State of Market: Close 01/13/26
Stocks fade into the close as Financials lag, Energy and commodities firm; bonds catch a small bid
Dow underperforms while S&P 500 and Nasdaq slip modestly; oil, silver and broad commodity baskets advance. Macro focus stays on Fed independence drama, sticky inflation risk, and the opening salvos of bank earnings.
TendieTensor.com State of Market Close
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U.S. equities drifted lower into the closing bell Tuesday, with modest index declines masking sharper underperformance in Financials and a bid into Energy and commodities. The S&P 500 proxy (SPY) slipped 0.2% to 693.75 versus a prior close of 695.16. The Nasdaq-100 tracker (QQQ) eased 0.17% to 626.13, while the Dow proxy (DIA) fell 0.81% to 491.90, the day’s laggard among the major benchmarks. Small caps were little changed, with the Russell 2000 proxy (IWM) finishing effectively flat at 261.35, down 0.06% on the day.
The sector tape showed a defensive rotation underneath the surface, but with notable dispersion. Financials (XLF) dropped 1.88% to 54.25, weighed by renewed regulatory and legislative headlines around credit-card routing and potential rate caps. Technology (XLK) dipped 0.20% to 146.50, a muted move as investors digested a flurry of AI-related stock calls and deal chatter. Energy, represented in our sector set by XLE, rose about 0.65% as crude oil rallied; Health Care (XLV) slipped 0.43% to 156.71.
Macro backdrop: yields, inflation, and expectations
Treasury yields remain elevated in the long end by recent history, with the latest available benchmark closes from January 9 showing the 2-year at 3.54%, 5-year at 3.75%, 10-year at 4.18%, and 30-year at 4.82%. These levels continue to anchor risk premia and equity valuation debates as earnings season begins. On inflation, the most recent Consumer Price Index readings available (November 2025) show headline CPI at 325.031 and core CPI at 331.068 (index levels), consistent with the narrative of disinflation progress but not yet a full return to pre-pandemic trendlines.
Market-based inflation compensation sits near the low-2% area for the middle of the curve: 5-year breakeven at 2.28% and 10-year at 2.24%, with the 5y5y forward near 2.21%. A model-based 1-year inflation expectation prints 3.20%, with model 5-year at 2.42% and 10-year at 2.34%. This profile supports the view that near-term inflation remains stickier than the longer-run anchor, a point echoed by recent commentary suggesting the upcoming CPI could show persistence that delays additional Fed cuts. BlackRock’s fixed income leadership has reiterated a view that policy should ultimately gravitate closer to 3% for an equilibrium rate. Against that backdrop, today’s modest bid in duration looks consistent with a market balancing elevated term premia and the prospect of steady policy while inflation cools in glideslope rather than in a straight line.
Equities and sectors
Index performance was orderly, with the Dow-sensitive DIA falling the most (-0.81%) amid weakness in select constituents tied to Financials and Industrials headlines, while the growth-tilted QQQ gave back 0.17%. SPY declined 0.2%, and IWM was nearly unchanged (-0.06%). The sector picture showed:
- Financials (XLF) down 1.88% to 54.25. Sentiment toward the card networks remained fragile as investors continued to absorb the potential implications of routing mandates and rate-cap proposals. Separate from regulation, the unofficial start of bank earnings featured JPMorgan, which reported results that beat expectations and reiterated a resilient macro tone, but the group still faced multiple cross-currents.
- Technology (XLK) down 0.20% to 146.50. A busy day of AI-linked commentary included bullish calls on Nvidia, AMD, and Intel, alongside broader software picks (Microsoft, Oracle, ServiceNow) expected to benefit as enterprise AI spending scales. The dispersion within tech remains high, with semis and AI infrastructure in focus and software platforms jockeying for monetization wins.
- Energy (XLE in our sector set) up about 0.65%. Crude oil rose as geopolitical tension around the Strait of Hormuz remained in focus. Company-specific narratives also buoyed sentiment; Exxon Mobil was cited for a new high despite policy uncertainty around Venezuela.
- Health Care (XLV) down 0.43% to 156.71. Stock-specific stories drove micro-moves, including GLP-1 developments and mixed reactions to preannounced results in subsets of the group.
Bonds
Treasuries edged higher as duration found modest support: long-duration TLT gained 0.14% to 87.80/87.80 (last trade 87.795), intermediate IEF rose 0.11% to 96.29, and front-end SHY added 0.04% to 82.86. With the 10-year yield at 4.18% in the latest available snapshot, the curve remains relatively flat in the 2s–10s segment compared to historical norms, though still upward sloped versus the short end. Today’s gentle bid is consistent with a market that is weighing sticky near-term inflation against cooling long-run expectations and headline risk around Fed independence.
Commodities
The commodity complex outperformed equities. Crude oil (USO) climbed 2.54% to 73.47, aided by ongoing U.S.–Iran tensions that keep key maritime chokepoints on traders’ radars. Broad commodities (DBC) rose 0.77% to 23.37, signaling continued accumulation across the complex.
Precious metals diverged: Gold (GLD) eased 0.14% to 421.62, consolidating near recent gains, even as debate persists about its role as a portfolio diversifier. Silver (SLV) advanced 1.75% to 78.58, outpacing gold and extending the white metal’s recent leadership during risk and policy uncertainty. Natural gas (UNG) added 1.16% to 11.31.
FX and crypto
In FX, EURUSD was marked around 1.1647 as of the close snapshot. Intraday context was limited in the provided dataset.
Digital assets rallied. Bitcoin (BTCUSD) traded near 94,410, up roughly 3.3% versus its provided open, while Ethereum (ETHUSD) hovered near 3,203, up about 2.7% from its open. The move higher in crypto took place alongside firm commodities and a slight bid to duration, a mix that points to ongoing interest in alternative assets during policy and geopolitical flux.
Notable movers and narratives from the news flow
- Financials and payments: Visa and Mastercard were flagged for sharp declines amid worries that a lower-cost routing alternative could be mandated, compounding broader concerns from a 10% APR cap proposal. JPMorgan reported results that beat expectations and emphasized economic resilience as bank earnings season gets underway.
- Energy: Exxon Mobil shares hit a new high despite uncertainty around Venezuelan oil opportunities following policy commentary over the weekend. Oil’s advance today aided the sector backdrop.
- Airlines and Aerospace: Boeing garnered positive attention on orders and deliveries, with a two-year high noted as orders continue to build; a separate tally showed it outsold Airbus in 2025 and delivered 600 aircraft. Delta traded lower after adjusted revenue missed following operational disruptions.
- Semiconductors and AI: Nvidia was named a top pick on relative underperformance creating opportunity; AMD drew a fresh Buy call on tight server CPU supply and a ramp in AI chips; Intel was highlighted for momentum in server CPUs and manufacturing execution. More broadly, the software side of AI—Microsoft, Oracle, and ServiceNow—was called out as well positioned for monetization as adoption matures. On the policy front, Microsoft drew attention for expected moves to allay consumer power-cost concerns related to AI buildouts.
- Defense/Space: L3Harris advanced into record territory after a $1 billion federal investment to acquire pre-IPO shares of a missile motor maker. Planet Labs drew bullish commentary on the “intersection of space and AI,” though today’s price action was not provided.
- Retail and platforms: Walmart’s inclusion in the Nasdaq-100 and focus on AI have driven fresh enthusiasm, with the stock described as having surged to records in recent coverage.
- Media and M&A: Paramount filed suit seeking information around Warner Bros. Discovery’s decision-making in a contested process; litigation continues as the parties jockey for shareholder support. Palantir was also in the legal headlines in an ongoing case involving former employees and a startup, a story that highlights IP and talent mobility risks in AI.
- Policy and the Fed: Multiple reports underscored bipartisan and international support for Fed Chair Jerome Powell amid a Justice Department probe, with former Fed chairs and global central bankers stressing the importance of central bank independence. Separate commentary argued that attacks on the Fed could raise inflation risk by undermining credibility.
Putting it together
Today’s market action—modest index declines, Financials under pressure, Energy and commodities firm, duration bid—fits a “risk rebalancing” template heading into earnings and a pivotal inflation print. Market-implied longer-term inflation remains anchored near 2.2%–2.3%, but a 3.2% model-based 1-year expectation and a stream of policy and geopolitical headlines argue for careful position sizing. Within equities, the leadership baton continues to shift among AI chips, software, and energy/commodities, while Financials grapple with both cyclical and policy headwinds.
Outlook
- Earnings season: Banks set the tone. Watch loan growth, net interest income sensitivity to the forward curve, credit normalization, and commentary on consumer and commercial health.
- Inflation data: With recent analysis pointing to sticky components, the next CPI print may influence the timing and magnitude of further Fed easing. The curve’s shape and the dollar’s path will be key tells.
- Policy risk: Developments around the Fed probe and any legislative movement on credit-card routing or APR caps could sway Financials and broader risk sentiment.
- Geopolitics and commodities: Tensions affecting the Strait of Hormuz keep a bid under crude. Volatility in oil can feed back into headline inflation and earnings guidance for transports and industrials.
- Tech/AI monetization: Watch for incremental signals on AI infrastructure demand (chips, power, networking) and software monetization as enterprises shift from pilots to production. Company-specific catalysts (Nvidia/AMD/Intel updates; Microsoft, Oracle, ServiceNow enterprise commentary) may drive dispersion.
Risks
- Policy interference and Fed credibility: Prolonged uncertainty around central bank independence could lift inflation risk premia and term premia.
- Regulatory shifts in payments: Routing mandates or APR caps would directly affect card networks and issuers, altering sector earnings power and consumer credit availability.
- Geopolitical shocks: Escalation in the Middle East or Venezuela could push oil higher, complicating disinflation and squeezing energy-sensitive sectors.
- Earnings disappointment: With indices near highs, misses or cautious guidance from megacaps or banks could reset valuations.
- Legal and IP risk in AI and media: Ongoing litigation involving Palantir and disputes in media consolidation highlight headline risk and potential for volatility in affected names.
Bottom line: The tape reflects a market rotating and hedging into catalysts. Long-end yields remain a headwind for valuation but are offset by anchored longer-run inflation expectations and steady growth signals. Positioning for a slow grind rather than a surge—while remaining tactical around oil, Financials policy risk, and AI dispersion—remains a prudent stance into the next data and earnings checkpoints.
U.S. equities drifted lower into the closing bell Tuesday, with modest index declines masking sharper underperformance in Financials and a bid into Energy and commodities. The S&P 500 proxy (SPY) slipped 0.2% to 693.75 versus a prior close of 695.16. The Nasdaq-100 tracker (QQQ) eased 0.17% to 626.13, while the Dow proxy (DIA) fell 0.81% to 491.90, the day’s laggard among the major benchmarks. Small caps were little changed, with the Russell 2000 proxy (IWM) finishing effectively flat at 261.35, down 0.06% on the day.
The sector tape showed a defensive rotation underneath the surface, but with notable dispersion. Financials (XLF) dropped 1.88% to 54.25, weighed by renewed regulatory and legislative headlines around credit-card routing and potential rate caps. Technology (XLK) dipped 0.20% to 146.50, a muted move as investors digested a flurry of AI-related stock calls and deal chatter. Energy, represented in our sector set by XLE, rose about 0.65% as crude oil rallied; Health Care (XLV) slipped 0.43% to 156.71.
Macro backdrop: yields, inflation, and expectations
Treasury yields remain elevated in the long end by recent history, with the latest available benchmark closes from January 9 showing the 2-year at 3.54%, 5-year at 3.75%, 10-year at 4.18%, and 30-year at 4.82%. These levels continue to anchor risk premia and equity valuation debates as earnings season begins. On inflation, the most recent Consumer Price Index readings available (November 2025) show headline CPI at 325.031 and core CPI at 331.068 (index levels), consistent with the narrative of disinflation progress but not yet a full return to pre-pandemic trendlines.
Market-based inflation compensation sits near the low-2% area for the middle of the curve: 5-year breakeven at 2.28% and 10-year at 2.24%, with the 5y5y forward near 2.21%. A model-based 1-year inflation expectation prints 3.20%, with model 5-year at 2.42% and 10-year at 2.34%. This profile supports the view that near-term inflation remains stickier than the longer-run anchor, a point echoed by recent commentary suggesting the upcoming CPI could show persistence that delays additional Fed cuts. BlackRock’s fixed income leadership has reiterated a view that policy should ultimately gravitate closer to 3% for an equilibrium rate. Against that backdrop, today’s modest bid in duration looks consistent with a market balancing elevated term premia and the prospect of steady policy while inflation cools in glideslope rather than in a straight line.
Equities and sectors
Index performance was orderly, with the Dow-sensitive DIA falling the most (-0.81%) amid weakness in select constituents tied to Financials and Industrials headlines, while the growth-tilted QQQ gave back 0.17%. SPY declined 0.2%, and IWM was nearly unchanged (-0.06%). The sector picture showed:
- Financials (XLF) down 1.88% to 54.25. Sentiment toward the card networks remained fragile as investors continued to absorb the potential implications of routing mandates and rate-cap proposals. Separate from regulation, the unofficial start of bank earnings featured JPMorgan, which reported results that beat expectations and reiterated a resilient macro tone, but the group still faced multiple cross-currents.
- Technology (XLK) down 0.20% to 146.50. A busy day of AI-linked commentary included bullish calls on Nvidia, AMD, and Intel, alongside broader software picks (Microsoft, Oracle, ServiceNow) expected to benefit as enterprise AI spending scales. The dispersion within tech remains high, with semis and AI infrastructure in focus and software platforms jockeying for monetization wins.
- Energy (XLE in our sector set) up about 0.65%. Crude oil rose as geopolitical tension around the Strait of Hormuz remained in focus. Company-specific narratives also buoyed sentiment; Exxon Mobil was cited for a new high despite policy uncertainty around Venezuela.
- Health Care (XLV) down 0.43% to 156.71. Stock-specific stories drove micro-moves, including GLP-1 developments and mixed reactions to preannounced results in subsets of the group.
Bonds
Treasuries edged higher as duration found modest support: long-duration TLT gained 0.14% to 87.80/87.80 (last trade 87.795), intermediate IEF rose 0.11% to 96.29, and front-end SHY added 0.04% to 82.86. With the 10-year yield at 4.18% in the latest available snapshot, the curve remains relatively flat in the 2s–10s segment compared to historical norms, though still upward sloped versus the short end. Today’s gentle bid is consistent with a market that is weighing sticky near-term inflation against cooling long-run expectations and headline risk around Fed independence.
Commodities
The commodity complex outperformed equities. Crude oil (USO) climbed 2.54% to 73.47, aided by ongoing U.S.–Iran tensions that keep key maritime chokepoints on traders’ radars. Broad commodities (DBC) rose 0.77% to 23.37, signaling continued accumulation across the complex.
Precious metals diverged: Gold (GLD) eased 0.14% to 421.62, consolidating near recent gains, even as debate persists about its role as a portfolio diversifier. Silver (SLV) advanced 1.75% to 78.58, outpacing gold and extending the white metal’s recent leadership during risk and policy uncertainty. Natural gas (UNG) added 1.16% to 11.31.
FX and crypto
In FX, EURUSD was marked around 1.1647 as of the close snapshot. Intraday context was limited in the provided dataset.
Digital assets rallied. Bitcoin (BTCUSD) traded near 94,410, up roughly 3.3% versus its provided open, while Ethereum (ETHUSD) hovered near 3,203, up about 2.7% from its open. The move higher in crypto took place alongside firm commodities and a slight bid to duration, a mix that points to ongoing interest in alternative assets during policy and geopolitical flux.
Notable movers and narratives from the news flow
- Financials and payments: Visa and Mastercard were flagged for sharp declines amid worries that a lower-cost routing alternative could be mandated, compounding broader concerns from a 10% APR cap proposal. JPMorgan reported results that beat expectations and emphasized economic resilience as bank earnings season gets underway.
- Energy: Exxon Mobil shares hit a new high despite uncertainty around Venezuelan oil opportunities following policy commentary over the weekend. Oil’s advance today aided the sector backdrop.
- Airlines and Aerospace: Boeing garnered positive attention on orders and deliveries, with a two-year high noted as orders continue to build; a separate tally showed it outsold Airbus in 2025 and delivered 600 aircraft. Delta traded lower after adjusted revenue missed following operational disruptions.
- Semiconductors and AI: Nvidia was named a top pick on relative underperformance creating opportunity; AMD drew a fresh Buy call on tight server CPU supply and a ramp in AI chips; Intel was highlighted for momentum in server CPUs and manufacturing execution. More broadly, the software side of AI—Microsoft, Oracle, and ServiceNow—was called out as well positioned for monetization as adoption matures. On the policy front, Microsoft drew attention for expected moves to allay consumer power-cost concerns related to AI buildouts.
- Defense/Space: L3Harris advanced into record territory after a $1 billion federal investment to acquire pre-IPO shares of a missile motor maker. Planet Labs drew bullish commentary on the “intersection of space and AI,” though today’s price action was not provided.
- Retail and platforms: Walmart’s inclusion in the Nasdaq-100 and focus on AI have driven fresh enthusiasm, with the stock described as having surged to records in recent coverage.
- Media and M&A: Paramount filed suit seeking information around Warner Bros. Discovery’s decision-making in a contested process; litigation continues as the parties jockey for shareholder support. Palantir was also in the legal headlines in an ongoing case involving former employees and a startup, a story that highlights IP and talent mobility risks in AI.
- Policy and the Fed: Multiple reports underscored bipartisan and international support for Fed Chair Jerome Powell amid a Justice Department probe, with former Fed chairs and global central bankers stressing the importance of central bank independence. Separate commentary argued that attacks on the Fed could raise inflation risk by undermining credibility.
Putting it together
Today’s market action—modest index declines, Financials under pressure, Energy and commodities firm, duration bid—fits a “risk rebalancing” template heading into earnings and a pivotal inflation print. Market-implied longer-term inflation remains anchored near 2.2%–2.3%, but a 3.2% model-based 1-year expectation and a stream of policy and geopolitical headlines argue for careful position sizing. Within equities, the leadership baton continues to shift among AI chips, software, and energy/commodities, while Financials grapple with both cyclical and policy headwinds.
Outlook
- Earnings season: Banks set the tone. Watch loan growth, net interest income sensitivity to the forward curve, credit normalization, and commentary on consumer and commercial health.
- Inflation data: With recent analysis pointing to sticky components, the next CPI print may influence the timing and magnitude of further Fed easing. The curve’s shape and the dollar’s path will be key tells.
- Policy risk: Developments around the Fed probe and any legislative movement on credit-card routing or APR caps could sway Financials and broader risk sentiment.
- Geopolitics and commodities: Tensions affecting the Strait of Hormuz keep a bid under crude. Volatility in oil can feed back into headline inflation and earnings guidance for transports and industrials.
- Tech/AI monetization: Watch for incremental signals on AI infrastructure demand (chips, power, networking) and software monetization as enterprises shift from pilots to production. Company-specific catalysts (Nvidia/AMD/Intel updates; Microsoft, Oracle, ServiceNow enterprise commentary) may drive dispersion.
Risks
- Policy interference and Fed credibility: Prolonged uncertainty around central bank independence could lift inflation risk premia and term premia.
- Regulatory shifts in payments: Routing mandates or APR caps would directly affect card networks and issuers, altering sector earnings power and consumer credit availability.
- Geopolitical shocks: Escalation in the Middle East or Venezuela could push oil higher, complicating disinflation and squeezing energy-sensitive sectors.
- Earnings disappointment: With indices near highs, misses or cautious guidance from megacaps or banks could reset valuations.
- Legal and IP risk in AI and media: Ongoing litigation involving Palantir and disputes in media consolidation highlight headline risk and potential for volatility in affected names.
Bottom line: The tape reflects a market rotating and hedging into catalysts. Long-end yields remain a headwind for valuation but are offset by anchored longer-run inflation expectations and steady growth signals. Positioning for a slow grind rather than a surge—while remaining tactical around oil, Financials policy risk, and AI dispersion—remains a prudent stance into the next data and earnings checkpoints.