Nasdaq down ~3.2%, S&P 500 falls ~1.8%, Dow ~flat
Tech weakest S&P 500 sector; Staples lead gainers
Euro STOXX 600 index ~unchanged
Dollar down; gold off >1%; crude off >2%; bitcoin down ~5%
U.S. 10-Year Treasury hits 1-month low of 4.498%, now ~4.54%
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AI-TRADE'S NOSE IS BLOODIED, BUT MIGHT OTHER FIGHTERS TAKE ITS PLACE?
The S&P 500 posted a more than 24% advance in 2023 followed by a more than 23% rise in 2024. These gains were bolstered by mega cap technology outperformance, underpinned by a relentless AI-buildout.
However, in a note out last Friday, Philip Palumbo, founder, CEO and chief investment officer at Palumbo Wealth Management, said he is looking for more modest stock market returns in 2025. With this, he expects the extraordinary focus on technology to ease. In other words, he believes there should be a broader range of opportunities this year than in the past two years.
"Part of that story is valuation. The mega cap tech stocks are highly valued and that can serve as a limiter. The rest of the market is not nearly as overvalued and as long as the economy holds together, ‘everybody else’ has the opportunity to have a good year," writes Palumbo.
Although the mega cap stocks spiked on the Trump election win, he notes that the market quickly settled into an environment of more evenly distributed performance.
Palumbo highlighted that the S&P 500 equal-weighted index .SPXEW is slightly outperforming the cap-weighted S&P 500 .SPX, as well as the Magnificent Seven MAGS.O group of stocks, so far this year.
"A few weeks is not a long time, but we are starting the year on a more even footing and we view that as a good thing. It would be healthy to see a photo-finish at the end of 2025."
Meanwhile, on Monday, as a result of turmoil caused by the Chinese DeepSeek artificial intelligence model, which is sparking a selloff in AI-related shares, the S&P 500 index is down about 1.9%, while the MAGS is sliding more than 3%. However, the SPXEW is only off about 0.4%.
As a result, SPXEW outperformance is widening. The SPXEW is now up around 3.5% YTD vs around a 1.8% rise for the SPX and a 0.2% gain for the MAGS:
(Terence Gabriel)
*****
FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
THAT NEW HOME SMELL: SALES OF NEW SINGLE-FAMILY HOMES BEAT EXPECTATIONS - CLICK HERE
DEEPSEEK SINKS STOCKS IN EARLY TRADE: CLICK HERE
DEEPSEEK THREAT DEEP-SIXING U.S. STOCK FUTURES - CLICK HERE
TOO MUCH UNCERTAINTY TO BE POSITIVE ON TREASURIES - CLICK HERE
WHAT COULD TAKE MARKETS DOWN? - CLICK HERE
DEEPSEEK CONCERNS SET STOXX TECH FOR WORST DAY SINCE OCT - CLICK HERE
BEFORE THE BELL: IT'S RISK OFF IN EUROPE - CLICK HERE
CHINA'S AI CHALLENGER PUTS INVESTORS ON EDGE - CLICK HERE
SPXEWSPXMAGS01272025B https://tmsnrt.rs/4hA6m4t
(Reporting by Chuck Mikolajczak)
((charles.mikolajczak@tr.com; @ChuckMik;))
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