Good Morning!
On Wednesday, January 15, the S&P 500 closed at 5,949.91, gaining 1.83%. The NASDAQ rose by 2.45%, finishing at 19,511 points, while the Dow Jones Industrial Average advanced 1.65% to close at 43,221. Meanwhile, the Russell 2000 climbed 1.99%, ending the trading session at 2,263.29.
The consumer price index report for December showed that core inflation rose less than expected, easing concerns about inflation and renewing hopes for further interest rate cuts by the Federal Reserve in 2025. This led to a sharp drop in the 10-year Treasury yield, which was at 4.66% after the release of the inflation data. Shares of large financial institutions like Goldman Sachs, Bank of New York Mellon, Citigroup, and Wells Fargo surged after posting strong quarterly results. Mega-cap technology stocks also performed well, with companies like Tesla, Nvidia, and Apple seeing significant gains.
Investors will be watching for more big bank earnings, including reports from Morgan Stanley and Bank of America. Additionally, the December retail sales report and weekly jobless claims data are expected to provide further insight into the state of the economy.
Joe Biden, 46th President of the United States, gave his farewell address yesterday.
Crypto Highlights
Bitcoin (BTC): Closed yesterday at $100,372, up 3.37%.
Ethereum (ETH): Gained 5.99%, reaching $3,424 per coin.
Solana (SOL): Increased 8.99%, trading at $205.10.
Ripple (XRP): Surged 13.55%, trading at $3.04 per coin.
Outgoing SEC Chair Gary Gensler has filed an appeal in the SEC's case against Ripple Labs. The appeal challenges a 2024 court decision that ruled partially in favor of Ripple Labs, rejecting the SEC's claim that XRP, Ripple’s native cryptocurrency, qualifies as a security in its programmatic sales. Gensler has announced that he will be stepping down from his role as SEC Chair on January 20.
Yesterday's Earnings
JPMorgan ($JPM): JPMorgan reported earnings per share of $4.81, beating forecasts, with revenue at $43.74 billion, exceeding expectations. The market cap for JPMorgan stands at $710.79 billion.
Wells Fargo&Co ($WFC): Wells Fargo posted an earnings per share of $1.42, slightly above the forecast, while revenue came in at $20.38 billion, just below expectations. The market cap for Wells Fargo is at $253.14 billion.
Goldman Sachs ($GS): Goldman Sachs saw a significant earnings beat with earnings per share at $11.95, surpassing forecasts, and revenue of $13.87 billion, higher than expected. The market cap for Goldman Sachs is at $199.43 billion.
BlackRock ($BLK): BlackRock reported earnings per share of $11.93, exceeding forecasts, and revenue of $5.68 billion, also beating expectations. The market cap for BlackRock is at $157.10 billion.
Citigroup ($C): Citigroup posted earnings per share of $1.34, above forecasts, with revenue at $19.58 billion, slightly higher than expected. The market cap for Citigroup stands at $148.96 billion.
Upcoming Earnings Today
UnitedHealth ($UNH): Before market open; earnings estimate: $6.72/share, revenue: $102.25B.
Bank of America ($BAC): Before market open; revenue estimate: $25.14B (+14.5% YoY).
Morgan Stanley ($MS): Earnings estimate: $1.69/share, revenue: $15.03B.
Headlines
10-Year Treasury Yield Drops as Core Inflation Cools in December
The 10-year Treasury yield fell 13 basis points to 4.653% on Wednesday, retreating from its 14-month high earlier in the week, as December inflation data showed signs of easing. Core inflation, which excludes food and energy prices, grew 3.2% year-over-year, slightly below the expected 3.3%, and 0.2% month-over-month, undercutting forecasts by 0.1 percentage point. The broader consumer price index rose 0.4% for the month, aligning with the 2.9% annualized rate economists anticipated.
Stock Futures Edge Higher Following S&P 500's Strongest Day Since November
U.S. stock futures ticked upward Wednesday night after the S&P 500 posted its best day in months, driven by cooling inflation data and stellar bank earnings. Dow Jones futures rose 82 points (0.2%), while S&P 500 and Nasdaq 100 futures also gained nearly 0.2%. Earlier, the Dow surged over 700 points (1.65%), the S&P 500 climbed 1.83%, and the Nasdaq Composite advanced 2.45%. The Russell 2000 gained about 2%, buoyed by optimism in small-cap stocks.
The rally followed a softer-than-expected inflation report showing core consumer prices increased 3.2% year-over-year in December, providing relief amid fears of further Federal Reserve rate hikes. Tech stocks like Tesla (+8%) and Nvidia (+3%) led the charge.
Israel-Hamas Ceasefire Set to Begin Sunday Amid Humanitarian Urgency
A ceasefire agreement between Israel and Hamas, brokered by the United States, Qatar, and Egypt, is set to take effect on Sunday after 15 months of devastating conflict in Gaza. The deal includes the release of hostages, with two Americans to be freed in the initial phase. Israeli Prime Minister Benjamin Netanyahu thanked both outgoing President Joe Biden and President-elect Donald Trump for their assistance in advancing the agreement. However, Netanyahu cautioned that "final details" are still being resolved.
Suspected Marburg Virus Outbreak Kills Eight in Tanzania
A suspected outbreak of the deadly Marburg virus has killed eight people and infected nine in Tanzania’s Kagera region, the World Health Organization (WHO) reported. The viral hemorrhagic fever, which has a fatality rate of up to 88%, is transmitted through contact with infected bodily fluids or contaminated materials. Initial symptoms include fever, headache, vomiting blood, and external bleeding.
Polish PM Accuses Russia of Plotting Global 'Acts of Air Terror'
Polish Prime Minister Donald Tusk accused Russia on Wednesday of orchestrating global sabotage, including plans for "acts of air terror" targeting airlines. Speaking alongside Ukrainian President Volodymyr Zelenskyy in Warsaw, Tusk said he could confirm fears of Russian plots to target airlines globally. His remarks follow incidents last year in which incendiary devices ignited cargo planes and warehouses in Germany and the UK, raising suspicions about Russian intelligence involvement.
Tusk’s pro-EU government has long accused Russia of hybrid warfare, including stoking migration crises along the EU’s eastern borders and retaliating against Western support for Ukraine since Russia's 2022 invasion. While the Kremlin denies these allegations, Poland has responded by reducing Russian diplomatic presence, closing one of three Russian consulates last year.
Germany to Shoot Down Drones Near Military Sites
Germany's cabinet has approved a measure authorizing the military to shoot down drones near military sites or critical infrastructure if deemed necessary for public safety. Interior Minister Nancy Faeser highlighted the growing use of drones for espionage and sabotage, particularly since Russia's invasion of Ukraine. This decision comes amid concerns over a suspected "shadow war" by Russia, which allegedly includes attempts to attack infrastructure and interfere with democratic processes. Recent drone sightings over German military bases and critical facilities, such as the US air base at Ramstein, have heightened security concerns. The new rules, pending parliamentary approval, will allow soldiers to neutralize drones if they pose an imminent threat to lives or essential facilities.
Europe’s Chip Ambitions Falter as Key Projects Stall and Focus Shifts to China
Europe’s efforts to bolster its semiconductor industry are faltering, with delays and setbacks threatening its competitive edge. While Germany secured TSMC’s investment in the European Semiconductor Manufacturing Company, production will not commence until 2027. Projects in Dresden by Infineon Technologies and Bosch continue, but Intel’s wafer fab in Magdeburg has stalled for over two years. A notable blow is the shelving of a EUR5.7 billion wafer fab collaboration between STMicroelectronics and GlobalFoundries (GF) in France, announced in 2022 with high hopes but now in limbo amid unclear reasons and limited updates.
In the face of these challenges, European chipmakers are increasingly turning to China. GF has ramped up partnerships with Chinese manufacturers, focusing on leveraging existing production capacity rather than building new facilities. Similarly, STMicroelectronics has expanded collaborations with Chinese firms like Hua Hong Semiconductor and Sanan Optoelectronics. Analysts attribute Europe’s setbacks to limited downstream electronics demand, rising energy costs, and political uncertainties.
Netherlands Tightens Export Controls on Semiconductor Equipment, Aligns With U.S. Restrictions
The Netherlands has announced stricter export controls requiring ASML, the country’s leading semiconductor equipment maker, to apply for government-issued licenses for certain products. The new measures, effective April 1, 2025, reflect alignment with U.S. policies targeting China’s access to advanced chip-making technology. Bloomberg reports that the updated rules encompass specific measurement and inspection equipment produced by Dutch firms, including ASML.
This move builds on prior restrictions imposed in 2024, which barred ASML from exporting its DUV tools to China for producing advanced chip nodes. While Chinese President Xi Jinping downplayed reliance on ASML, the company remains the sole producer of cutting-edge lithography machines vital for advanced semiconductors. ASML's CEO noted that China lags 10-15 years behind in chipmaking. Despite U.S. and Dutch sanctions, China accounted for nearly half of ASML’s sales in Q3 2024. However, ASML expects sales to China to drop to 20% of total revenue this year due to the expanded restrictions, while remaining confident in its long-term growth. Meanwhile, China is accelerating efforts to develop its own chipmaking tools, including recruiting talent from global firms.
Biden Bolsters Russia Sanctions to Prevent Future Reversal
In a strategic move during his final days in office, President Joe Biden invoked a 2017 law to make it more difficult for future administrations to lift key sanctions on Russia. The new rules, based on the Countering America’s Adversaries Through Sanctions Act (CAATSA), grant Congress the authority to block any attempts to remove restrictions. They also mandate the implementation of secondary sanctions, aiming to maintain pressure on Russia and ensure consistent oversight of U.S. sanction policies.
On the same day, the U.S. Treasury announced additional sanctions targeting approximately 100 Russian companies in critical sectors like defense, energy, and finance, including the Tactical Missile Armament Corporation and the Moscow Exchange. The updated framework requires Congressional approval to remove any company from the Specially Designated Nationals (SDN) List, ensuring long-term enforcement. Analysts suggest these measures are designed to safeguard against potential policy reversals by Donald Trump or future presidents, preserving the focus on weakening Russia's military-industrial capabilities.
Russian Missile Strike Forces Power Outages Across Ukraine Amid Winter Cold
Russia launched a major missile and drone attack on Ukraine early Wednesday, targeting energy and gas infrastructure critical to the country’s military operations. The barrage, which included 43 missiles and 74 drones, compelled Ukrainian authorities to shut down power grids in six regions, leaving many residents without electricity in freezing winter conditions. The strikes follow Russia’s vow to respond to alleged attacks on its soil, including Ukrainian strikes on an oil refinery and military installations deep within Russian territory.
Ukraine’s energy infrastructure has been repeatedly targeted throughout the nearly three-year war, with significant damage to its power grid. By midday, some electricity was restored, though officials urged conservation. President Volodymyr Zelenskyy called for accelerated delivery of Western air defense systems to counter these assaults. The attacks are part of Russia’s broader strategy to weaken Ukrainian resilience by disrupting power supplies and defense manufacturing. Meanwhile, the two nations conducted another prisoner swap, exchanging 25 captives each in a deal brokered by the UAE.
Los Angeles Fires Rage Amid Strong Winds and Critical Threats
Los Angeles is grappling with one of its worst disasters as wildfires fueled by persistent winds and dry conditions continue to rage. The fires, which have burned an area nearly the size of Washington, D.C., have claimed 25 lives, destroyed over 12,000 structures, and displaced up to 200,000 residents. Officials have urged vigilance, with evacuation orders affecting tens of thousands as wind gusts of up to 112 km/h are expected through Friday. Over 8,500 firefighters, supported by aircraft and emergency teams from the U.S., Canada, and Mexico, are battling the flames. Despite their efforts, entire neighborhoods, such as Pacific Palisades, have been reduced to rubble, leaving only chimneys standing.
Wall Street Soars on Record Bank Profits and Cooling Inflation
U.S. stocks surged on Wednesday, fueled by easing inflation data and robust fourth-quarter earnings from major banks. The Dow Jones Industrial Average rose 703 points (1.65%) to close at 43,222, while the S&P 500 gained 1.83%, and the Nasdaq Composite advanced 2.45%. Core inflation slowed to 3.2% year-over-year in December, down from 3.3%, offering investors relief amid concerns over potential Federal Reserve rate hikes.
Record-breaking profits from JPMorgan Chase ($58.5 billion annual profit), Goldman Sachs ($4.11 billion Q4 profit), Citi ($2.9 billion Q4 profit), and Wells Fargo ($5.1 billion Q4 profit) signaled strength in the financial sector. BlackRock also reported a 21% increase in Q4 profit, with assets under management reaching a record $11.55 trillion. Lower Treasury yields complemented the rally, easing fears of inflation-driven outflows from stocks.
JPMorgan Posts Record Annual Profit Amid Market Rebound
JPMorgan Chase achieved its largest-ever annual profit in 2024, driven by a strong performance from its investment banking and trading divisions. The bank's net income rose 18% to $58.5 billion, boosted by a 49% increase in investment banking fees and a 21% surge in trading revenue in the fourth quarter. CEO Jamie Dimon attributed the results to a resilient U.S. economy, characterized by low unemployment and strong consumer spending. He also acknowledged challenges such as inflation and geopolitical risks. Despite a slight decline in net interest income in the fourth quarter, JPMorgan's overall financial outlook remains strong, with projected net interest income for 2025 exceeding analysts' expectations.
The bank's success reflects a broader revival in dealmaking and fundraising as the Federal Reserve cuts interest rates to support economic growth. JPMorgan's shares rose nearly 3% following the announcement, capping a 41% gain for 2024.
Goldman Sachs Profit Surges on Record Stock Trading Performance
Goldman Sachs Group Inc. reported a stellar fourth-quarter performance, with profits more than doubling to $4.1 billion. This surge was driven by the firm's equity traders, who achieved their best year on record, along with growth in its investment banking and money management divisions. A surprise $472 million gain from balance-sheet bets further boosted the results, highlighting Goldman's ability to capitalize on favorable market conditions.
SEC Sues Elon Musk, Alleging $150 Million Fraud in Twitter Stock Purchase
The Securities and Exchange Commission (SEC) filed a lawsuit against Elon Musk, accusing him of failing to disclose his 9% stake in Twitter within the required 10-day window in early 2022. The SEC claims Musk's delayed disclosure allowed him to buy Twitter shares at artificially low prices, underpaying by at least $150 million. During this period, Twitter's stock price rose 27% once Musk's stake was belatedly revealed, causing financial harm to investors who sold at undervalued prices.
Transportation Secretary Nominee Vows Independence in Tesla Investigations
Sean Duffy, Donald Trump’s nominee for Transportation Secretary, pledged during his Senate confirmation hearing to prioritize safety, streamline regulations, and avoid interfering in ongoing federal investigations into Tesla. Duffy, a former congressman, assured the Senate Commerce, Science, and Transportation Committee that the National Highway Traffic Safety Administration (NHTSA) would be allowed to conduct its Tesla probes without political influence, even amid pressure linked to Elon Musk’s close ties to the incoming administration.
Healthcare Leaders, NVIDIA CEO Highlight AI’s Transformative Role
At the J.P. Morgan Healthcare Conference, NVIDIA CEO Jensen Huang joined industry leaders to discuss how artificial intelligence (AI) is reshaping healthcare. With the sector facing a severe labor shortage projected to hit 10 million workers by 2030, AI is enabling advancements across drug discovery, clinical trials, genomic research, and patient care. Speakers included Patrick Collison of the Arc Institute, Christina Zorn from Mayo Clinic, Jacob Thaysen of Illumina, and Ari Bousbib of IQVIA, all of whom announced partnerships with NVIDIA to harness AI for biomedical innovation. Huang emphasized AI’s evolution toward agentic models capable of reasoning and problem-solving, supported by NVIDIA’s new Cosmos platform, which enhances robotics and generative AI capabilities.
These collaborations aim to streamline workflows and uncover biological insights. The Arc Institute, for instance, is leveraging NVIDIA’s technology to develop Evo, a model for understanding DNA, RNA, and proteins. Mayo Clinic is integrating AI with its pathology database to revolutionize cancer care, while also investing in robotics to address workforce shortages. Illumina and IQVIA are using AI to tackle the complexities of multimodal data and optimize clinical trial efficiency, ensuring privacy and regulatory compliance. NVIDIA also introduced new resources like NIM microservices and BioNeMo Blueprints to empower healthcare developers.
NVIDIA Announces First-Ever Quantum Day at GTC 2025 Despite CEO's 20-Year Timeline for Quantum Computing
NVIDIA has announced its inaugural Quantum Day, set to take place on March 20 during GTC 2025, just days after CEO Jensen Huang suggested practical quantum computing may be 15 to 30 years away. The event will feature discussions on quantum technology's transformative potential in industries such as drug discovery, materials science, and financial forecasting. Huang will lead sessions with key players, including Alice & Bob, Atom Computing, IONQ, and D-Wave.
Despite Huang’s cautious timeline for the technology’s practical applications, NVIDIA is ramping up its investment in quantum computing. The event will highlight advancements in quantum technology, explore its integration with classical systems, and showcase collaborations between NVIDIA and industry partners.
TikTok Prepares for U.S. Shutdown Amid Ban Threat
TikTok is set to cease operations in the U.S. on Sunday, potentially impacting its 170 million American users, unless the Supreme Court intervenes to delay or overturn the federal ban. The law, requiring ByteDance to divest TikTok’s U.S. assets, would block new downloads and restrict U.S. companies from supporting the app’s services. While users may still access the app initially, the ban would render updates and maintenance impossible, affecting TikTok globally due to its reliance on U.S. service providers. ByteDance has sought delays, arguing the ban violates First Amendment rights.
President-elect Donald Trump has considered issuing an executive order to delay enforcement, while the current administration has declined to intervene without a credible divestment plan. TikTok plans to notify users of the shutdown and provide a data download option. Despite the looming ban, TikTok has indicated it could quickly restore U.S. operations if the ban is lifted later.
Intel to Spin Off Intel Capital as Part of Restructuring Efforts
Intel announced plans to spin off its venture capital arm, Intel Capital, into an independent firm by the second half of 2025. This move will allow Intel Capital, which manages $5 billion in assets, to raise funds from external investors for the first time. Previously fully funded by Intel, the venture arm has been instrumental in corporate venture capital since its founding in 1991. The restructured entity may also adopt a new name as part of its transition.
Malaysia Explores Cryptocurrency Regulations After UAE, Binance Discussions
Malaysia is considering the establishment of a cryptocurrency policy following discussions between Prime Minister Datuk Seri Anwar Ibrahim, Abu Dhabi leaders, and Binance founder Changpeng Zhao. The initiative aims to modernize Malaysia’s financial system and position the country as a competitive player in the digital finance space. Speaking after a three-day official visit to Abu Dhabi, Anwar highlighted the need for Malaysia to embrace cryptocurrency-friendly regulations to avoid being left behind in the rapidly evolving global financial landscape.
While the policy framework remains in its early stages, Anwar emphasized the importance of collaboration with UAE policymakers to develop a robust regulatory approach. Comprehensive studies involving Malaysia’s Treasury, Securities Commission, and Bank Negara Malaysia will be necessary to address potential concerns and ensure readiness among stakeholders. This initiative comes amid heightened scrutiny from Malaysia's Securities Commission, which recently ordered Bybit to cease operations and flagged other platforms like Atomic Wallet and KuCoin for operating without registration.
