Stock market today: Dow pops higher, tech weighs on Nasdaq as Treasury yields keep climbing

A surge in the US dollar has equity strategists expecting “FX headwinds” and other phrases about the strong dollar to be a heavily discussed topic this earnings season.

With the US dollar continuing to strengthen, companies with large international exposure are likely to be discussing how their sales are weakening due to the foreign exchange crossover.

But the equity research team at Goldman Sachs found an interesting point about when companies miss sales estimates due to FX headwinds. Their stocks don’t underperform the market by nearly as much.

Dating back to 2016, the Goldman equity strategy led by David Kostin found that companies who miss sales estimates on a constant currency basis see their stock underperform the market by 3.69% the next day. But if the miss isn’t on a constant currency basis, meaning it hasn’t been adjusted for the strong dollar, the company’s stock only underperforms by 0.69%.

So in some ways, the market often sees the headwind as a short-term one and isn’t overly judgemental about it. Still, Kostin notes “companies with domestic-facing sales have typically outperformed firms with international-facing revenues in other periods of US dollar strength.”

Yahoo Finance’s Laura Bratton reports:

Edison International (EIX) — the parent company of the utility Southern California Edison (SCE) — saw its stock drop more than 12% Monday following an announcement from SCE late last week that it’s being investigated by California fire authorities for its potential link to the Los Angeles wildfires.

SCE said in a statement Friday that the authorities are investigating whether its equipment “was involved in the ignition” of one of the wildfires in Los Angeles. The utility said one of its power lines fell Jan. 7 but that it “does not know whether the damage observed occurred before or after the start of the fire.”

Read more here.

Yahoo Finance’s Brooke DiPalma reports:

Shake Shack (SHAK) posted preliminary fourth quarter results that beat expectations, but investors don’t seem convinced.

Shares of the fast-casual chain fell 6% on Monday after the company reported same-store sales grew by 4.3% last quarter. Total revenue jumped around 15% year over year to $328.7 million.

Shake Shack made a “lot of progress” this past year “in an environment where you still have concerns around wage inflation and potentially some commodity inflation, and you’ve got some risks that are kind of popping up here over the last few weeks [like the bird flu],” CEO Rob Lynch told Yahoo Finance at the ICR conference in Orlando, Fla.

For 2025, it projects to expand restaurant margins to 22% from 21.4%, the highest margin in the last eight years.

Read more here.

Shares of Honeywell (HON) rose as much as 4% before paring gains on Monday after Bloomberg reported the industrial conglomerate is on track to proceed with a breakup amid pressure from activist investor Elliott Investment Management.

In December Honeywell said it was exploring strategic alternatives to unlock shareholder value, including separating its aerospace business. Honeywell is expected give an update on progress made when it reports its fourth quarter earnings on February 6.

Shares of US Steel (X) jumped following news reports that rivals Cleveland-Cliffs (CLF) and Nucor (NUE) are considering making a joint bid for the iconic steel-maker just weeks after the Biden Administration blocked a takeover of the Pittsburg-based company by Japan’s Nippon Steel.

As part of the offer, Cleveland-Cliffs would buy US Steel in cash and then sell the company’s Big River Steel mill in Arkansas to Nucor, according to people familiar with the matter as reported by the Financial Times. News of the joint bid consideration was first reported by CNBC.

Cleveland-Cliffs reportedly plans to offer less than $40 a share to buy US Steel, far less than the $55 a share that Nippon Steel had agreed to pay for the company last year before The Biden administration blocked the merger citing national security concerns.

US Steel stock jumped more than 5% on the news while shares of Nucor and Cleveland-Cliffs also rose.

Stocks came off their session lows by 1:00 p.m. ET on Monday with the major averages mixed.

The S&P 500 (^GSPC) pared losses to fall more than 0.2% while the Nasdaq Composite (^IXIC) dropped 0.8%. The Dow Jones Industrial Average (^DJI) rose 0.5%.

Tech stocks lagged as investors rotated out of the sector. EV giant Tesla (TSLA), erased losses of more than 2% to briefly flip above the flatline.

AI chip maker Nvidia (NVDA) fell more than 2%. Social media company Meta (META) and iPhone maker Apple (AAPL) both fell more than 1%.

Oil extended gains to a five-month high on Monday as worries grew over supply disruptions impacting big importers China and India from wide-ranging sanctions against Russian crude.

West Texas Intermediate crude (CL=F) rose roughly 2% to trade above $78 per barrel while Brent crude futures (BZ=F), the international benchmark price, surpassed $81, the highest level since August.

The move higher comes after an almost 4% surge on Friday in reaction to wide-ranging sanctions against Moscow imposed by the US, targeting oil executives, traders, and more than 180 vessels, bringing the total number of ships sanctioned to 451, according to JPMorgan analysis.

“There are indications that, similar to Indian refiners who avoid taking Russian oil in tankers under sanctions or in ships insured by sanctioned Russian insurers, China is also becoming a less-permissive buyer,” wrote JPMorgan analysts in a recent note.

Bitcoin (BTC-US) fell 3% over the past 24 hours to hover just below $92,000 per token. Enthusiasm for the token has waned in recent days as risk assets have sold off amid rising US Treasury yields and a higher US Dollar.

Meanwhile bitcoin proxy MicroStrategy (MSTR) bought about 2,530 tokens for $243 million between Jan.6 and Jan. 12, according to the company’s latest filing.

The company currently holds approximately 450,000 bitcoins. MicroStrategy stock slumped 4% on Monday.

‘Magnificent 7’ stocks led the tech sell-off on Monday as investor optimism over Federal Reserve rate cuts this year began to fade ahead of a highly anticipated inflation print this week.

AI chip giant Nvidia (NVDA) fell roughly 3% after the Biden administration released an updated export rule aimed at controlling the flow of artificial intelligence to “adversaries” such as China.

EV maker Tesla (TSLA) retreated around 1% while social media platform Meta (META) and iPhone maker Apple (AAPL) both shed more than 2%. Microsoft (MSFT) and Alphabet (GOOG, GOOGL) posted smaller drops.

Tech stocks extended their declines from Friday, which came as a hotter-than-expected jobs report dashed hopes that the Fed would cut rates at least two times this year. Investors expect policymakers to shift any easing to the fall at the earliest.

Growth stocks lost ground as the yield on the 10-year Treasury (^TNX) ticked higher and the US Dollar Index (DX-Y.NYB) rose to its highest level since 2022.

Shares of UnitedHealth (UNH) rose nearly 4% on Monday morning, helping lift the Dow Jones Industrial Average (^DJI) into positive territory in early trading.

UnitedHealth, along with other insurers like Humana (HUM), rose after Medicare released a proposal that would allow for bigger-than-expected payments for insurance companies in 2026.

Shares of CVS Health (CVS) also rallied.

Moderna (MRNA) shares sank 23% at the open on Monday after the biotech giant lowered its 2025 sales guidance by $1 billion because of weak demand for its COVID-19 vaccines and a slower adoption of its new respiratory syncytial virus (RSV) shot.

The company said it expects revenue in 2025 to come in anywhere between $1.5 billion and $2.5 billion after hitting as much as $3.1 billion last year.

Stocks opened lower on Monday, with tech leading the losses as optimism over interest rate cuts this year continued to fade and bond yields rose.

The S&P 500 (^GSPC) sank 0.8%, while the Nasdaq Composite (^IXIC) dropped 1.3%. The Dow Jones Industrial Average (^DJI) fell about 0.1%.

Stocks continued their sell-off from Friday’s plunge, which wiped out all year-to-date gains for the major averages.

A hot December jobs report spooked the markets, as investors faced the possibility that the Federal Reserve will make just two rate cuts this year.

Among Monday’s laggards, shares of Nvidia (NVDA) and Tesla (TSLA) slid more than 3% and 2%, respectively, as the “Magnificent Seven” group lost ground in the market sell-off.

Investors awake to markets continuing their post-red-hot jobs report tantrum.

The rise in yields and now the rise in energy prices remain in focus. Both of these things happening at the same time is the worst possible scenario for the bulls. At the time of this writing, premarket weakness is being seen in top momentum names such as Tesla (TSLA) and Nvidia (NVDA).

Important point this morning by the Goldman Sachs team:

“The move in rates is also now tightening financial conditions such that it may weigh on growth and risk assets. Positions that benefit from lower US yields now look more attractive, especially for portfolios that already embrace the US growth theme.”