Where the Money's Moving

The market's favorite sport right now is rearranging risk and calling it insight. Capital is shuffling between trades with the confidence of a crowd that refuses to miss out but cannot agree on what matters. With a holiday looming, hesitation looks expensive and patience feels unfashionable.

Markets are beginning 2026 in a state of indecision. Strategies are being tested, convictions are provisional and the first options-expiry Friday of the year has arrived before anyone seems quite ready. With U.S. markets set to close on Monday for Martin Luther King Jr. Day, investors are trying to settle their positions early.

The urge to "rotate" is everywhere. Investors say they want alternatives to the giants of artificial intelligence, yet they keep circling back to semiconductors. The reason is structural. TSMC announced renewed spending plans, which sent a jolt through the supply chain. The biggest beneficiaries were not the household-name chip designers but the firms that sell the machinery and tools. Europe's ASML and American peers such as KLA and Applied Materials jumped. These companies profit from expansion itself, regardless of which chip ultimately powers the next wave of computing.

The broader tech complex, however, looks oddly restrained. The Nasdaq 100 eked out a 0.3% gain and ended Thursday's session at its intraday low. It is up just 1.2% for the year, badly lagging the iShares Semiconductor ETF, which has climbed nearly 12%. Investor faith in AI-driven chip demand remains strong, even as money trickles out of heavyweight technology stocks and into less fashionable corners such as small caps, materials and industrials.

America's small companies have quietly stolen the spotlight. The Russell 2000 is already up 7.8% this year, a performance that reflects both bargain-hunting and a belief that domestic, less-leveraged firms may cope better with slowing growth. It is also a reminder that rallies broaden before they break.

The mood is cautious rather than complacent. U.S. equities are heading for modest weekly losses, despite record closes earlier in the week and the S&P 500 hovering within 60 points of the 7,000 mark - a level many see as technical resistance. Banks have weighed on the index, battered by fears that a proposed cap on credit-card interest rates could crimp profits. The financial sector is on track for its worst week since October.

Earnings season is only just getting started, but early signals are mixed. Transport firms such as J.B. Hunt have disappointed. Banks like PNC have surprised on the upside. Bigger tests lie ahead next week, with results due from Netflix, Johnson & Johnson and Intel. Investors say they want “genuine earnings growth”. They are about to find out how much of it still exists.

Asia offers fewer surprises. Australia has logged a fifth straight gain, South Korea an eleventh. India and Taiwan are higher, Japan softer, and China and Hong Kong slightly in the red. Europe's futures point to caution as options expire and investors square positions ahead of a holiday-shortened week in the United States.

Today's economic highlights:

On today's agenda: housing starts in Canada; in the United States, monthly industrial production, the NAHB housing market index, and the Fed Bowman speech. See the full calendar here.

• Dollar index: 99,250
• Gold: $4,605
• Crude Oil (BRENT): $63.6 (WTI) $59.71
• United States 10 years: 4.17%
• BITCOIN: $95,280

In corporate news:

• Target, UnitedHealth, General Mills, Best Buy, Hormel, Land O'Lakes, Cargill, and 3M have remained silent amid ICE raids in Minneapolis, contrasting their vocal stances during the George Floyd protests, as small Latino-owned businesses struggle with the impact.
• Paramount CEO David Ellison met with the UK's culture minister in London as he pushes a $30/share cash bid to acquire Warner Bros Discovery, challenging Netflix's competing offer.
• Regions Financial forecasts FY2026 net interest income to rise 2.5–4%, though it expects a slight decline in Q1.
• Major drugmakers including Eli Lilly, Merck, GSK, Johnson & Johnson, and Regeneron are participating in the FDA's fast-track voucher program, but some rivals fear legal risks due to potentially rushed approvals.
• Some investors in Home Depot are pressuring the company to disclose how surveillance data from Flock Safety is shared with law enforcement amid reports it's been used in ICE operations.
• United Airlines and American Airlines are fiercely competing for dominance at Chicago's O'Hare Airport, with United leveraging greater gate access and a head start post-pandemic.
• Chevron, along with partners NewMed Energy and Ratio Energies, has approved a $2.36 billion expansion of Israel's Leviathan gas field to increase exports to Egypt and Jordan.
• BBC is preparing to launch original programming on YouTube for the first time, targeting younger audiences and potential advertising revenue outside the UK.
• Verizon has received final California approval for its $9.6 billion acquisition of Frontier Communications, overcoming regulatory hurdles.
• Italy's antitrust watchdog is investigating Microsoft's Activision Blizzard over aggressive in-game monetization tactics in "Call of Duty Mobile" and "Diablo Immortal" that may exploit minors.
• Boeing has reached a tentative labor agreement with white-collar workers at Spirit AeroSystems, including wage increases and improved benefits following its recent $4.7 billion acquisition.
• Amazon's Kuiper, along with BeetleSat and Satelio, received satellite permits from Nigeria to expand broadband coverage, joining SpaceX in Africa's largest telecoms market.
• TBS Holdings will invest $150 million in Legendary Entertainment, aiming to globally promote Japanese content through adaptations of manga, games, and anime.
• Anthropic has appointed ex-Microsoft executive Irina Ghose as its India managing director as it opens its first office in Bengaluru amid rising AI demand.
• Joby Aviation's electric air taxis will begin commercial operations in Dubai by year-end under an exclusive six-year contract with the city.
• Viettel has started building Vietnam's first chip plant, aiming to establish full domestic semiconductor manufacturing capabilities by 2027.
• Blackstone is investing approximately $4.65 billion (€4 billion) in a data center in Germany.
• MPS successfully raised €750 million through a qualified covered bond issuance, attracting over €2.4 billion in orders.
• Grasim Industries has appointed Sachin Sahay as the CEO of Birla Opus Paints.
• Equinor resumes construction on the Empire Wind project in New York after a federal judge overturned a Trump-era decision.
• Worthington Steel has announced its acquisition of metal processing firm Klöckner & Co SE in a $2.4 billion deal.
• TSMC expansion in U.S. semiconductor manufacturing and strong earnings have driven tech sector rallies.
• Ford has entered into a deal and collaboration with BYD for hybrid vehicle battery supply.
• OpenAI is expanding its AI initiatives by launching a request for U.S. manufacturing proposals and investing in Merge Labs.
• Exxon Mobil has secured a seismic survey contract in Trinidad and Tobago.
• James Hardie Industries is closing its manufacturing plants in Fontana, CA, and Summerville, SC, to enhance productivity and cost efficiency.

Analyst Recommendations:

• Devon Energy Corporation: Scotiabank downgrades to sector perform from sector outperform and reduces the target price from USD 47 to USD 41.
• Hewlett-Packard Company: Barclays downgrades to underweight from equalweight and reduces the target price from USD 24 to USD 18.
• Iridium Communications Inc.: Morgan Stanley downgrades to market weight from overweight and reduces the target price from USD 37 to USD 24.
• Penumbra, Inc.: Baird downgrades to neutral from outperform with a price target raised from USD 345 to USD 374. 
• Rocket Lab Corporation: Morgan Stanley upgrades to overweight from equalwt and raises the target price from USD 67 to USD 105.
• Shift4 Payments, Inc.: Deutsche Bank downgrades to hold from buy and reduces the target price from USD 100 to USD 65.
• Tractor Supply Company: Truist Securities downgrades to hold from buy and reduces the target price from USD 67 to USD 55.
• Yeti Holdings, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 57.
• Analog Devices, Inc.: Oppenheimer maintains its outperform rating and raises the target price from USD 265 to USD 350.
• Applied Materials, Inc.: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 285 to USD 380.
• Fiserv, Inc.: B Riley Securities Inc. maintains its neutral recommendation and reduces the target price from USD 105 to USD 76.
• Intel Corporation: TD Cowen maintains its hold recommendation and raises the target price from USD 38 to USD 50.
• Macom Technology Solutions Holdings, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 190 to USD 245.
• Mks Inc.: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 180 to USD 250.
• Netflix, Inc.: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 139 to USD 110.
• Texas Pacific Land Corporation: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 1050 to USD 350.