Stock Market Update

Equity futures point to a modestly lower open this morning as the market looks to rebound from yesterday's sharp retreat. 

The major averages posted broad losses in the first session back from the holiday weekend, with the S&P 500 and Nasdaq Composite moving below their respective 50-day moving averages and into negative territory for the year. 

The risk-off move came as investors reacted to tariff threats between the U.S. and EU as President Trump doubled down on his stance that Greenland should be acquired by the U.S. for security interests. The market now waits in anticipation for President Trump to give an address at the World Economic Forum in Davos today for further clarity on trade policy and geopolitical priorities, with any new commentary carrying the potential to influence near-term risk sentiment.

In the meantime, investors have a sizable batch of earnings reports to assess, though they have largely taken a back seat in terms of market focus amid the geopolitical uncertainty. 

The market will receive a light batch of data this morning, including December Housing Starts and Building Permits, ahead of tomorrow's Personal Income and Spending reports for October and November. The MBA Mortgage Applications Index for the week ended January 17 increased 14.1%, from a prior increase of 28.5%.

In corporate news:

• Netflix (NFLX 80.92, -6.34, -7.3%) beat EPS expectations by $0.01 and reported revenues in-line. The company guided Q1 EPS below consensus with revenues below consensus and guided FY26 revenues in-line. 
• Travelers (TRV 267.99, -1.62, -0.6%) beat EPS expectations by $2.37 and beat revenue expectations. The company's Board of Directors authorized an additional $5 billion in share repurchases.
• United Airlines (UAL 112.21, +3.64, +3.4%) beat EPS expectations by $0.17 and reported revenues in-line. The company guided Q1 and FY26 EPS in-line. 

Reviewing overnight developments:

Equity indices in the Asia-Pacific region were mixed on Wednesday with Japan's Nikkei (-0.4%) deepening its retreat from a record high while South Korea's Kospi (+0.5%) remained in record territory. Japan's Nikkei: -0.4%, Hong Kong's Hang Seng: +0.4%, China's Shanghai Composite: +0.1%, India's Sensex: -0.3%, South Korea's Kospi: +0.5%, Australia's ASX All Ordinaries: -0.3%.

In news:

• Japanese debt rebounded from the Tuesday plunge in longer tenors, though short end lagged, leaving the 2-yr bond with a slim loss.
• Japan's Finance Minister Katayama expressed confidence that the bond market will improve and that fiscal sustainability will be maintained.
• South Korea's exports were up 14.9% yr/yr through the first 20 days of January with chip exports jumping 70.2%.
• China Securities Journal speculated that the People's Bank of China will delay its next easing move.

In economic data:

• Australia's December MI Leading Index 0.1% m/m (last 0.0%)
• New Zealand's December RBNZ Offshore Holdings 57.5% (last 58.0%)

Major European indices trade in the red. STOXX Europe 600: -0.7%, Germany's DAX: -1.1%, U.K.'s FTSE 100: -0.2%, France's CAC 40: -0.4%, Italy's FTSE MIB: -1.1%, Spain's IBEX 35: -0.8%.

In news:

• The U.K.'s inflation accelerated more than expected in December, though the market still believes that the Bank of England could cut its bank rate as early as March.
• European Central Bank President Lagarde said that central bank will not always backstop fiscal spending if additional debt does not sustain growth.
• The German government is reportedly lowering its domestic 2026 growth forecast to 1.0% from 1.3%.

In economic data:

• U.K.'s December CPI 0.4% m/m, as expected (last -0.2%); 3.4% yr/yr (expected 3.3%; last 3.2%). Core CPI 0.3% m/m, as expected (last -0.2%); 3.2% yr/yr (expected 3.3%; last 3.2%). Input PPI -0.2% m/m (expected -0.1%; last 0.5%) and Output PPI 0.0% m/m (expected 0.1%; last 0.1%). December House Price Index 2.5% yr/yr (expected 1.8%; last 1.7%) and January CBI Industrial Trends Orders -30 (expected -33; last -32)