(Bloomberg) -- Stocks are set for a relatively steady start as investors look beyond AI winners. Shares seen as vulnerable to disruption are now outperforming those seen as the technology's biggest beneficiaries.
Nasdaq 100 futures were unchanged as of 5:25 a.m. in New York, while S&P 500 contracts fell 0.2%.
Thursday's decline was concentrated in technology, which erased the previous day's gains. But the broader market carried on, with the equal-weight version of the S&P 500 — a proxy for market breadth — finishing the session up 0.8%, its best day since 2024 relative to its market-cap weighted version.
And that's telling. Advancers outnumbered decliners by about two-to-one Thursday, while 61% of S&P 500 members are now above their 50-day moving average, the highest proportion in two months.
The AI trade is the culprit once again, but it doesn't seem investors are turning risk-off. They have been simply repricing the build-out, taking money off the semiconductor trade to reinvest into more defensive sectors like staples and utilities.
"Yesterday the market did not stop believing in AI, it simply started asking who pays for it, and at a 5% bond yield that question has an opportunity cost," said Florian Ielpo, head of macro research at Lombard Odier Asset Management.
Investors are exiting so-called AI winners at a fast pace, with a basket of such stocks now down 23% from June highs. By contrast, stocks at risk of AI disruption have surged nearly 60% over the same period and are now leading this year.
Global hedge funds suffered one of their broadest declines since the Covid pandemic following Thursday's selloff, according to Goldman Sachs's prime brokerage desk. Their long-short basket of hedge fund VIP stocks finished down 4.2%, the worst move since 2011, and is now down 10.4% this month.
It seems the earnings season is failing to reassure investors despite starting on a solid footing. Macro-economic angst is weighing on sentiment, while the AI capex narrative is turning against what was the best trade of the year until the summer.
In premarket trade, Western Digital has slipped despite a strong revenue and earnings forecast for the current quarter, as the company said on its earnings call that capital spending would be slightly elevated over the next two years.
The bull case is cracking on the valuation side. OpenAI, which is seeking to raise around $30 billion in a fresh funding round, is now targeting a valuation of $1.25 trillion during the final stages of negotiations, a $150 billion drop from the $1.4 trillion it was seeking last month, according to people familiar with the matter.
Meanwhile, SpaceX continued to disrupt the telecom market, aiming to secure a minimum of 80,000 cell sites across the US, and is in talks with at least one major cellular infrastructure company to reach that goal.
In credit markets, metrics are signaling their biggest risk-off sentiment in more than a year, as a selloff in AI stocks and growing geopolitical tensions caused investors to seek out safe-haven assets.
In politics, President Donald Trump traveled to Iowa on Thursday to boost Ashley Hinson, the Republican Senate candidate locked in a tight race with Democrat Josh Turek.
In other corporate news:
- Deckers Outdoor drops after the owner of the UGG, Hoka and Teva footwear brands cut its full-year net sales forecast to below analyst estimates.
- RingCentral jumps after raising its full-year earnings forecast.
- Citigroup won approval to launch a wholly-owned securities business in China, after a nearly five-year wait.
Strategy: Third-quarter earnings in Europe and the US are off to a solid start, but positive surprises are moderating and share-price reactions have been weighed down by macro concerns, according to strategists at Barclays. Emerging market stocks led weekly equity fund flows, while investors continued to pour cash into money market funds, Bank of America says.
Earnings: Of the 119 S&P 500 companies to have reported thus far, 80% have beaten analysts' forecasts, while 13% have missed. 54% of companies have positively surprised on sales, while 23% have missed.
American Express and SLB are among companies due to report numbers before the market opens. AmEx could post another quarter of above-consensus EPS growth, with strong credit offsetting slower billings and rising costs, according to Bloomberg Intelligence.
Economy: S&P Global flash manufacturing PMI due at 9:45 a.m. ET, followed by final reading of University of Michigan sentiment at 10 a.m.
Equity Insights
- The S&P 500 Consumer Staples Index is up 12% so far this month, on track for its best month since October 1998 as investors rotate out of the technology trade and into defensive.
Sectors in focus:
- Tower companies gain and wireless carriers slide after SpaceX was said to be targeting 80,000 or more US cell sites, with talks under way with at least one infrastructure owner.
US Premarket Movers of Note:
- RNG US (+16.2%): RingCentral Jumps After Raising Full-Year Forecast
- MXL US (+6.3%): MaxLinear 4Q Revenue Forecast Beats Estimates
- DECK US (-9.1%): Deckers Outdoor Shares Tumble as Full-Year Sales Guide Cut
M&A:
- Canadian oil and gas producer Logan Energy Corp. is exploring options including a potential sale, according to people familiar with the matter.
ECM:
- Lycia Therapeutics Inc., a biotechnology firm focused on treatments for allergies and autoimmune diseases, raised $317.5 million in an upsized US initial public offering that priced at the top of its marketed range.
Macro:
- The Hong Kong dollar pulled away from the weak end of its trading band as investors unwound carry trades that involved selling the local currency in favor of the higher-yielding greenback, according to DBS Bank.
- France is still pushing for a US tariff exemption for French spirits and seeks the same treatment for cognac and champagne as Irish whiskey, French trade chief Nicolas Forissier says ahead of a meeting of EU trade ministers in Dublin.
- Africa's efforts to contain a widening Ebola outbreak are being tested by porous borders, illegal crossings and infected travelers who can pass through screening before developing symptoms.
Europe/Asia:
Europe Trading: European stocks fell for a second day as disappointing earnings, including from Kering SA's Gucci, added to concerns over the artificial intelligence trade and elevated oil prices.
Asia Trading: Asian stocks steadied, as a chip-led selloff and mixed signals from US tech earnings drove investors to defensive sectors and other safe-haven assets. The MSCI Asia Pacific Index headed for its fourth-straight week of losses.
Other Company News:
- Calpers Pivots From US Tech Giants to Private Equity, FT Reports
- Goldman Sachs Unit Said to Buy Stake in Inflexion's Celnor
- Shoprite, Investec Said to Discuss South African Fintech Tie-Up
- Citigroup Secures Approval for Solo Securities Venture in China
- Nvidia Invests in AI Video and Image Generator Higgsfield
- Alnylam Reports Positive Data for Huntington's Disease Drug
ECO CALENDAR (All times ET):
- 9:45 am: United States Oct P S&P Global US Manufacturing PMI, est. 55.5, prior 55.9
- 9:45 am: United States Oct P S&P Global US Services PMI, est. 58, prior 58.8
- 9:45 am: United States Oct P S&P Global US Composite PMI, est. 57.6, prior 58.4
- 10:00 am: United States Oct F U. of Mich. Sentiment, est. 46.3, prior 46.3
Main Rating Changes:
Upgrades:
- MSM US: MSC Industrial Raised to Buy at Jefferies; PT $135
- SPCX US: SpaceX Double Upgraded at Phillip on Super Intelligence Upside
- TXN US: Texas Instruments Raised to Buy at Freedom Capital; PT $330
- VLY US: Valley National Raised to Outperform at KBW; PT $17
Downgrades:
- DECK US: Deckers Outdoor Cut to Underweight at Piper Sandler; PT $75
- GL US: Globe Life Cut to Neutral at Piper Sandler; PT $165
- NCLH US: Norwegian Cruise Cut to Underweight at JPMorgan; PT $11
- QGEN US: Qiagen Cut to Hold at DZ Bank; PT $46.50
- Cut to Neutral at Baird; PT $52
- TMO US: Thermo Fisher Cut to Hold at DZ Bank; PT $650
Initiations:
- ATRO US: Astronics Rated New Sector Weight at KeyBanc
- GH US: Guardant Health Rated New Buy at Roth Capital Partners; PT $200
- NTRA US: Natera Rated New Buy at Roth Capital Partners; PT $475
- RSI US: Rush Street Rated New Overweight at Barclays; PT $24
- SGHC US: Super Group Rated New Equal-Weight at Barclays; PT $13
- VSEC US: VSE Rated New Sector Weight at KeyBanc
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Disclosures for Think Equity Morning Brief, January 30, 2026
Sources: Bloomberg LP; The Wall Street Journal
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