State of Market: Midday 01/05/26
Midday Market: Broad Rally Builds as Small Caps and Dow Lead; Gold, Silver Extend Breakouts While Bonds Firm
Stocks advance despite soft ISM manufacturing; semis buoyed by CES anticipation and upgrades. Oil gains on Venezuela headlines; utilities lag. Treasury ETFs edge higher as long-end yields remain elevated versus December levels.
TendieTensor.com State of Market Midday
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Stocks are broadly higher into the midday session Monday, with gains spanning large caps and small caps alike as investors digest a mix of macro data, sector-specific catalysts, and geopolitical developments. The advance is led by the Dow and small caps, while the S&P 500 and Nasdaq track solidly higher. Precious metals extend their outperformance, oil rises on Venezuela-related headlines, and bonds firm modestly, hinting at a small intraday bid for duration even as long-end yields remain higher than short-dated rates when measured by late-December benchmarks.
At 1:30 p.m. ET, SPY trades near 688.34, up roughly 0.8% versus Friday’s close. QQQ is around 618.38, up about 0.9%. DIA outperforms near 491.52, up approximately 1.6%. IWM leads among the major equity ETFs at 253.04, up about 1.7% on the day. The tone reflects renewed risk appetite after a lackluster start to the year, aided by strength in semiconductors and financials.
Macro backdrop: growth, inflation, and policy expectations
The latest available Treasury yield benchmarks (as of 12/31) show the 2-year at 3.47%, 5-year at 3.73%, 10-year at 4.18%, and 30-year at 4.84%. That curve configuration continues to place long-end rates meaningfully above the front end compared with the 2-year, keeping the curve relatively flat to slightly upward sloping from 2s into the long bond. Inflation expectations from December indicate market-implied 5-year and 10-year breakevens around 2.28% and 2.24%, respectively, with a 5y5y forward near 2.21%. A modeled 1-year inflation view sits around 3.20%, while longer-dated modeled horizons center near the mid-2s. Together, these inputs suggest that while investors expect nearer-term price pressures to remain above target, longer-term expectations are still anchored close to 2%–2.5%.
Incoming data today highlight ongoing manufacturing softness. The ISM Manufacturing Index for December fell to 47.9%, the year’s low and the 10th straight month of contraction, underscoring a factory sector still under pressure. Meanwhile, comments from a Federal Reserve official noted that AI adoption may be contributing to hiring slowdowns at larger firms, adding nuance to the labor picture ahead of a pivotal jobs report later this week. These developments fit with a macro setup in which growth is uneven—manufacturing is weak, labor signals are mixed—and inflation progress is expected to continue gradually but with the potential for bumps if energy prices or supply frictions re-emerge.
Equities: breadth improves; semis and financials in focus
The day’s equity leadership aligns with risk-on tone. Small caps (IWM +~1.7%) are outperforming, often a constructive signal for breadth. The Dow’s stronger showing (DIA +~1.6%) points to strength in economically sensitive groups and selected large-cap financials. Sector detail is mixed but generally constructive:
- Financials (XLF 56.41 vs 54.93 prior) are up about 2.7%. Sentiment around the largest U.S. bank remains constructive after coverage highlighting JPMorgan Chase’s unique positioning among mega-cap peers, including its valuation inside an exclusive market-cap cohort. As bank earnings approach later this month, investors appear willing to add to the group on expectations of resilient net interest income and diversified fee streams—even as the yield curve remains a headwind for some business lines.
- Technology (XLK 144.72 vs 144.30 prior) is up about 0.3%, with semiconductors capturing attention. An upgrade lifted ASML to another record, and there’s fresh enthusiasm for the chip ecosystem ahead of a major CES address by a leading AI chip supplier. Market commentary also flagged strength in wafer fab equipment names such as Lam Research, Applied Materials and KLA, all tied to continued data-center buildout narratives.
- Health care (XLV 154.60 vs 155.51 prior) is modestly lower, down roughly 0.6%. On the micro front, Novo Nordisk’s launch of a U.S. weight-loss pill is drawing attention across the GLP-1 complex and has coincided with pressure on some peers, according to reports. This dynamic can create crosscurrents within the sector even as overall market risk appetite improves.
- Utilities (XLU 42.24 vs 43.18 prior) are under pressure midday, down about 2.2%. Defensive, rate-sensitive pockets are lagging as cyclicals and value factors catch a bid.
Beyond sectors, notable single-stock narratives from today’s coverage include media and energy. Shares of Versant, the Comcast spinoff that houses cable brands like CNBC, USA Network and the rebranded MS NOW, saw a sharp drop in early trading on their first day as an independent company. In energy, a report highlighted a notable rally in a U.S. supermajor’s shares after the U.S. captured Venezuela’s leader, with debate over whether the oil-stock move is fundamentally justified or largely speculative. The broader market reaction to the geopolitical development has been contained, reflecting the historical pattern of limited sustained equity impact barring significant supply shocks.
Bonds: firmer prices, softer yields intraday
Treasuries, via ETFs, show a slight bid across the curve. TLT (87.43 vs 87.03 prior) is up about 0.5%, IEF (96.34 vs 96.08) up roughly 0.3%, and SHY (82.89 vs 82.86) up marginally. The move suggests modest intraday easing in yields, which is consistent with a soft ISM print. However, relative to the late-December reference levels, the long end remains elevated, a reminder that markets expect a more balanced growth/inflation mix rather than an abrupt disinflationary slide. Strategists have argued that if growth slows more materially in 2026, the Fed could be compelled to cut rates more deeply, a thesis often linked to support for duration and for precious metals—a linkage that is visible in today’s commodity tape.
Commodities: gold and silver surge; oil higher, nat gas lower
Precious metals extend a strong start to the year. GLD trades near 408.35 (vs 398.28 prior), up about 2.5%. SLV is around 69.51 (vs 65.75 prior), up roughly 5.7%. Recent commentary positing deeper 2026 rate cuts as growth cools has been supportive for gold, while structural discussions about geopolitics, deglobalization and nearshoring also figure into medium-term inflation narratives that can underpin both gold and silver. Industrial metals exposure also benefits when cyclical hopes improve, so silver’s blend of precious and industrial demand can be a double tailwind on days like today.
Energy markets are also firm. USO sits around 70.20 (vs 68.96 prior), up about 1.8%, and DBC, a broad commodities basket, is higher near 22.82 (vs 22.39 prior), up approximately 1.9%. The Venezuela development has stoked discussions about potential supply risk and price premia, though at the index level equities have stayed composed. Notably, commentary from one strategist suggested geopolitical shifts could inject a premium into oil, while others cautioned that certain oil-stock rallies may be more speculative than fundamental. Natural gas (UNG 11.59 vs 12.06 prior) is a notable outlier to the downside, down roughly 3.9% intraday.
FX and crypto: euro edges up; digital assets firmer
The euro trades around 1.1717 versus the U.S. dollar, modestly above the provided open reference, suggesting a slight softening in the dollar intraday. Without a broader dollar index here, that observation is limited to EURUSD. In crypto, Bitcoin (BTCUSD) is around 94,012 versus an open near 92,579, up roughly 1.6% intraday. Ethereum (ETHUSD) marks near 3,200 versus an open around 3,166, up about 1.1%. The risk-on tone and falling intraday yields likely contribute to the bid across higher-beta assets.
News drivers and notable movers
- Manufacturing: The ISM Manufacturing Index fell to 47.9% in December, the 10th straight month of contraction, underscoring an ongoing factory slump.
- Semiconductors/AI: An upgrade drove ASML to fresh records, while heightened anticipation ahead of a major CES address from a leading U.S. AI chip designer is buoying the equipment ecosystem (Lam Research, Applied Materials, KLA). Another note called out TSMC’s potential to extend gains following a strong 12-month run.
- Financials: Coverage highlighted JPMorgan’s distinct position within the small cohort of $900 billion-plus market-cap companies, with valuation support relative to peers. That backdrop aligns with XLF leadership today.
- Energy/Geopolitics: After U.S. forces captured Venezuela’s leader, one major U.S. oil company’s shares were reported up sharply; analysts debated the sustainability of the move. Separate commentary suggested that geopolitical events may have limited lasting effect on broad equities, consistent with today’s contained index response.
- Health care/Obesity drugs: Novo Nordisk’s U.S. weight-loss pill availability is a new variable within the GLP-1 landscape and has coincided with weakness in certain competitors, adding to today’s mixed health-care tape.
- Media: Versant, the spinoff from Comcast housing cable networks, slid sharply on its debut, reflecting a tough reception for legacy linear media assets even as streaming and event-driven content receive more attention.
Outlook: what to watch next
- Labor market: A high-stakes jobs report later this week could recalibrate growth and policy expectations after mixed labor signals and the soft ISM print. Traders will watch whether payrolls, unemployment, and wage metrics corroborate a slowing but resilient labor market or hint at a sharper deceleration.
- AI and semis: CES headlines, especially from leading AI silicon providers, remain a key near-term driver. Equipment and foundry guidance—including demand visibility into 2026—will be crucial for sustaining the chip-led momentum supporting QQQ and broader tech factor performance.
- Earnings setup: With bank results approaching later in January, the degree of NII resilience, fee income diversification, and reserve builds will help validate today’s strength in XLF. Guidance on credit quality and loan demand will be closely parsed.
- Energy risk: Markets will track developments around Venezuela and any potential supply repercussions for crude and refined products. Oil-sensitive equities could remain volatile as the situation evolves.
Key risks
- Growth downside: The 47.9% ISM reading underscores manufacturing weakness; a more pronounced slowdown could weigh on earnings and equity multiples.
- Inflation flare-ups: Energy price spikes or supply disruptions could interrupt disinflation, influence inflation expectations, and tighten financial conditions.
- Policy uncertainty: If the labor market weakens abruptly, the path and timing of rate cuts could become more volatile, complicating cross-asset positioning.
- Sector rotations: Crowded positioning in AI beneficiaries could amplify volatility around CES or earnings if guidance disappoints; conversely, defensive sectors may lag further if risk-on continues.
Bottom line
Midday trade reflects a constructive cross-asset tone: equities are broadly higher with leadership from small caps and financials, semiconductors are supported by event-driven catalysts and upgrades, and bonds are modestly firmer alongside a soft manufacturing print. Gold and silver’s strength aligns with narratives of eventually easier policy and persistent macro uncertainty, while oil’s gains mirror geopolitical risk assessment. With a pivotal jobs report and tech headlines ahead, near-term direction will depend on whether growth and earnings visibility can improve without reigniting inflation pressures. For now, the market is giving the benefit of the doubt to a soft-landing path, but the balance of risks argues for disciplined positioning and close attention to incoming data.
Stocks are broadly higher into the midday session Monday, with gains spanning large caps and small caps alike as investors digest a mix of macro data, sector-specific catalysts, and geopolitical developments. The advance is led by the Dow and small caps, while the S&P 500 and Nasdaq track solidly higher. Precious metals extend their outperformance, oil rises on Venezuela-related headlines, and bonds firm modestly, hinting at a small intraday bid for duration even as long-end yields remain higher than short-dated rates when measured by late-December benchmarks.
At 1:30 p.m. ET, SPY trades near 688.34, up roughly 0.8% versus Friday’s close. QQQ is around 618.38, up about 0.9%. DIA outperforms near 491.52, up approximately 1.6%. IWM leads among the major equity ETFs at 253.04, up about 1.7% on the day. The tone reflects renewed risk appetite after a lackluster start to the year, aided by strength in semiconductors and financials.
Macro backdrop: growth, inflation, and policy expectations
The latest available Treasury yield benchmarks (as of 12/31) show the 2-year at 3.47%, 5-year at 3.73%, 10-year at 4.18%, and 30-year at 4.84%. That curve configuration continues to place long-end rates meaningfully above the front end compared with the 2-year, keeping the curve relatively flat to slightly upward sloping from 2s into the long bond. Inflation expectations from December indicate market-implied 5-year and 10-year breakevens around 2.28% and 2.24%, respectively, with a 5y5y forward near 2.21%. A modeled 1-year inflation view sits around 3.20%, while longer-dated modeled horizons center near the mid-2s. Together, these inputs suggest that while investors expect nearer-term price pressures to remain above target, longer-term expectations are still anchored close to 2%–2.5%.
Incoming data today highlight ongoing manufacturing softness. The ISM Manufacturing Index for December fell to 47.9%, the year’s low and the 10th straight month of contraction, underscoring a factory sector still under pressure. Meanwhile, comments from a Federal Reserve official noted that AI adoption may be contributing to hiring slowdowns at larger firms, adding nuance to the labor picture ahead of a pivotal jobs report later this week. These developments fit with a macro setup in which growth is uneven—manufacturing is weak, labor signals are mixed—and inflation progress is expected to continue gradually but with the potential for bumps if energy prices or supply frictions re-emerge.
Equities: breadth improves; semis and financials in focus
The day’s equity leadership aligns with risk-on tone. Small caps (IWM +~1.7%) are outperforming, often a constructive signal for breadth. The Dow’s stronger showing (DIA +~1.6%) points to strength in economically sensitive groups and selected large-cap financials. Sector detail is mixed but generally constructive:
- Financials (XLF 56.41 vs 54.93 prior) are up about 2.7%. Sentiment around the largest U.S. bank remains constructive after coverage highlighting JPMorgan Chase’s unique positioning among mega-cap peers, including its valuation inside an exclusive market-cap cohort. As bank earnings approach later this month, investors appear willing to add to the group on expectations of resilient net interest income and diversified fee streams—even as the yield curve remains a headwind for some business lines.
- Technology (XLK 144.72 vs 144.30 prior) is up about 0.3%, with semiconductors capturing attention. An upgrade lifted ASML to another record, and there’s fresh enthusiasm for the chip ecosystem ahead of a major CES address by a leading AI chip supplier. Market commentary also flagged strength in wafer fab equipment names such as Lam Research, Applied Materials and KLA, all tied to continued data-center buildout narratives.
- Health care (XLV 154.60 vs 155.51 prior) is modestly lower, down roughly 0.6%. On the micro front, Novo Nordisk’s launch of a U.S. weight-loss pill is drawing attention across the GLP-1 complex and has coincided with pressure on some peers, according to reports. This dynamic can create crosscurrents within the sector even as overall market risk appetite improves.
- Utilities (XLU 42.24 vs 43.18 prior) are under pressure midday, down about 2.2%. Defensive, rate-sensitive pockets are lagging as cyclicals and value factors catch a bid.
Beyond sectors, notable single-stock narratives from today’s coverage include media and energy. Shares of Versant, the Comcast spinoff that houses cable brands like CNBC, USA Network and the rebranded MS NOW, saw a sharp drop in early trading on their first day as an independent company. In energy, a report highlighted a notable rally in a U.S. supermajor’s shares after the U.S. captured Venezuela’s leader, with debate over whether the oil-stock move is fundamentally justified or largely speculative. The broader market reaction to the geopolitical development has been contained, reflecting the historical pattern of limited sustained equity impact barring significant supply shocks.
Bonds: firmer prices, softer yields intraday
Treasuries, via ETFs, show a slight bid across the curve. TLT (87.43 vs 87.03 prior) is up about 0.5%, IEF (96.34 vs 96.08) up roughly 0.3%, and SHY (82.89 vs 82.86) up marginally. The move suggests modest intraday easing in yields, which is consistent with a soft ISM print. However, relative to the late-December reference levels, the long end remains elevated, a reminder that markets expect a more balanced growth/inflation mix rather than an abrupt disinflationary slide. Strategists have argued that if growth slows more materially in 2026, the Fed could be compelled to cut rates more deeply, a thesis often linked to support for duration and for precious metals—a linkage that is visible in today’s commodity tape.
Commodities: gold and silver surge; oil higher, nat gas lower
Precious metals extend a strong start to the year. GLD trades near 408.35 (vs 398.28 prior), up about 2.5%. SLV is around 69.51 (vs 65.75 prior), up roughly 5.7%. Recent commentary positing deeper 2026 rate cuts as growth cools has been supportive for gold, while structural discussions about geopolitics, deglobalization and nearshoring also figure into medium-term inflation narratives that can underpin both gold and silver. Industrial metals exposure also benefits when cyclical hopes improve, so silver’s blend of precious and industrial demand can be a double tailwind on days like today.
Energy markets are also firm. USO sits around 70.20 (vs 68.96 prior), up about 1.8%, and DBC, a broad commodities basket, is higher near 22.82 (vs 22.39 prior), up approximately 1.9%. The Venezuela development has stoked discussions about potential supply risk and price premia, though at the index level equities have stayed composed. Notably, commentary from one strategist suggested geopolitical shifts could inject a premium into oil, while others cautioned that certain oil-stock rallies may be more speculative than fundamental. Natural gas (UNG 11.59 vs 12.06 prior) is a notable outlier to the downside, down roughly 3.9% intraday.
FX and crypto: euro edges up; digital assets firmer
The euro trades around 1.1717 versus the U.S. dollar, modestly above the provided open reference, suggesting a slight softening in the dollar intraday. Without a broader dollar index here, that observation is limited to EURUSD. In crypto, Bitcoin (BTCUSD) is around 94,012 versus an open near 92,579, up roughly 1.6% intraday. Ethereum (ETHUSD) marks near 3,200 versus an open around 3,166, up about 1.1%. The risk-on tone and falling intraday yields likely contribute to the bid across higher-beta assets.
News drivers and notable movers
- Manufacturing: The ISM Manufacturing Index fell to 47.9% in December, the 10th straight month of contraction, underscoring an ongoing factory slump.
- Semiconductors/AI: An upgrade drove ASML to fresh records, while heightened anticipation ahead of a major CES address from a leading U.S. AI chip designer is buoying the equipment ecosystem (Lam Research, Applied Materials, KLA). Another note called out TSMC’s potential to extend gains following a strong 12-month run.
- Financials: Coverage highlighted JPMorgan’s distinct position within the small cohort of $900 billion-plus market-cap companies, with valuation support relative to peers. That backdrop aligns with XLF leadership today.
- Energy/Geopolitics: After U.S. forces captured Venezuela’s leader, one major U.S. oil company’s shares were reported up sharply; analysts debated the sustainability of the move. Separate commentary suggested that geopolitical events may have limited lasting effect on broad equities, consistent with today’s contained index response.
- Health care/Obesity drugs: Novo Nordisk’s U.S. weight-loss pill availability is a new variable within the GLP-1 landscape and has coincided with weakness in certain competitors, adding to today’s mixed health-care tape.
- Media: Versant, the spinoff from Comcast housing cable networks, slid sharply on its debut, reflecting a tough reception for legacy linear media assets even as streaming and event-driven content receive more attention.
Outlook: what to watch next
- Labor market: A high-stakes jobs report later this week could recalibrate growth and policy expectations after mixed labor signals and the soft ISM print. Traders will watch whether payrolls, unemployment, and wage metrics corroborate a slowing but resilient labor market or hint at a sharper deceleration.
- AI and semis: CES headlines, especially from leading AI silicon providers, remain a key near-term driver. Equipment and foundry guidance—including demand visibility into 2026—will be crucial for sustaining the chip-led momentum supporting QQQ and broader tech factor performance.
- Earnings setup: With bank results approaching later in January, the degree of NII resilience, fee income diversification, and reserve builds will help validate today’s strength in XLF. Guidance on credit quality and loan demand will be closely parsed.
- Energy risk: Markets will track developments around Venezuela and any potential supply repercussions for crude and refined products. Oil-sensitive equities could remain volatile as the situation evolves.
Key risks
- Growth downside: The 47.9% ISM reading underscores manufacturing weakness; a more pronounced slowdown could weigh on earnings and equity multiples.
- Inflation flare-ups: Energy price spikes or supply disruptions could interrupt disinflation, influence inflation expectations, and tighten financial conditions.
- Policy uncertainty: If the labor market weakens abruptly, the path and timing of rate cuts could become more volatile, complicating cross-asset positioning.
- Sector rotations: Crowded positioning in AI beneficiaries could amplify volatility around CES or earnings if guidance disappoints; conversely, defensive sectors may lag further if risk-on continues.
Bottom line
Midday trade reflects a constructive cross-asset tone: equities are broadly higher with leadership from small caps and financials, semiconductors are supported by event-driven catalysts and upgrades, and bonds are modestly firmer alongside a soft manufacturing print. Gold and silver’s strength aligns with narratives of eventually easier policy and persistent macro uncertainty, while oil’s gains mirror geopolitical risk assessment. With a pivotal jobs report and tech headlines ahead, near-term direction will depend on whether growth and earnings visibility can improve without reigniting inflation pressures. For now, the market is giving the benefit of the doubt to a soft-landing path, but the balance of risks argues for disciplined positioning and close attention to incoming data.