Morning in New York: news contributes to volatility spike

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

The mood of traders this Friday, January 9, will be largely determined by news from the U.S. Supreme Court. A number of decisions are expected to be announced, including the verdict in the case on the legality of import duties imposed by Donald Trump on the majority of trading partners of the United States. The case is considered one of the most significant because of the potential impact on the global economy and the question of the limits of presidential power. The White House imposed import tariffs under a 1977 law for emergency situations. The markets' reaction to any news related to this case could be acute as the court's decision will change the assessment of risks to supply chains, inflation and corporate profitability, especially in cyclical sectors.

Traditionally, the monthly report of the Ministry of Labor will attract a lot of attention. Freedom Broker's baseline scenario assumes 150 thousand new jobs in the non-farm sector (consensus: 70 thousand) and a decline in unemployment from 4.6% to 4.5% (in line with average forecasts) due to the return to work of those temporarily laid off amid the shutdown. A "cleaner" trend in private sector hiring (Freedom Broker estimates the figure to be 60k with a consensus of 75k) would signal market normalization without overheating. If the actual results will be close to the specified benchmarks, the market will perceive this statistics as moderately favorable, as it will reduce the risk of tightening financial conditions.

Also today, the preliminary consumer sentiment index from the University of Michigan for January (consensus: 53.5 points, December: 52.9) will be released.

Futures on US stock indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with increased volatility. We focus on the S&P 500 fluctuations in the range of 6840-7000 points (from -1.2% to +1.2% of the previous session's closing level).

- Taiwan Semiconductor (TSM) reported fourth-quarter revenue growth of 20.45% year-over-year. The figure fell within the company's guidance of $32.2-33.4 bln and exceeded the consensus.

- Elon Musk's xAI will invest more than $20 billion in a data center in Southaven, Mississippi, which is expected to be operational as early as February.

- Donald Trump will discuss with the heads of Chevron (CVX), Exxon Mobil (XOM) and ConocoPhillips (COP) their participation in the recovery of the Venezuelan oil sector. According to media reports, the White House expects that with a partial easing of sanctions, daily production could increase by several hundred thousand barrels. At the same time, the largest oil and gas companies insist on the need for legal and financial guarantees and do not commit themselves to large-scale investments.

- Aehr Test Systems (AEHR) reported a 27% year-over-year decline in revenue and a drop in non-GAAP gross margin from last year's 45.3% to 29.8% due to lower packaging shipments and a less favorable product mix. Against this backdrop, the company's shares were down more than 3% on the premarket.

- Walt Disney (DIS) CEO Bob Iger met with Chinese Vice Premier Ding Xuexiang in Beijing, who urged the company to step up investment in the PRC amid tensions between the U.S. and China and current import restrictions on Hollywood films.

- Rio Tinto (RIO) has confirmed talks on a possible acquisition of Glencore (GLNCY). The option of a deal with payment in shares is being discussed, and it may be about the acquisition of part or all of Glencore's assets. Before the opening of the main trading RIO quotes are falling by about 3%.

January 8 trading on the U.S. stock exchanges ended mixed. S&P 500 added a symbolic 0.01%, NASDAQ 100 decreased by 0.57%, Dow Jones grew by 0.55%, and Russell 2000 rose by 1.11%. Energy companies (XLE: +3.15%) became the leaders of growth on the background of WTI quotations jumping by 3.2%. Technology sector (XLK: -1.56%) topped the list of outsiders due to selloffs in shares of IT giants and general decrease of interest in megacaps.

The representatives of the "Magnificent Seven" again showed mixed dynamics. The buyers of Amazon (AMZN: +1.96%) were the most active. NVIDIA (NVDA: -2.15%) remained under pressure.

The defense sector showed a sharp rebound amid Donald Trump's initiatives to increase military spending. Demand was also shifting towards cyclical segments amid capital outflows from the shares of major corporations and lagging bigtechs.

Market sentiment was determined by the mentioned expectations of the December report of the Ministry of Labor and the decision of the U.S. Supreme Court on tariffs imposed on the basis of IEEPA (International Emergency Economic Powers Act). In addition, factors of the upcoming reporting season and the change of the Fed chairman are put into quotations.

The number of initial applications for unemployment benefits for the previous week increased from 200 thousand to 208 thousand, while the consensus was 212 thousand. The number of repeated applications increased from 1.858 million (revised estimate) to 1.914 million, while the forecast result was 1.9 million. The dynamics of these indicators was interpreted as a sign of stable cooling of the labor market ahead of the publication of official employment statistics (non-farm payrolls) for December.

- Costco Wholesale (COST: +3.7%) reported last quarter net sales growth of 8.5% year-over-year on a 6.2% increase in comparable sales excluding gasoline and currency factors.

- Jefferies Financial Group's (JEF: -5.6%) adjusted earnings per share fell short of estimates due to higher expenses, weaker results from fixed income instruments and a one-time $30 million pretax loss related to Pointa Bonita and First Brands.

- Constellation Brands (STZ: +5.3%) reported quarterly results that were better than expected and gave a confident guidance for fiscal 2026. The company's beer segment delivered a positive surprise.

- Bloom Energy (BE: +12.8%) and American Electric Power (AEP: +2.0%) have entered into an agreement for the latter to purchase a solid oxide fuel cell option.

This article was AI-translated and verified by a human editor