ratios, and revenue per employee in an effort to determine that the markets are indeed softening or stabilizing.
Upcoming Economic Events
Core PPI m/m, Core Retail Sales m/m, PPI m/m, Retail Sales m/m
This week’s economic calendar brings a tightly packed series of inflation and consumer activity data that will test the market’s current assumptions about disinflation, spending resilience, and the Federal Reserve’s next move. With Core PPI, headline PPI, Core Retail Sales, and Retail Sales all scheduled for release, we are entering a high-sensitivity zone for rate expectations and asset allocation. These indicators don’t just shape sentiment—they set the tone for cross-asset flows by validating or disrupting the soft landing narrative that’s been cautiously forming in early 2026.
Core PPI m/m & PPI m/m
Both producer price reports offer a window into upstream cost pressure — the kind that filters into consumer prices with a time lag.
- If Core PPI (which strips out food and energy) or headline PPI prints above forecast, the message is clear: inflationary forces haven’t fully faded, especially within supply chains and input markets. This scenario would likely lead to a bearish flattening of the yield curve — long yields climbing as rate-cut hopes fade, while short-end rates rise on policy re-pricing. Equities, particularly growth and tech, may come under pressure as valuations compress under higher real yields. The U.S. dollar could catch a bid, while gold may see a temporary pullback.
- On the other hand, if PPI data undershoots, especially for core readings, markets may interpret it as further evidence that producer inflation is rolling over decisively. That would support lower yields, a weaker dollar, and increased conviction in the Fed’s ability to start easing sooner — benefiting rate-sensitive assets and boosting liquidity preferences across risk assets.
Core Retail Sales m/m & Retail Sales m/m
Retail sales will test the demand side of the equation — and the results will carry broad implications across asset classes.
- If retail sales (both core and headline) come in above expectations, the signal is that consumer demand remains intact, despite high borrowing costs and waning stimulus buffers. Initially, equity markets may respond positively to growth resilience, especially in consumer discretionary names and large-cap retailers. However, sustained strength in spending could raise concerns that the disinflation path may be interrupted, delaying policy easing and prompting upward pressure on yields.
- If sales are weaker than forecast, it confirms that tighter financial conditions are finally biting into consumption, possibly triggering a flight to safety in Treasuries and defensive equity sectors. However, weak retail alongside soft PPI would be read as a green light for the Fed to accelerate cuts — potentially igniting a rally in rate-sensitive names, including real estate, utilities, and long-duration tech.
Taken together, these four data points will help investors decode the interaction between supply-side cost trends and consumer-side demand pressure.
A hot-hot print — higher inflation and strong spending — would be a clear risk-off event, repricing Fed expectations and stalling equity momentum. A cold-cold outcome would likely trigger a Fed-friendly reaction, where disinflation and demand softness validate rate cuts and support a broad rally. But if the data is mixed — for example, soft PPI and strong retail — markets may struggle with interpretation, causing sector churn, FX volatility, and increased reliance on forward Fed guidance.
This is not just a data dump — it’s a directional catalyst for equities, bonds, and the U.S. dollar into February. Traders and allocators should prepare for heightened intraday volatility around the releases, and analysts will need to move quickly in assessing how closely the actuals align with the broader disinflation and soft landing thesis that has been slowly priced in since Q4 of last year.
Stock Market Performance
Indexes Continue Climbing Off April Lows, But Average Member Drawdowns Remain Deep
U.S. equity indexes remain resilient, with year-to-date returns broadly positive and multi-month rebounds from the April 8, 2025 low continuing to hold. However, under the surface, member-level drawdowns reveal a fragile participation story. At Zaye Capital Markets, we continue to monitor this divergence closely: while the major averages are masking persistent weakness among their constituents, smart capital remains focused on quality, liquidity, and defensive positioning until internals confirm breadth recovery.
Here’s our updated breakdown of the figures as shown in the chart (as of January 12, 2026):
S&P 500: Broad Index Stable, But Members Still Lagging
YTD: +2% | Index max drawdown from YTD high: 0% | Avg. member drawdown: –3%
Return since 4/8/25 low: +40% | Drawdown since 4/8/25 low: –5% | Avg. member: –19%
The S&P 500 has held firm into 2026 with a 2% year-to-date gain and no drawdown from the YTD peak. Yet the average member remains down 3% from their own highs, and the average decline since the April bottom sits at –19%. This confirms continued strength at the index level, but with gains narrowly concentrated—likely in large-cap defensives and tech.
NASDAQ: Index Up, But Member Pain Deepens
YTD: +2% | Index max drawdown from YTD high: 0% | Avg. member drawdown: –6%
Return since 4/8/25 low: +55% | Drawdown since 4/8/25 low: –8% | Avg. member: –43%
Despite a 55% rally from the April 2025 lows, the NASDAQ is flat YTD and showing the widest internal stress. Average members are still down 43% from the rebound base, with the average member drawdown from the recent peak at –6%. The spread between headline index recovery and underlying component performance signals fragility—particularly in mid-cap tech and software names.
Russell 2000: Small Caps Still Vulnerable Despite Headline Gains
YTD: +6% | Index max drawdown from YTD high: 0% | Avg. member drawdown: –4%
Return since 4/8/25 low: +50% | Drawdown since 4/8/25 low: –9% | Avg. member: –31%
The Russell 2000 leads major indexes year-to-date at +6%, but average members remain sharply underwater, with 31% average drawdowns from the April bottom. Despite a headline gain of 50% off the lows, internal breadth remains weak — reinforcing concerns over refinancing risk, margin pressures, and liquidity constraints in small-cap equities.
Dow Jones: Relative Stability, But Hidden Strain Remains
YTD: +3% | Index max drawdown from YTD high: –1% | Avg. member drawdown: –3%
Return since 4/8/25 low: +32% | Drawdown since 4/8/25 low: –6% | Avg. member: –15%
The Dow continues to reflect its defensive composition. While up 3% YTD with only a modest 1% pullback, the average constituent has still experienced a 15% drawdown from the April rebound. Compared to the NASDAQ and Russell, this is relatively stable—but still well below a fully healed internal market.
At Zaye Capital Markets, we view these conditions as a cautionary tale for over-indexed positioning. While major benchmarks remain in positive territory and off cycle lows, the wide disparity between index returns and average member drawdowns suggests passive flows are masking deteriorating breadth. Until internal leadership broadens and member-level recovery deepens, we continue to favor high-quality companies with low leverage, pricing power, and consistent earnings visibility. Breadth matters—and right now, it’s not signaling a full risk-on environment.
The Strongest Sector in All These Indices
Materials, Industrials, and Consumer Discretionary Lead as Broader Sectors Lag
As of January 12, 2026, sector-level performance within the S&P 500 is beginning to clearly diverge, with three groups pulling away from the pack: Materials, Industrials, and Consumer Discretionary. These three sectors have delivered the strongest year-to-date gains so far in 2026, offering a window into investor positioning that now favors economic cyclicality, pricing power, and operational leverage in early-stage recoveries. At Zaye Capital Markets, we interpret this rotation as a signal of renewed confidence in global growth exposure, especially in sectors that benefit from manufacturing activity, capital investment, and consumer-led demand resilience.
Materials: Outright Sector Leader
YTD: +7.2% | 1/12/26 performance: +0.7%
Materials have outperformed all other S&P 500 sectors in 2026, climbing a strong 7.2% year-to-date and gaining 0.7% on the latest daily print. This sector’s dominance reflects rising demand for industrial inputs, metals, and chemicals—especially in light of increased infrastructure investment and inventory restocking cycles. The price strength in Materials also suggests a possible bottoming in global manufacturing PMIs, with investors rotating into value-linked cyclical exposure ahead of any confirmed macro inflection.
Industrials: Riding Global Rebuild Momentum
YTD: +5.2% | 1/12/26 performance: +0.8%
Industrials are the second-best performing sector, up 5.2% for the year and advancing 0.8% on the day. Key themes driving this outperformance include capex recovery, defense spending, and renewed interest in logistics and aerospace names. As margin pressure stabilizes and order books rebuild, Industrials have become a favored cyclical proxy in a high-rate but cooling-inflation environment.
Consumer Discretionary: Quiet Surge into Early 2026
YTD: +4.6% | 1/12/26 performance: 0.0%
Rounding out the top three is Consumer Discretionary, gaining 4.6% year-to-date despite showing no move on the day. The sector’s strength reflects expectations of real wage recovery, resilient services demand, and improving consumer sentiment. The flat daily performance indicates short-term consolidation, but the broader trend remains intact, especially with rate cut expectations beginning to seep into equity pricing models.
In contrast, sectors like Financials (–0.8%), Utilities (–0.3%), and Energy (–0.7%) have lagged year-to-date—suggesting the market is penalizing rate-sensitive and commodity-linked exposures that face headwinds from margin compression or declining price momentum. With the S&P 500 itself only up 1.9%, these top-performing sectors have been critical in holding up the broader index.
At Zaye Capital Markets, we continue to see leadership concentration in sectors tied to real economic expansion and forward cash flow leverage. While defensive names offer downside protection, Materials, Industrials, and Consumer Discretionary remain the strongest relative plays as long as economic surprises remain net positive and disinflation trends persist.
Earnings
Earnings Reported Yesterday — 13-Jan-2026
- JP Morgan Chase & Co. reported EPS of 4.63 USD, falling short of the 4.85 USD estimate, resulting in a –0.22 USD miss (–4.57%). Revenue also came in slightly below expectations at 45.8B USD versus the forecast of 46.17B USD. Despite its large market cap of 846.35B USD, these earnings miss signals some pressure on earnings efficiency, likely tied to weaker-than-expected net interest income or trading revenue. Investors will now shift focus to loan growth, capital returns, and forward guidance clarity on 2026 profitability targets.
- The Bank of New York Mellon Corporation exceeded expectations with EPS of 2.02 USD against an estimate of 1.91 USD, representing a +0.11 USD beat (+5.96%). Revenue stood at 5.18B USD, slightly higher than the 5.14B USD forecast. With a market cap of 85.73B USD, this strong performance supports the firm’s consistent execution in custodial services and fee-based income. The result also reflects prudent cost control and rate-sensitive margin expansion, supporting valuation stability going forward.
- Delta Air Lines, Inc. posted EPS of 1.55 USD, narrowly beating the 1.53 USD estimate by +0.02 USD (+1.50%), while revenue came in at 14.61B USD versus an expected 14.68B USD. Despite a modest revenue shortfall, the earnings beat reflects efficiency gains and resilient premium travel demand. With a market cap of 45.27B USD, attention now turns to fuel cost guidance, fare trends, and demand seasonality into Q1.
- Concentrix Corporation reported EPS of 2.95 USD, beating the 2.91 USD forecast by +0.04 USD (+1.37%). Revenue matched expectations at 2.55B USD versus 2.54B USD expected. With a market cap of 2.44B USD, the results reinforce solid operational execution. Investors will be watching closely for margin signals, backlog health, and commentary on enterprise demand across customer experience and digital transformation verticals.
Earnings Due Today — 14-Jan-2026
- Bank of America Corporation will be a key report for gauging consumer credit health and deposit cost sensitivity. Investors are likely to focus on the bank’s net interest income trend and loan loss provisions amid ongoing rate pressure. Commentary on deposit betas and credit card delinquencies will guide expectations for consumer banking margins across 2026.
- Wells Fargo & Company is expected to shed light on expense controls, capital return, and its loan book quality. With regulatory pressures still shaping growth, investors will be watching for signs of efficiency improvement, clarity on forward guidance, and any strategic updates around its commercial and mortgage banking exposure.
- Citigroup, Inc. remains under scrutiny for its turnaround narrative. Today’s report will be critical to assess progress on restructuring, cost containment, and global footprint streamlining. Credit reserve changes and guidance on return-on-equity targets will be essential to gauge whether investor patience is being rewarded.
- Home BancShares, Inc. provides a clean look into the regional banking segment. Markets will focus on net interest margin resilience, loan growth in commercial real estate and consumer portfolios, and credit quality stability in southeastern U.S. markets. Any indication of loan softness or rising delinquencies could trigger caution across smaller regional bank peers.
Overview of Stock Market on Tuesday, 13 Jan 2026
U.S. equity markets retreated from recent record highs in response to the start of a new earnings season and digestion of new inflation data. With the December CPI report meeting expectations, bond yields receded, and expectations for a rate cut later in 2026 were reinforced, although mixed earnings, especially in large banks, dampened market sentiment. Financial sector stocks led declines, while defensive and some cyclicals were supported. At Zaye Capital Markets, we continue to track breadth, revisions, and economic indicators for confirmation of market trend.
Stock Prices
Economic Indicators and Market Drivers
The market sentiment for the current day is a function of investor sentiment related to earnings delivery and inflation persistence. The CPI data, which revealed inflation remaining at expectations, has further fueled expectations of cuts in the latter half of 2026, although bank earnings, which have disappointed with revenue declines among systemically important banks, have weighed on the sector. Geopolitical news, such as tariffs related to Iran trade flows, is further adding to risk-off sentiment. With lower Treasury yields, equities are responding to earnings and macro sentiment simultaneously.
Recent Stock Market News
CrowdStrike Holdings, Inc. ($CRWD) has made a move to acquire Seraphic Security, expanding its capabilities into browser runtime protection as a new offering within its Falcon platform. With web browsers now poised to be the primary environment where humans as well as AI agents will run their operations, CrowdStrike will be able to offer its customers a new way of incorporating security into their workflow without changing anything.
Microsoft Corporation ($MSFT) recently shared their plans with the world to work together with the energy industry and the regulatory bodies to make sure that the price models of energy are aligned with the increasing demands of the energy requirements of the AI data centers. This move by Microsoft is part of their growing “community-first” AI infrastructure strategy.
Stan Druckenmiller lost $600 million shorting internet stocks in 1999. This is a reminder that it can be as bad to be early in a structural shift as it can be to be wrong. Although Michael Burry has sounded the warning about an impending AI surplus, the market conditions are not in agreement with that view. NVIDIA Corporation ($NVDA) is still selling as many AI chips as it can manufacture, while Palantir Technologies Inc. ($PLTR) has yet to start its enterprise AI expansion.
Despite Citigroup Inc. ($C) performing better than industry peers, it still saw a drop of around 1.2% as overall market sentiment remained cautious on banking sector earnings. Additionally, Bank of America Corporation ($BAC) and Wells Fargo & Company ($WFC) also experienced a drop as a result of overall uncertainties related to deposit pricing, loan volumes, as well as overall earnings. Conversely, Moderna, Inc. ($MRNA) experienced a boost due to it increasing its forward-looking guidance.
The Magnificent Seven and Broad Market Context
Though the “Magnificent Seven” data for the current period is not yet available, the general index trend indicates the dynamics of concentrated leadership. Mega-cap tech is an important driver, although weakness in bank earnings and concerns over credit policy have capped the upside. Charts indicate the Nasdaq is attempting to breakout from its sideways trend, although weakness in the financial sector is holding the S&P 500 index back.
Major Index Performance as of Tuesday, 13 Jan 2026
- Nasdaq: Trading near 23,709.87, down ~0.1% as tech responds to mixed earnings and breadth pressure.
- S&P 500: Trading near 6,963.74, down ~0.2% as financials weigh on the benchmark.
- Russell 2000: Trading near 2,633.10, down ~0.1% with small caps seeing selective rotation.
- Dow Jones: Trading near 49,191.99, down ~0.8% as cyclical and financial pressure bites.
In Zaye Capital Markets’ view, current market conditions are a function of early earnings season calibration. While some leadership has been reaffirmed, it is becoming increasingly a function of earnings quality and macro views. High-quality balance sheets, earnings visibility, and reactions to inflation messages are paramount, with a focus on increased participation as a catalyst for sustainable upside.
Gold Price: Why Gold Prices Are Hovering Near Record High Levels Despite Iran Tensions and Weak US Economic Data?
The current market price of spot gold is approximately US $4,600/oz, lingering slightly below its all-time highs in response to the sudden jump in tensions in the Middle East and in anticipation of important U.S. inflation and retail reports. In our opinion at Zaye Capital Markets, gold’s recent price action represents the direct result of the current geopolitical turmoil sparked by recent comments from the White House and Donald Trump. Over the course of the past 48 hours alone, the Administration has scrapped diplomatic negotiations with Iran, threatened military action in the region, and levied further trade sanctions on Iranian-backed organizations. At the same time, Trump’s public encouragement of Iranian dissidents to “take over” public buildings and promises of “very strong action” have dramatically raised world prices of uncertainty. In this environment, gold’s role as a geopolitical hedge has again come to the forefront as investors quickly shift to hard assets in response to reports of dwindling diplomatic options. At the same time, today’s release of Core PPI, PPI, and Retail Sales reports will further boost gold’s appeal as a hedge on any negative surprises in these reports—particularly if linked to lower growth outlooks and lower expected rates. The message from yesterday’s October housing statistics, which saw new sales above forecast while median prices dropped 8% from last year, is that the market is selectively resilient, with underlying demand weakness. This trend, where volumes rise while prices drop, reflects the market sentiment as well: economic indicators are no longer strongly positive, though not recessionary either. This subtlety is vital to gold pricing. With mortgage rates remaining high and consumers under pressure, the slightest indication that the economy is losing its momentum, particularly in today’s PPI and retail indicators, would boost the prospects of an easing policy later this year. This complex pattern of geopolitical tensions, policy uncertainty, and mixed fundamentals on the domestic front defines, in our view at Zaye Capital Markets, the multi-trigger gold support zone. Institutional investors are gradually viewing gold not only as an inflation hedge for tactical allocation, but as an investment in the geopolitical asset class, particularly with flattening real yields and extended equity valuations globally. Unless the tensions with Iran abate considerably or the economic indicators show a material change in the rate outlook, gold is likely to remain well-supported around the current levels of $4,600, with any upside breakout likely to attract momentum buyers looking for macro havens.
Oil Prices: How Iran Unrest & U.S. Economic Data Are Influencing Oil Price Projections
As of today, Brent crude is currently trading near $65.38 per barrel, while WTI crude is near $61.03, having held strong after several days of strong gains driven by increasing levels of geopolitical risk. Much of the current price action has been driven by a series of rapid-fire foreign policy moves, and many of these revolve around Iran. At Zaye Capital Markets, we observe that markets have responded in kind to Trump’s comments urging Iranian protesters to “take over” government buildings, the White House’s cancellation of talks with Iranian officials, and new executive orders regarding Middle Eastern security. In combination with threats of new U.S. military action and tariffs aimed at countries doing business with Iran, these moves have driven fears of regional oil supply chain disruption—particularly from OPEC-associated countries. Yet market participants have factored in a small risk premium to price in the possibility of oil supply chain disruptions via the Strait of Hormuz and Iranian oil production pullbacks. Yet news of Venezuelan oil exports resumption has capped gains, rebalancing sentiment in the oil market. In related news, market commentary from OPEC and IEA continues to be cautiously supportive, with OPEC predicting strong demand in 2026, though supply chain flexibility continues to be tight. On the macro side, oil is also following the struggle between rate-led demand outlooks and hard data consumption. The mixed bag of economic indicators yesterday, including the strong new home sales beating estimates despite sharp price drops, indicated some resilience within the U.S. economy, although it remains uncertain whether this growth trend can continue in the face of high borrowing rates. The market is now awaiting the release of the Core PPI, PPI, and Retail Sales figures, as well as U.S. crude oil inventory statistics, which could shape both inflation outlooks and short-term demand outlooks. A surprise increase in crude oil inventories or a weak retail sales print could stem oil’s tide, although a positive inventory draw and a strong spending print could rekindle the fire above $65. Moreover, Trump’s assertions in Detroit this past weekend that Federal Reserve policy is ‘sabotaging U.S. industry’ could have a spillover effect within energy markets by further increasing demands to ease monetary conditions, which could fuel further demand in the future. At Zaye Capital Markets, we believe this is a juncture where a series of headline-driven geopolitical shock moves have layered themselves upon weak macroeconomic fundamentals, and a single stumble in either economic or geopolitical arenas could again ignite price movements and strategic readjustments throughout the energy sector.
Bitcoin Prices: Why Bitcoin Is Volatile Near $93,500 as War Risk and Rate Cuts Collide
Bitcoin is trading around $93,500 following a volatile period during which it temporarily re-entered the $95,000 region before falling back into a tighter trading band around the $92,000-$94,400 region. In our analysis at Zaye Capital Markets, the current price action in Bitcoin is best characterized as a literal confrontation between two opposing forces: risk-on macro sentiment driven by expectations of rate cuts, versus risk-off geopolitics driven by escalating news about the Middle East. While the Iran-centric rhetoric and actions, involving talk of “help,” the cancellation of talks, the imposition of new security measures, the escalation of tariffs, and threats of military intervention, do not affect Bitcoin in the same manner as they affect crude oil or gold, they most definitely affect liquidity and market psychology. As the threat of global conflict heightens, Bitcoin can temporarily function as a high-beta asset, selling off as investors flee to the dollar in greater numbers, as well as reduce their leverage. But this time around, the market dynamic is unique in that the institutional demand pipeline for Bitcoin is stronger, as evidenced by the spot ETF inflows, which have recovered to $116.9 million, thus ending the multi-day streak of outflows. This is important in that it can serve as a market stabilizer during periods of price volatility, particularly when traders are closing out positions but institutional players are still buying. This means that the market can move higher in response to positive macroeconomic news, retreat in reaction to geopolitics, but still be fundamentally backed well above the psychologically important $90,000 region. The economic story from yesterday also contributed to this pull-and-tug dynamic. The improvement in inflation numbers sufficient to improve rate-cut expectations is deeply positive for Bitcoin as it generally helps risk sentiment, increases liquidity, and encourages investors to return to growth-oriented assets. However, we also saw some mixed signals from the overall economy as some sectors such as housing perform well, but the affordability aspect continues to deteriorate through lower prices and reduced incentives, leaving investors wondering for how long the consumer sector can sustain such performance. Hence, the current rallies in Bitcoin are displaying signs of momentum (2% to $93,500, 3.3% to $94,400) as well as volatility in pattern, as the price fails to sustain breakouts as soon as the overall economic headlines reverse. The inflation and consumption trends due today, especially the producer price index and retail demand trends, are important as they shape the “liquidity story.” In the event that the numbers come out softer than expected, there could be benefits for Bitcoin from stronger rate-cut pricing and flows, potentially aiding another push towards $95,000. Alternatively, if the numbers come out stronger than expected, there could be a pause for the price as yields firm up and investors take risk off the table, potentially aiding a retest towards $90,000-92,000, especially if the headlines from tariffs and the Middle East persist.
ETH Prices: How Spot ETF Flows & Whale Actions Contribute to Ethereum Price Trends in 2026
Ethereum is trading in the region of $3,130 to $3,340 at the moment, stuck in a tight trading range following its failure to sustain a short-term rally in the early part of the week. At Zaye Capital Markets, we view the current trading action in Ethereum as being driven by divergent forces in the structural and institutional markets. On the one hand, Grayscale’s Ethereum Trust (ETHE) and some other spot ETH ETFs registered a $5 million increase in assets under management, thereby ending its multi-day spell of outflows and showing that some institutional participants are still strategically active in the market. Nevertheless, it has also come to light that spot ETH ETFs have experienced more than $345 million in overall outflows in the course of the last month alone, with Grayscale contributing substantially to this drawdown. At the same time, it has come to light that the whale group of Ethereum holders (10,000 to 1 million ETH in size) has generally acted as net sellers of Ethereum in recent times, thereby implying that they have lost market conviction or are practicing risk management in anticipation of important macro-economic events. This whale selling action has thereby prevented Ethereum from breaching the $3,400 level of resistance and has led to current market action being contained in a symmetrical triangle pattern that normally precedes a strong break-out or break-down. Market analysts and AI models are currently awaiting the development of market volatility compression in the current symmetrical triangle pattern to give way to momentum action depending on the subsequent path of important macro-economic developments. Yesterday’s soft inflation numbers also helped Ethereum’s resurgence as a longer-term digital asset as investors repriced rate expectations and increasingly factored in easier monetary policy from the Fed later this year. However, this supportive risk environment was dampened by geopolitical risks, primarily Trump’s tough line against Iran and his increasingly aggressive rhetoric against the Federal Reserve. Such attitudes, coupled with uncertainty about Middle East policy, caused some risk-off flow into dollars and gold. As for Ethereum, it finds itself in a challenging environment where macroeconomic support from higher inflation expectations pushes it higher, but risk aversion driven by global security incidents caps gains. Tomorrow’s crucial U.S. economic data dumps in Core PPI, headline PPI, and Retail Sales numbers will be critical. Poor performances might heighten rate-cut expectations, leading whales and ETF fund managers alike to accumulate ETH. However, stronger-than-expected numbers might cause yields to climb, resurgent selling pressure from institutional investors concerned about tighter monetary policy. At Zaye Capital Markets, we continue to monitor on-chain action, ETF flow dynamics, and order book dynamics driven by macroeconomic event risk. ETH continues to find support above $3,000 but needs whale wallets to reverse into an accumulation pattern and for institutional capital to increasingly view ETH as more than simply a risk-on proxy in the overall crypto cycle.
