(Jan 8): Wall Street optimism faded as traders digested mixed economic data and took stock of shifting geopolitical risks amid a flurry of social media posts from the US president. Yields fell across the globe.
The S&P 500 Index slid 0.3% after notching its second intraday record of 2026 on Wednesday while the Nasdaq 100 struggled to hold onto a small gain. Stocks lost their edge after posts from President Donald Trump sent homebuilders and defense contractors tumbling. Valero Energy Corp led shares of refiners higher after Trump said Venezuela would turn over millions of barrels of oil to the US.
RTX Corp slid more than 5% after the market closed as Trump threatened to cut ties with its Raytheon defence unit.
His pronouncements “were just the latest examples of the Trump 2.0 White House intervening in the economy in an unprecedented fashion”, said Vital Knowledge’s Adam Crisafulli.
A rally in US Treasuries was dampened after US services activity expanded in December at the fastest pace in more than a year, fueled by solid demand growth and a pickup in hiring. Earlier data from ADP Research was better received by the bond market after it showed hiring in December rose at a moderate pace, pointing to sluggish momentum heading into 2026. The yield on 10-year notes fell to 4.14%, with rates also moving lower across most of Europe.
Altogether, the economic data was positive according to Crisafulli, though drops in both an equal-weighted version of the S&P 500, which gives Dollar Tree Inc as much clout as Apple Inc, as well as a gauge of smaller firms bear watching.
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“The underlying price action is poor,” Crisafulli noted. With two quarter-point rate cuts already baked into swaps traders’ expectations for 2026 the focus will soon turn to Friday’s key December nonfarm payrolls report.
Stocks have been on a tear on optimism over solid earnings growth and inflation remaining sufficiently contained for the US Federal Reserve (Fed) to keep cutting borrowing costs. That rosy view has persisted despite a worsening geopolitical backdrop, including US actions in Venezuela, its threats of intervention elsewhere and rising tensions between China and Japan.
To Evercore ISI the recent data indicate the Fed will hold rates steady at the next meeting.
See also: S&P 500 inches forward as traders await key economic data
“If the employment report signals that the labour market is bending but not breaking, the Fed will keep rates on hold at its January meeting, as the bar for an additional near-term cut is higher following the latest cut in December,” Marco Casiraghi wrote.
In addition to a payrolls report, traders will also be watching for the Supreme Court opinion on the legality of Trump’s global tariffs on Friday.
Precious metals pulled back, with silver falling below US$80 an ounce and gold breaking a three-day winning streak. Copper retreated from an all-time high.
Oil extended losses after Washington moved to exert greater control over Venezuela’s industry. The US European Command said US forces seized a Venezuela-linked, Russia-flagged ship in the north Atlantic. West Texas Intermediate traded below US$57 a barrel.
Investors were also keeping tabs on the primary bond market as the first week of 2026 saw a surge in global issuance, signalling strong confidence despite heightened geopolitical risks.
Issuance in the US investment-grade bond market topped US$72 billion in the first two days of the week, the busiest back-to-back sessions on record, according to data compiled by Bloomberg. European borrowers brought a record number of tranches to the market on Wednesday and are set to raise €61 billion (US$71.3 billion).
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- Lockheed Martin Corp and other military tech stocks fell after Trump said he wouldn’t allow dividends or stock buy-backs for defence firms.
- Warner Bros Discovery Inc determined that an amended takeover offer from Paramount Skydance Corp is inferior to the deal it already has in place with Netflix Inc.
- Discord Inc filed confidentially for an initial public offering, according to people familiar with the matter, adding to a rapidly growing pipeline of venture capital-backed tech listings.
- Nvidia Corp, countering fears about an AI spending bubble, said that an upbeat revenue forecast delivered in October has only gotten brighter due to strong demand.
- Pirelli & C SpA is in talks with its largest shareholder, China’s Sinochem Group, over options that include reducing the Chinese conglomerate’s stake in the Italian tyre maker.
- Baidu Inc’s artificial-intelligence chip unit has hired banks for an initial public offering in Hong Kong that may raise as much as US$2 billion, according to people familiar with the matter.
- BlueScope Steel Ltd rejected an US$8.8 billion takeover bid by US steelmaker Steel Dynamics Inc and Australian conglomerate SGH Ltd.
Some of the main moves in markets:
Stocks
- The S&P 500 was down 0.3% as of 4pm New York time on Wednesday
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average fell 0.9%
- The MSCI World Index fell 0.4%
- S&P 500 Equal Weighted Index fell 1.2%
- The Russell 2000 Index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.1%
- The euro was little changed at US$1.1678
- The British pound fell 0.3% to US$1.3462
- The Japanese yen was little changed at 156.78 per dollar
Cryptocurrencies
- Bitcoin fell 2.3% to US$91,074.35
- Ether fell 4.1% to US$3,139.32
Bonds
- The yield on 10-year Treasuries declined three basis points to 4.14%
- Germany’s 10-year yield declined three basis points to 2.81%
- Britain’s 10-year yield declined six basis points to 4.42%
Commodities
- West Texas Intermediate crude fell 1.5% to US$56.30 a barrel
- Spot gold fell 0.9% to US$4,452.25 an ounce
Uploaded by Jason Ng
