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Briefing.com Summary:
*President Trump nominates Kevin Warsh to be Fed Chair.
*Apple impressed with its earnings results, but the stock is trading lower reportedly on margin concerns and AI ties to Gemini
*The December PPI report was hotter than expected, raising concerns about cost pass-through to consumers.
It is a very busy morning on the news front, which would have been the case based alone on all the notable earnings reports released since yesterday's close. The news ante got dialed up a notch, however, after President Trump made it known that he will be nominating former Fed Governor Kevin Warsh to be the next Fed Chair.
The equity futures market was not doing well prior to the Warsh nomination news. It might appear now that it is still not doing well, but in fact it has improved since the announcement.
The S&P 500 futures, which had been down as many as 73 points, are now down 33 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 173 points and are trading 0.7% below fair value, and the Dow Jones Industrial Average futures are down 256 points and are trading 0.6% below fair value.
Most of the drag has been a byproduct of weakness in the mega-cap space, including Apple (AAPL), which had a blockbuster quarter that featured 38% revenue growth in China and much stronger-than-expected iPhone sales. Still, AAPL is flat in pre-market trading. The analyst at Needham has suggested the lackluster action stems from concerns about Apple "subcontracting its AI futures to GOOGL/Gemini," and margin compression in FY26 due to rising memory and NAND costs.
On a related note, Sandisk (SNDK) is soaring in pre-market trading, up 22% after it posted blowout results and issued fiscal Q3 guidance well above current consensus estimates.
American Express (AXP), Chevron (CVX), Colgate-Palmolive (CL), Exxon (XOM), KLA-Tencor (KLAC), Visa (V), Verizon (VZ), and Western Digital (WDC) are among the other luminaries that reported results and have been met with mixed responses.
The December Producer Price Index, meanwhile, was met with an initially negative response, as it checked in hotter than expected. The Producer Price Index for final demand increased 0.5% month-over-month (Briefing.com consensus: 0.2%), with the index for final demand services up 0.7%. The index for final demand, excluding food and energy, jumped 0.6% month-over-month (Briefing.com consensus: 0.3%).
On a year-over-year basis, the index for final demand was up 3.0%, unchanged from November, while the index for final demand, excluding food and energy, was up 3.2% versus 3.0% in November.
The key takeaway from the report is the lingering 3-handle on the year-over-year changes, which will keep alive concerns about pass-through (to the consumer) and possible margin compression (for wholesalers and retailers) if they don't pass-through their higher costs.
Interestingly, the Treasury market didn't react much to this report, likely because it is wrestling more with the implications of Kevin Warsh being the next Fed Chair if/when he gets confirmed. Senator Tillis (R-NC) has reiterated his stance that he will oppose any nominee until the DOJ investigation into the Fed is concluded.
In other news, President Trump has threatened a 50% tariff on aircraft imports from Canada if it does not expedite the certification of Gulfstream jets; he has warned the UK about strengthening its trade ties with China; and he has signed an executive order that established a process for imposing tariffs on goods from countries that sell or provide oil to Cuba.
Then, there is the matter of a possible military strike against Iran brewing.
It isn't a boring news cycle. That's for sure. However, it is a news cycle that is fomenting increased uncertainty and more defensive-minded trading action.
