After a shaky open, U.S. equities staged a powerful intraday reversal, closing with fresh records for both the Dow Jones Industrial Average and the S&P 500, even as tech stocks lagged.
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Dow Jones: +1.34%
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$S&P 500(.SPX)$ : +0.21%
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Nasdaq: –0.25% $NVIDIA(NVDA)$
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Hot Stock: Royal Caribbean +7.4%
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Biggest Loser: Oracle –10.8%
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Best Sector: Materials +2.2%
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Weakest Sector: Communication Services –1.0%
The late-session surge reflected resilient investor sentiment, continued rotation into cyclicals, and a stabilizing policy backdrop from the Federal Reserve.
Market Drivers: Tech Weakness vs. Broader Strength
Tech Under Pressure $Technology Select Sector SPDR Fund(XLK)$
Stocks
The Nasdaq spent the entire session under water as $Oracle(ORCL)$ became the market’s biggest drag:
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Oracle missed the mark with record-high capex of $12B (vs. $8.4B expected), raising concerns about AI infrastructure spending running ahead of revenue growth.
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The stock collapsed –10.8%, the worst performer of the day.
The report rekindled debate over whether the AI trade is entering a more selective, mature phase — rewarding profitable growth while punishing heavy spenders.
Cyclicals Rally
Despite tech softness, broader equities pushed higher:
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Materials led all sectors (+2.2%), benefiting from expectations of improving 2026 growth.
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$Royal Caribbean Cruises(RCL)$ jumped +7.4%, the day’s top performer, as consumer discretionary sentiment remained firm.
This divergence highlights an ongoing rotation away from megacap tech into value, travel, industrials, and commodities. $Vale SA(VALE)$
After-Hours Action: Lululemon Pops on Results & Leadership Change
Lululemon delivered:
Lululemon
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Stronger-than-expected Q3 earnings
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Announcement that CEO Calvin McDonald will depart on Jan. 31, 2026
Shares surged +10% in after-hours, signalling investor confidence in both the results and succession planning.
Fed Surprise: Regional Presidents Reappointed Early
In an unexpected afternoon announcement, the Federal Reserve unanimously reappointed all 12 regional Fed presidents to new five-year terms effective March 1, 2026.
Typically published in February, the early decision appears designed to:
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Preempt potential intervention from the Trump administration
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Provide stability ahead of:
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A pending Supreme Court case involving Governor Lisa Cook
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The arrival of a new Fed Chair in May (Kevin Hassett currently seen as frontrunner)
The reappointment removes a source of political uncertainty at a moment when markets are hyper-sensitive to central bank independence.
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2025 GDP: 1.8%
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2026 GDP: 1.9% (still slightly below the 2% ideal pace)
Growth is expected to feel stronger:
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Lower policy uncertainty
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Consumer “wealth effect”
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Ongoing AI investment
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$50–55B in higher tax refunds (UBS estimate)
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Deregulation and targeted tax incentives
However, early-year momentum may be constrained by:
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Weak residential investment
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A sluggish labor market in H1
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Persistent inflation above target
A new Fed Chair in May may bring skepticism and volatility before a steadier policy path emerges.
Coming Up
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Speeches from Philadelphia Fed President Anna Paulson, Cleveland Fed President Beth Hammack, Chicago Fed President Austan Goolsbee.
Expect markets to parse every word on growth, inflation, and policy direction…
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This summary is for informational purposes only and does not constitute financial advice. Investors should conduct their own research before making investment decisions.
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