Stock Market Update

Equity futures point to a lower open this morning after the major averages incurred modest losses last week, while small caps outperformed.

Mega-cap stocks, which lagged in the previous week's action, are under pressure again this morning, with all of the "magnificent seven" names down over 1% in the premarket. 

Geopolitical developments are at the forefront of headlines today after President Trump said over the weekend via Truth Social that several NATO members will face a 10% tariff that is to increase until the "complete and total purchase of Greenland."  Bloomberg reports that the EU is considering retaliatory tariffs of EUR 93 billion on U.S. goods in response. 

Elsewhere, the market is currently receiving a mixed bag of earnings reports this morning that includes several regional banking names. 

There is no economic data of note this morning, though this week will see the release of the PCE Price Index for October and November, which is notably the Fed's preferred inflationary gauge. The market will not hear from any Fed officials this week, as it is now the blackout period ahead of the January FOMC meeting. 

In corporate news:

• The White House considers an executive order to cap credit card interest rates, according to Bloomberg. 
• 3M (MMM 160.00, -7.80, -4.7%) beat EPS expectations by $0.03, beat revenue expectations, and guided FY26 EPS in-line. 
• Netflix (NFLX 89.08, +1.09, +1.2%) and Warner Bros. Discovery (WBD 28.50, -0.07, -0.3%) amend the agreement to an all-cash transaction, accelerating the path to a WBD shareholder vote. 
• U.S. Bancorp (USB 54.70, +0.30, +0.6%) beat EPS expectations by $0.07 and reported revenues in-line. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note. Japan's Nikkei: -1.1%, Hong Kong's Hang Seng: -0.3%, China's Shanghai Composite: UNCH, India's Sensex: -1.3%, South Korea's Kospi: -0.4%, Australia's ASX All Ordinaries: -0.6%.

In news:

• Sovereign debt was also pressured with JGBs sliding sharply and the 20-yr yield jumping nearly 16 basis points to 3.316% after a weak auction.
• There was also speculation about increased fiscal spending after Prime Minister Takaichi confirmed that a snap election will be held on February 8.
• China's National Development and Reform Commission will take steps to boost demand for the next four years.
• The People's Bank of China left its one-year and five-year prime rates at their respective 3.00% and 3.50%.

In economic data:

• South Korea's December PPI 0.4% m/m (last 0.3%); 1.9% yr/yr (last 1.9%)
• Hong Kong's December Unemployment Rate 3.8% (last 3.8%)
• India's December Infrastructure Output 3.7% yr/yr (last 1.8%)
• New Zealand's December Performance of Services Index 51.5 (last 46.9)

Major European indices trade in the red amid pressure on sentiment stemming from President Trump's continued insistence that Greenland has vital importance to U.S. national security and an overnight slide in Japanese debt that drove JGB yields on longer tenors to fresh record highs. STOXX Europe 600: -1.1%, Germany's DAX: -1.3%, U.K.'s FTSE 100: -0.9%, France's CAC 40: -0.9%, Italy's FTSE MIB: -1.3%, Spain's IBEX 35: -1.4%.

In news:

• French Prime Minister Lecornu said that a surtax on profits of large companies will be maintained in the budget for 2026 to appease socialists.
• European Central Bank policymaker Vujcic was nominated to replace Luis de Guindos as ECB Vice President.

In economic data:

• Eurozone's November Current Account surplus EUR8.6 bln (expected surplus of EUR20.3 bln; last surplus of EUR26.7 bln) and November Construction Output -1.06% m/m (last 1.66%). January ZEW Economic Sentiment 40.8 (expected 36.7; last 33.7)
• Germany's December PPI -0.2% m/m, as expected (last 0.0%). January ZEW Economic Sentiment 59.6 (expected 50.0; last 45.8) and ZEW Current Conditions -72.7 (expected -75.5; last -81.0)
• U.K.'s November three-month employment change 82,000 (expected 27,000; last -16,000). November Average Earnings Index + Bonus 4.7% yr/yr (expected 4.6%; last 4.8%), November Unemployment Rate 5.1%, as expected (last 5.1%) and December Claimant Count change 17,900 (expected 15,600; last -3,300)
• Spain's November trade deficit EUR5.68 bln (last deficit of EUR4.69 bln)
• Swiss December PPI -0.2% m/m, as expected (last -0.5%); -1.8% yr/yr (last -1.6%)