Overview
By midday, the tape is leaning lower where it once leaned harder on megacap tech. The broad market’s tone is guarded, not panicked. The S&P 500 proxy SPY is below its prior close, while the Nasdaq-tracking QQQ is under more pressure. The Dow via DIA and small caps via IWM are essentially treading water. Underneath, leadership has clearly rotated. Cyclicals and defensives are carrying the day, not the usual AI generals.
The day’s other signature move is metals. Gold and silver, after last week’s record-setting shakeout, are charging higher. GLD and SLV are both sharply up, an emphatic countertrend after the rout. Energy is bid, with crude and a broader commodity basket grinding higher. Crypto, by contrast, is soft, and that divergence is not lost on traders who watch risk thermometers.
Macro backdrop
Rates are steady to mixed, with a slight heaviness on the long end compared with the previous readings. The latest available Treasury curve has the 2-year near 3.52%, the 5-year around 3.79%, the 10-year about 4.26%, and the 30-year close to 4.87%. That shape keeps the emphasis on duration risk rather than new macro information. In ETFs, that translates to a mostly flat session for long and intermediate Treasuries. TLT, IEF, and SHY are all hovering near unchanged, with a mild downward bias consistent with a slightly higher long bond yield.
Inflation expectations are not flashing. Market-implied breakevens sit around 2.39% at five years and 2.31% at 10 years, with model-based one-year expectations near 2.6%. That is a picture of disinflation without relief from vigilance. The latest headline and core CPI levels, both from December, sit elevated in index terms, keeping the policy conversation sensitive to any growth or commodity surprises.
Washington noise is interfering with the clean read. Efforts in the House to end the partial shutdown are ongoing, and prediction markets lean toward a resolution. Even so, the delay of the January jobs report is a practical consequence. Markets can handle ambiguity for a day or two. Weeks become a problem. Until the shutdown clears, traders are triangulating with what they have, which today includes a heavy rotation and some sharp commodity rebounds.
One more potential macro torsion point sits in the bond market’s near-term calendar. Dealers and macro desks are focused on supply. Any signal this week that future note and bond auction sizes will increase materially would be a stress test for duration. The fact that cash yields are largely steady while commodity proxies climb is a reminder that the next surprise might come from the issuance side rather than macro data, at least in the very near term.
Equities
The equity indices tell the story, but the sector pattern writes it. SPY is below yesterday’s mark and QQQ is heavier still, as the megacap cohort backs away. DIA and IWM are a shade softer, but they are outperforming the growth-heavy complex. That split matters. It reflects an active rotation rather than a blanket de-risking.
At the single-name level, the AI complex remains the fulcrum for sentiment. MSFT is trading below its previous close. NVDA is also lower after another round of scrutiny on its capital and customer dynamics, including reports that its planned OpenAI investment may be smaller than previously floated, while hyperscalers push custom silicon. GOOGL, META, and AMZN are all in the red at midday, in line with the broader tech drift.
There are exceptions. TSLA is modestly higher despite fresh headwinds from uneven registrations in some European markets and the ongoing strategy pivot toward robotics and autonomy. In the old-economy camp, CAT is firmer, pointing to continued interest in infrastructure and industrial throughput plays tied to data center buildouts and power expansion. Housing-adjacent consumer names like HD are also green, reinforcing the idea that cyclicals are getting the benefit of the doubt on a day when software and semis are not.
Financials are mixed. JPM and BAC are up intraday, even as the sector ETF lags, reflecting stock-specific positioning and relative value interest in balance sheet winners. GS is down, a small tell that the flows into secular AI beneficiaries within financials are not enough to lift every boat at once. Health care is a two-way street: MRK is higher, JNJ is up, but PFE is lower on a mixed update for its weight-loss program and a cautious outlook that highlights policy and pricing pressure.
The media-entertainment pocket remains a pressure point. DIS is lower after earnings that showed stronger parks revenue but squeezed margins in entertainment and sports. NFLX is down as the market continues to handicap its deal-making ambitions and the implications for cash commitments. CMCSA is bucking the trend with a steady gain, another small vote for cash-flow consistency.
Sectors
Leadership has a distinct flavor. Industrials, staples, utilities, and energy are higher in midday trading. XLI is up, tracking the bid in names leveraged to infrastructure and physical buildouts. XLP and XLU are also higher, a classic defensive overlay when growth proxies are under inspection. XLE is green, consistent with crude and the commodity complex’s firmer tone.
Lagging are technology and consumer discretionary. XLK is firmly lower, and XLY is also in the red. That pairing tells a story about the market’s willingness, today, to pay for cash yield and hard-asset exposure while questioning the pace and efficiency of AI spending. The day’s software bright spot, Palantir’s guidance and growth update, is more a company-specific headline than a sector bailout in this session.
Financials via XLF are slightly lower even with some banks firmer. That disconnect stands out. It signals that rotation is selective, not wholesale. Traders are differentiating by balance sheet quality and fee exposure rather than chasing the whole sector. As for health care, XLV is marginally softer, reflecting the divergence between big pharma winners and those navigating pipeline and pricing questions.
Energy deserves a closer look. The merger drumbeat continues, with another oil-and-gas combination that did not thrill shareholders, but the group is still higher today. Part of that is a function of positioning after a choppy January for commodities. Part is the slow realization that power and generation capacity are the bottlenecks in the AI buildout, and pipelines to profit may run through turbines and transformers before they return to GPUs.
Bonds
Fixed income is quiet, but not asleep. The ETF read is nearly flat, with TLT, IEF, and SHY a touch below yesterday’s marks. That aligns with the slightly higher long-bond yields in the latest curve snapshots. The conversation in rates is less about inflation shock and more about supply, duration appetite, and how a still-firm economy absorbs issuance.
The near-term risk is supply indigestion. Traders have been explicit about what they do not want to see: a meaningful increase in future auction sizes for longer-dated notes and bonds. If that arrives, duration will have to cheapen to clear. Today’s mild softness in price feels like a market that is preserving optionality rather than taking a firm view on the growth path while the shutdown fog lingers.
Commodities
Metals are the day’s headline act. GLD is up sharply versus yesterday, and SLV is also stronger. This rebound comes after a two-day, record-setting wipeout that shocked even veteran commodity desks. The bounce is notable not because it erases the damage. It does not. It matters because it shows buyers will step in when positioning gets stretched and when macro hedges are on sale. Whether that stabilizes into a base is unknowable at midday, but the attempt is clear.
Crude oil is firmer, with USO up on the session, and the diversified commodity tracker DBC is higher as well. Natural gas via UNG is up, consistent with a broader bid for hard assets. Some of this is catch-up after an aggressive metals washout. Some is rotation, as equity investors tilt toward energy producers and power-adjacent plays while reevaluating software multiples.
The oil narrative is complicated by geopolitics and policy signals, but the day-to-day price action is resolutely about balance sheets and cash flows. With energy equities higher and crude positive, the market is granting the sector the benefit of the doubt today. That could change quickly, but the current stands in that direction.
FX & crypto
The euro is a fraction stronger against the dollar in midday trade. The EURUSD mark is above its open, a small risk-on signal for European assets but not a decisive macro tell. The more prominent message sits in digital assets. BTCUSD is lower versus its open, and ETHUSD is down too. The recent slump in crypto, paired with a sizable quarterly loss at a high-profile crypto-finance firm, speaks to ongoing deleveraging and a more cautious stance among speculative accounts.
The divergence between precious metals and crypto is striking. Gold and silver are bouncing, while bitcoin and ether slip. That split is a reminder that not every risk hedge is fungible, and correlation regimes can change abruptly when funding, regulation, and positioning collide.
Notable headlines
- House momentum to end the partial shutdown builds, though timelines remain fluid. The shutdown has already delayed the January jobs report, reducing near-term macro visibility.
- Bond desks are focused on Wednesday’s financing signals. Market chatter is fixated on avoiding larger auction sizes that could pressure longer maturities.
- Gold and silver are staging a rebound after last week’s historic plunge. The move has rekindled debate on whether metals overshot to the downside amid forced selling.
- Tech’s AI core is wobbling. Reports that NVDA may dial back the size of its OpenAI investment and that a major enterprise software peer is tapping markets for sizable funding have kept investors attentive to capital intensity and returns.
- Another energy tie-up met with skepticism from shareholders, but energy equities are higher midday as crude and the broader commodity basket firm.
- DIS traded lower following results that featured strong parks revenue but weaker entertainment and sports margins. PFE fell after weight-loss data that underwhelmed versus high expectations and a cautious profit outlook.
- Crypto remains under pressure. A high-profile quarterly loss at a crypto financial firm underscored the pain from the latest drawdown.
Risks
- Supply risk in Treasuries if future auction sizes rise, pressuring longer-duration yields and equity multiples.
- Policy uncertainty from the partial government shutdown and delayed macro data, complicating rate and growth assessments.
- AI capex intensity and funding mix, with large issuers raising capital and hyperscalers developing custom chips that could challenge incumbent margins.
- Commodity volatility, especially after the extreme metals unwind and sharp rebound seen today.
- Sector-specific margin pressures, notably in media and biopharma, where costs and policy intersect.
What to watch next
- Whether the House can finalize a shutdown-ending agreement and restore the economic data calendar.
- Any Treasury communication on refunding that alters expected auction sizes and the duration mix.
- The durability of today’s rotation into industrials, energy, staples, and utilities into the close.
- Follow-through in precious metals after today’s bounce, and whether crypto stabilizes or extends losses.
- Price action in AI bellwethers, as investors parse capital plans and the returns on new spending.
- Margin commentary across media and healthcare as cost lines meet growth ambitions.
Equities, by the numbers
Index ETFs at midday paint a muted, rotational picture. SPY trades below yesterday’s close, QQQ is faring worse, while DIA and IWM are only slightly softer. The message is that investors are trimming exposure to extended growth winners rather than aggressively marking down the broader economy.
Among megacaps, AAPL is off its prior close, joining MSFT, NVDA, GOOGL, META, and AMZN in the red. TSLA edges higher. In the media complex, DIS and NFLX are lower, while CMCSA is up. Financials are split, with JPM and BAC up and GS lower. Healthcare is mixed, with MRK and JNJ higher, PFE and LLY lower, and UNH down modestly.
In defense and aerospace, RTX and NOC are higher, LMT is a bit softer. Energy leaders XOM and CVX are both positive alongside the sector ETF.
Context, not prediction
One day’s rotation does not a regime change make. But the ingredients are familiar: a heavy tech tape questioned for its capex burn and concentration risk, bond markets focused on supply over data, commodities staging a recovery bid, and Washington headlines complicating the macro calendar. That cocktail usually produces days like this, when traders pay for certainty in cash flow sectors and let the multiple-driven winners cool.
There is also a psychological layer. After a violent move in metals and a sharp swing in tech leadership last week, investors are still testing the edges of positioning. That tends to depress liquidity in the leaders and lift it in the laggards, exaggerating the intraday moves. If shutdown headlines turn constructive and bond supply lands softly, the rotation could simply moderate. If not, the market will keep watching where the cash is being generated rather than where the stories are the loudest.
For now, the market is speaking plainly: favor what earns today, question what spends for tomorrow, and wait for Washington to turn the macro lights back on.