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Briefing.com Summary:
*There was a rotation out of the tech sector on Tuesday that has partially carried over to today.
*Adv. Micro Devices is down big after its earnings report, while Eli Lilly is up big after its earnings report.
*The January ADP Employment Change report showed only a modest change in private sector jobs.
The tech sector had a tough time of it on Tuesday, with buyers recoiling in the face of AI-related challenges putting traditional business models at risk. That perspective was acute in the software space, yet it filtered across the tech space and the growth stock factor.
The selling, however, was fairly concentrated, just as last year's buying interest had been. To that end, the mega-cap stocks, the semiconductor stocks, and tech stocks in general were targeted, and their losses became others' gains. The energy (+3.3%), materials (+2.0%), consumer staples (+1.7%), and utilities (+1.5%) sectors were standout performers.
This rotational aspect is carrying over today, with chip maker Adv. Micro Devices (AMD) getting caught in the crosshairs of high expectations. Shares of AMD are down nearly 10% in pre-market action, whereas shares of Eli Lilly (LLY) are up 8% after the drugmaker posted better-than-expected results and FY26 guidance.
Currently, the S&P 500 futures are up five points and are trading 0.1% above fair value, the Nasdaq 100 futures are down 90 points and are trading 0.3% below fair value, and the Dow Jones Industrial Average futures are up 92 points and are trading 0.2% above fair value.
This mixed action is an offshoot of the mixed reactions to earnings reports from a host of other companies that includes Uber (UBER), Cirrus Logic (CRUS), Super Micro Computer (SMCI), GE HealthCare (GEHC), Amgen (AMGN), Clorox (CLX), Chipotle Mexican Grill (CMG), and Boston Scientific (BSX).
There was also an economic release this morning that could be deemed mixed. The ADP Employment Change Report for January showed private sector employment increased by a modest 22,000 jobs (Briefing.com consensus: 43,000), driven by a 21,000 increase in service-providing jobs. Overall, medium-sized establishments accounted for 41,000 jobs, large establishments shed 18,000 jobs, and small establishments saw no change.
The ADP report is a private report, so it was not affected by the government shutdown, which is delaying the release of the January Employment Situation report that had been scheduled for Friday. The latest government shutdown, though, has ended, so government releases should start to flow again relatively soon.
Other data today also comes from private entities. The final January S&P Global U.S. Services PMI (prior 52.5) will be released at 9:45 a.m. ET and will be followed by the ISM Services PMI (Briefing.com consensus: 53.7%; prior 54.4%) at 10:00 a.m. ET.
Treasuries are stirring a bit this morning, but mostly in response to the quarterly refunding announcement. The Treasury will be offering $125 billion of Treasury securities to refund approximately $90.2 billion of privately held Treasury notes and bonds maturing on February 15, 2026. The 2-yr note yield is up one basis point to 3.58%, and the 10-yr note yield is up one basis point to 4.28%.
Elsewhere, gold and silver futures continue to trade higher, and cryptocurrencies continue to struggle. Bitcoin is around $75,000, up from yesterday's lows closer to $73,000, yet the specter of forced selling continues to loom over that market with possible knock-on effects for stocks that could be seen as a source of funds to meet margin calls.
