Morning Preview: January 27, 2025

Early Look
Monday, January 27, 2025
Futures |
Up/Down |
% |
Last |
Dow |
-392.00 |
0.88% |
44,210 |
S&P 500 |
-145.25 |
2.36% |
5,988 |
Nasdaq |
-896.50 |
4.09% |
21,015 |
U.S. stock futures are stumbling in an unexpected rout overnight, led by weakness in AI driven technology after Chinese AI startup DeepSeek rolled out a free assistant it says uses lower-cost chips and less data, seemingly challenging a widespread bet in US AI stocks and pulling down shares of big tech names (NVDA, META, MSFT, ARM, ANET, AVGO, SMCI, etc.). The tech decline comes as China’s AI DeepSeek is giving a reason for investors and traders to unwind crowded trades as valuation becomes a question after it appeared to provide comparable performance to U.S. chatbots at a fraction of the price. DeepSeek recently released a powerful AI model that it claims cost just $5.6 million to build, using less-powerful chips. If true that could undermine demand for super-pricey AI chips and other gear. Reminder AI infrastructure stocks got a boost last week from the big Stargate project announced by President Trump, led by Oracle, SoftBank and OpenAI. Stocks declined on Friday as investors locked in gains ahead of the FOMC policy meeting mid-week, key inflation data (PCE on Friday) and big earnings (AAPL, META, MSFT, TSLA this week), but still managed solid gains last week that saw the S&P 500 (SPX) close above 6,100 for the first time ever. The Dow Jones Industrial Average popped 2.15% last week, the S&P 500 index gained 1.7%, the Nasdaq composite climbed 1.65%, and the small-cap Russell 2000 advanced 1.4%. The 10-yr yield slides over 11 bps to 4.51% as bonds rally after stock rout fueling safe haven bids. In Asian markets, The Nikkei Index fell -366 points to 39,565, the Shanghai Index dipped -2 points to 3,250, and the Hang Seng Index rises 131 points to 20,197. In Europe, the German DAX is down -253 points to 21,140, while the FTSE 100 fell -20 points to 8,481. Investors prepare as roughly 23% of S&P companies report this week.
Market Closing Prices Yesterday
- The S&P 500 Index dipped -17.47 points, or 0.29%, to 6,101.24.
- The Dow Jones Industrial Average fell -140.82 points, or 0.32%, to 44,424.25.
- The Nasdaq Composite dropped -99.38 points, or 0.50%, to 19,954.30.
- The Russell 2000 Index declined -6.86 points, or 0.30% to 2,307.74.
Economic Calendar for Today
- 8:30 AM ET National Activity Index for December
- 10:00 AM ET New Home Sales M/M for December…est. 673K
- 10:30 AM ET Dallas Fed Manufacturing Index for January
- 1:00 PM ET US Treasury to sell $69B in 2-year notes
- 1:00 PM ET US Treasury to sell $70B in 5-year notes
Earnings Calendar:
- Earnings Before the Open: BMRC BOH DX HOPE OXLC SOFI T
- Earnings After the Close: AGNC ARE BRO CR EFSC ELS FSBC GGG HMST NUE PCH PFBC SANM SBCF SFBS TRNS WAL WRB WSFS
Other Key Events:
- China NBS Manufacturing PMI for January
Macro |
Up/Down |
Last |
Nymex |
-0.16 |
74.50 |
Brent |
-0.13 |
78.37 |
Gold |
-5.20 |
2,773.70 |
EUR/USD |
0.0018 |
1.0515 |
JPY/USD |
-2.27 |
153.73 |
10-Year Note |
-0.113 |
4.510% |
World News
- President Donald Trump slapped steep 25% retaliatory tariffs and other measures against Colombia on Sunday, after that country refused to allow two flights carrying deported migrants to land. If the dispute is not quickly resolved, U.S. consumers could see increases in things from gasoline to coffee to fresh-cut flowers.
- South Korean prosecutors charged President Yoon Suk Yeol for his failed attempt last month to place the country under martial law, Yonhap News Agency said, forcing the impeached leader to remain in detention as they build a case against him.
- China manufacturing index unexpectedly fell 1 point to 49.1, back below the neutral 50-day level. The non-manufacturing index sank two points to 50.2 vs. views for 52.1.
Sector News Breakdown
Consumer
- Dana (DAN) upgraded to Equal Weight from Underweight at Wells Fargo.
- D.R. Horton (DHI) downgraded to Neutral from Buy at Bank America as housing demand moderates.
- Ryanair (RYAAY), Europe’s largest low-cost carrier, posted an after-tax profit that beat analysts’ forecasts, but revised down its passenger outlook on delays in Boeing aircraft delivery.
Energy, Industrials and Materials
- Barrick Gold (GOLD) downgraded to Neutral from Buy at Bank America citing mine project problems.
- Nuclear/Utility stocks are tumbling along with technology AI shares on the DeepSeek China AI news as well (CEG, SMR, OKLO, CCJ, VST all widely lower – group had been strong on expectations of more power needed for AI).
Financials
- Elon Musk has initiated conversations about using blockchain technology at the new Department of Government Efficiency, according to people with knowledge of the discussions. It’s the latest sign of the Trump administration’s efforts to bolster the digital asset industry – Bloomberg reported.
Healthcare
- Akero Therapeutics (AKRO) set a Monday investor conference to share preliminary topline week 96 results from its Symmetry clinical study in patients with liver disease.
- Ocugen (OCGN) announced that the U.S. FDA has reviewed the company’s Investigational New Drug application, and it is in effect.
- Veru (VERU) announces positive topline data from phase 2B QUALITY clinical study: Enobosarm preserved lean mass in patients receiving WEGOVY® (Semaglutide) for Weight Reduction; the study met primary endpoint.
Technology, Media & Telecom
- Chinese artificial-intelligence (AI) company DeepSeek has impressed Silicon Valley at how its programmers nearly matched American rivals despite using inferior chips. On Jan. 20, DeepSeek introduced R1, a specialized model designed for complex problem-solving – WSJ reported. The impressive performance from DeepSeek, at a fraction of the price for US chatbots, is crushing tech stocks this morning (NVDA, AVGO, ARM, META).
- AT&T’s (T) Q4 wireless subscriber growth surpassed expectations, fueled by strong demand for its discounted premium plans combining; AT&T added 482,000 net monthly bill-paying wireless phone subscribers in the holiday quarter, outpacing analysts’ estimated gains of 424,550. Q4 EPS $0.54 tops $0.50 estimate; Q4 revs $32.3B is slightly better than the $32.03B estimate.
- RingCentral (RNG) downgraded to Equal Weight from Overweight at Barclays.
Market commentary provided by Hammerstone Markets, Inc, a firm separate from and not affiliated with Regal Securities. Regal Securities has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.