Overview
The tape is leaning risk-on into the bell. Overnight bids have SPY, QQQ, DIA, and IWM set to open higher after a turbulent stretch tied to tariff rhetoric and a bond selloff. The recalibration began as Washington softened its Greenland tariff stance, and the market is attempting to rebuild footing rather than chase.
The tone is firmer but not euphoric. Long-end yields are still elevated relative to last week, gold is holding its ground, silver is lagging, and crypto is heavy. That combination says positioning is warming, not sprinting.
Macro backdrop
Growth is running hotter than the recent worry would suggest. Third-quarter GDP growth was pegged at 4.4%, with consumer and business spending doing the heavy lifting. Weekly jobless claims point to a labor market that remains “low-hire, low-fire,” another way of saying churn is muted and demand for labor is steady.
Rates remain the fulcrum. The latest available Treasury marks show the 10-year yield near 4.30% and the 30-year around 4.91%, both above where they sat late last week. The front end is steadier, with the 2-year near 3.60% and the 5-year around 3.86%. Inflation expectations are contained, with model-based estimates near 2.60% at one year and roughly 2.33% to 2.32% across the five and ten-year horizons. December price gauges showed headline CPI levels still elevated in absolute terms, but the forward look does not show de-anchoring.
The bigger macro tension has been crosscurrents in global bonds. As investors weigh Japan’s recent volatility and a policy meeting later this week, the U.S. curve is absorbing that pressure while also digesting shifting tariff headlines. The result is a market that wants to buy risk on relief but will not ignore yield gravity.
Equities
Pre-bell pricing points to a broad lift. The last traded off-hours levels put SPY above its prior close, with QQQ, DIA, and IWM in the same lane. That alignment matters. It shows buyers supporting both mega-cap growth and domestic cyclicals after a politically driven downdraft.
Under the hood, the mega-cap cohort is mixed but skewing firmer where AI enthusiasm remains intact. NVDA has momentum, GOOGL, META, AMZN, and AAPL are pointing higher, while MSFT screens softer on recent prints. In autos and AI-adjacent hardware, TSLA is firmer into the open. Among financials, dispersion is noticeable, with GS firm and JPM and BAC slightly softer.
Healthcare remains a defensive anchor with offense. UNH, LLY, and MRK are bid, while JNJ is edging lower after legal and pricing headlines. Media continues to reprice deal risk, with NFLX still under pressure, while DIS and CMCSA track higher with the broader tape. Energy bellwethers XOM and CVX are up alongside crude-linked products.
The market’s character reads like this: the tariff scare forced a de-risking, the relief brought buyers back, but cross-asset tells say this is rebuilding confidence, not a melt-up. Buyers are rotating in, not stampeding.
Sectors
Leadership is setting up cleanly. Technology (XLK) is bid in pre-hours alongside communications and AI-linked names, a familiar playbook after pullbacks. Financials (XLF) are modestly higher despite lightly softer prints in a couple of the big banks, a nod to steeper long rates offset by tariff relief.
Energy (XLE) and industrials (XLI) are participating, which adds breadth and confirms the reopening of cyclical risk after geopolitical volatility. Healthcare (XLV) is firm, and consumer discretionary (XLY) is catching a bid with heavyweight platforms. Utilities (XLU) are slightly higher in step with the bond bounce, while staples (XLP) are flat to mixed, reflecting a pause after defensive outperformance earlier in the week.
That pattern is constructive for sentiment. Growth is not running away from value, and cyclicals are not freezing out defensives. It reads as a market putting risk back on the table without abandoning ballast.
Bonds
After a punishing stretch, Treasuries are stabilizing. Off-hours prints have TLT and IEF higher versus the prior close, with SHY little changed to slightly up. The price bounce comes even as the 10-year and 30-year yields remain above late last week’s levels. Relief on tariffs is helping, but the market still respects supply, policy noise, and the global fixed income backdrop.
In practical terms, stock-bond correlation is behaving. Wednesday’s equity rebound arrived with a modest bid in duration, and that tone is carrying into the open. It is not a rush for safety, it is a reduction in stress.
Commodities
Gold’s grip on the narrative has not slipped. GLD is up again pre-bell after a week that saw records in the metal complex during peak tariff anxiety. The more interesting tell is silver. SLV is lower versus the prior close and failed to echo gold’s surge earlier this week. That divergence often signals fatigue in the higher-beta metal and speaks to selective hedging rather than blanket fear.
Energy is pushing higher. Crude proxies like USO are up into the morning. Natural gas is the standout, with UNG sharply higher after weather-driven demand expectations whipsawed the complex. The broad commodity basket (DBC) is firmer, reflecting the upswing across energy and metals.
Bottom line, hedges are still in place, but the most speculative edges of the metals trade are cooling. That matters for gauging whether this risk-on attempt has legs.
FX & crypto
The euro is firmer. EURUSD is trading above its prior open, an echo of tariff de-escalation and the relief bid in European risk assets. Crypto is not confirming the equity bounce. Bitcoin is marking below its prior open near 90,000 and Ether is also softer, a small but consistent sign that the animal spirits are not spilling over into every risk proxy.
Notable headlines
- Weekly jobless claims continue to signal a more stable, low-churn labor market, reducing immediate worry about a demand shock.
- Q3 growth of 4.4% underscores resilient consumption and business investment, providing a macro floor beneath recent equity swings.
- Tariff tensions around Greenland cooled after calming remarks in Davos, helping unwind the “Sell America” trade that had slammed Treasuries earlier in the week.
- In metals, gold’s run has strong sponsorship while a contrarian view argues silver’s momentum is topping, aligning with today’s price action.
- In airlines, Spirit is exploring a deal with Castlelake as the carrier seeks a restructuring path.
- Alibaba is considering an IPO of its T-Head AI chip unit, a reminder of the global race to build domestic silicon capacity.
- GE’s shares turned lower after a beat as investors focused on slowing revenue growth and the full-year cadence, a classic late-cycle reaction function.
Risks
- Policy volatility: The tariff narrative is fluid. A fresh escalation would reawaken the “Sell America” reflex across bonds and the dollar and could abrade equity multiples.
- Global bond stress: Ongoing volatility in Japan’s market and any hawkish tilt from Tokyo could transmit to U.S. duration, pressuring long-duration equities.
- Energy price shocks: Rapid moves in natural gas and crude raise pass-through risks just as inflation expectations stay contained. A persistence of the spike would challenge the soft-landing story.
- Earnings dispersion: Guidance risk remains high in mega-cap tech, media, and healthcare. Any disappointment from AI or deal-driven names would impact index leadership.
- Legal and regulatory overhangs: Pharma pricing frameworks and litigation headlines can skew sector leadership without warning.
What to watch next
- The opening hour follow-through in SPY, QQQ, and IWM. Early breadth will indicate whether buyers are leaning in beyond mega-caps.
- Long-end Treasury tone via TLT and the 10-year yield zone near 4.30%. A sustained bid would support multiple expansion.
- Metals divergence: Does GLD hold gains as SLV lags? A continued split would signal more targeted hedging, not broad risk aversion.
- Natural gas follow-through in UNG and knock-on effects for utilities and energy equities.
- Tariff communications from Washington and responses out of Europe. Any shift in tone could quickly reset FX and rates.
- Updates from AI-levered bellwethers, including enterprise tie-ups and silicon supply commentary, given ongoing leadership from NVDA and platform names.
Sector and asset performance references are based on pre-market and off-hours indications relative to prior closes, where available.