Closing Recap

Wall Street staged a decisive relief rally on Tuesday, shaking off early-week “AI Jitters” as buyers flooded back into Tech and Financials. The Dow Jones recouped half of its recent losses, while the Nasdaq led the charge, rising 1.04% as the dystopian fears sparked by the Citrini Research essay began to fade. The mood was further buoyed by President Trump’s State of the Union address, where he confirmed a pivot to a 10% global tariff under Section 122, removing the immediate threat of a more draconian 15% levy. However, the macro backdrop remains highly complex. Australian inflation came in hot, boosting the Aussie Dollar and cementing RBA hike expectations, while Japanese equities exploded to new record highs. In commodities, Gold and Oil retreated as geopolitical risk premiums were priced out following Trump’s preference for diplomacy with Iran.

Key Takeaways

• Tech Rebounds, Leading Broad Market Higher: The Nasdaq surged 1.04% as investors bought the dip in the software and AI names that had been crushed on Monday.
• Trump’s SOTU Tariff Pivot: In his State of the Union, President Trump confirmed tariffs are staying despite the Supreme Court loss. The administration is pivoting to a 10% global levy for 150 days under Section 122 (aiming for 15% later), keeping the “trade war premium” alive but removing immediate worst-case scenarios.
• S&P 500 Nears 6,900: The S&P 500 gained 0.77%, putting it within striking distance of the 6,900 level, with strong market breadth as 9 of 11 sectors finished higher.
• Goldman’s “Correction” Warning: Goldman Sachs warned that a U.S. stock market correction is the biggest near-term risk to the U.S. economy. A 20% drop could shave nearly a full percentage point off GDP due to the “wealth effect” unwinding among high-income earners.
• Natural Gas Goes Parabolic: Natural gas futures surged another 29% to hit the highest level since 2022, bringing its five-day gain to a staggering 119% as a massive winter storm hits the U.S.
• Aussie Inflation Runs Hot: Australian CPI hit 3.8% YoY, beating estimates. More importantly, the core “trimmed mean” accelerated to 3.4%. This reinforces the RBA’s hawkish stance, boosting the AUD and raising the odds of a May rate hike.
• Nikkei Hits New Record: Japan’s Nikkei 225 surged 1.4% to a fresh all-time high above 58,100. The combination of a weaker Yen and a rebound in global tech sentiment is acting as rocket fuel for Japanese equities.
• Bitcoin ETF Outflows Peak: Over 100,300 BTC have exited spot ETFs since the October highs—the largest drawdown ever. The institutional “marginal bid” has vanished, leaving Bitcoin struggling near $65,000 despite a 3% bounce today.
• Bitcoin Recovers to $65k: After a period of intense selling, Bitcoin is showing signs of life, climbing above $65,000 as it tracks the broader rebound in technology stocks.
• Yen Weakens as Nikkei Hits Record High: The Japanese yen is slipping as the Nikkei 225 surges to a new all-time high, driven by the tech rebound and speculation around new BoJ board nominees.
• March Fed Cut is Dead: The odds of a March Fed rate cut have collapsed to just 4%. The market has fully digested the “Higher for Longer” reality.
• Oil & Gold Pull Back: WTI Crude fell 1% to $65.63, and Gold shed nearly $50 as Trump reiterated a preference for diplomacy with Iran, cooling the geopolitical temperature ahead of Thursday’s nuclear talks in Geneva.

Market Overview

Tuesday’s session was a testament to the “buy the dip” mentality that has defined this bull market. After a severe, AI-focused sell-off on Monday, triggered by a dystopian research report, investors quickly stepped back in. The recovery in the technology sector, particularly in software, led a broad-based rally that pushed the S&P 500 back toward the 6,900 level. This resilience was further supported by a surprisingly strong U.S. Consumer Confidence report, which jumped to 91.2, suggesting the consumer remains healthy despite inflation concerns. The panic surrounding the “AI Job Apocalypse” was swiftly countered by Fed officials and bargain hunters. The market breadth was exceptionally strong (9 of 11 sectors green), proving that the underlying bid for equities remains intact despite the BofA “Sell” signals and insider dumping.

Index	Up/Down	%	Last
DJ Industrials	370.75	0.76%	49,174
S&P 500	52.36	0.77%	6,890
Nasdaq	236.41	1.04%	22,863
Russell 2000	31.32	1.19%	2,652

The macroeconomic backdrop, however, remains complex. President Trump’s State of the Union address confirmed that the administration will not back down on trade, pivoting to a new legal justification (Section 122) to impose temporary global tariffs. This ensures that trade policy uncertainty will remain a persistent “risk premium” for the market. While a Reuters poll shows strategists remain bullish on the S&P 500 reaching 7,500 by the end of 2026, Goldman Sachs warned that a market correction is now the biggest risk to the U.S. economy. In the commodity space, the jaw-dropping rally in natural gas—up 119% in five days—highlights the extreme volatility possible when weather shocks meet tight supply dynamics. With Nvidia’s highly anticipated earnings report looming on Wednesday, the market remains on edge.

Economic Calendar

With the U.S. government back online, the market is continuing to digest a mix of delayed and current economic data. Today’s calendar is light on market-moving data, serving as the calm before the Nvidia storm.

Data Released Yesterday / Overnight:

• U.S. Consumer Confidence (Jan): A significant upside surprise, jumping to 91.2 from 89.0, beating the 87.0 consensus.
• U.S. Durable Goods Orders (Nov): A huge beat, with orders surging +5.3% m/m, though this is delayed data.
• Australian CPI (Jan): Came in firmer than expected at 3.8% y/y, with core measures accelerating, boosting RBA hike odds.
• Japan Services PPI (Jan): Held steady at a sticky 2.6% y/y.

Today’s Economic Calendar:

• European Session: Final Eurozone CPI and final German Q4 GDP.
• U.S. Session: An extremely light calendar with only low-tier data like MBA mortgage applications. The focus will be on Nvidia earnings after the close.
• 15:40 GMT – Fed’s Barkin Speaks.
• 16:00 GMT – Fed’s Schmid Speaks (Hawk).
• After Hours – NVIDIA EARNINGS.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The “Peace Dividend” trade was active. Gold fell nearly $50 to settle at $5,176.30 as profit-taking hit the crowded trade. Silver diverged, gaining 1% to $87.51, showing incredible resilience.However, the long-term outlook remains exceedingly bullish, with Goldman Sachs projecting $5,400 by year-end. Natural gas was the undeniable star, surging another 29% as a massive winter storm batters the U.S. Crude oil slipped, with WTI settling down 1.03% at $65.63 a barrel as the U.S. and Iran head for a third round of nuclear talks.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.78	-1.17%	65.63
Gold	-49.30	-0.94%	5,176.30
EUR/USD	-0.0005	-0.04%	1.1779
USD/JPY	1.14	0.74%	155.75
Bitcoin	2,000+	3.2%	65,102
10-Year Note Yield	0.006	0.14%	4.032%

The U.S. dollar is finding a footing as traders digest the implications of President Trump’s revised tariff strategy, while the Australian dollar is outperforming on hot inflation data.

• AUD/USD: The Breakout Star (0.7070). The Aussie is surging on the back of a hot CPI print (3.8%) that drastically increases the odds of a May RBA rate hike. With the rest of the world cutting or holding, the RBA’s hawkishness is a massive tailwind.
• EUR/USD: The pair is consolidating its recent gains, trading around 1.1800. The euro is being pressured by the renewed threat of U.S. tariffs, which offsets the support from a broadly softer dollar. The Euro is completely paralyzed. There is a staggering $13 Billion in option expiries stacked between 1.1750 and 1.1900 for today’s 10 AM NY cut. The sheer gravity of the 1.1800 strike ($3.9B) will act as a ‘black hole,’ preventing any meaningful directional move until these contracts expire.
• GBP/USD: The pound is holding steady near the 1.3500 handle, balancing the prospect of BoE rate cuts against the weaker U.S. dollar dynamic. But BoE Governor Bailey’s comments that “there should be scope for some further easing” is capping upside.
• USD/JPY: The pair is climbing higher, back toward 155.75. The yen is underperforming as the Nikkei hits record highs and as the market assesses the implications of two new BoJ board nominees.The nomination of two new BOJ board members adds uncertainty regarding the pace of future hikes under PM Takaichi.

Cryptocurrencies: The crypto market is attempting to stage a recovery. Bitcoin rebounded over 3% to reclaim the $65,000 level, tracking the strong performance in tech stocks and finding some bargain-hunting interest after its recent severe pullback. Treasuries: U.S. Treasury yields were slightly higher, with the 10-year yield ticking up to 4.03%. The market is digesting the strong consumer confidence data and the implications of the new tariff strategy.

Looking Ahead

Today’s trading will likely be a waiting game ahead of the most anticipated event of the week: Nvidia’s earnings report after the closing bell. Given the recent extreme volatility and “bubble” fears surrounding the AI sector, Nvidia’s results and forward guidance will be critical in determining whether the tech rebound can be sustained or if the selling pressure will resume. In the meantime, the market will continue to parse the implications of President Trump’s State of the Union address and the ongoing geopolitical developments in the Middle East.

What to Watch Today

• The Euro “Gamma Pin”: Do not expect EUR/USD to trend this morning. With $13B in options expiring across a 150-pip range, price action will be choppy and mean-reverting around 1.1800 until 10 AM ET.
• Aussie Momentum: AUD/USD is the cleanest macro trade on the board right now. Watch if it can clear the 0.7100 resistance level on the back of the hot CPI data.
• Bitcoin’s Institutional Test: Spot ETFs are bleeding capital. Watch the ETF flow data tonight. If the outflows accelerate despite yesterday’s price bounce, it signals that institutions are using liquidity to exit, leaving retail holding the bag.
• Nvidia (NVDA) After Hours: The undisputed King of the market reports today. Volatility in the QQQ (Nasdaq ETF) will be extreme heading into the close.