US Open: Reaction to U.S. Russian Peace Talk

• US indices trade cautiously lower (US2000 -0.07%, US500 -0.09%) while European markets diverge, with indices like SPA35 (+0.67%) and W20 (+2.19%) showing notable strength
• U.S.-Russia peace negotiations in Saudi Arabia trigger defensive sector rotation, as unexpected diplomatic breakthrough raises questions about future military spending
• Intel surges over 5% on potential break-up speculation, with Broadcom eyeing chip design business and TSMC considering manufacturing assets
• Super Micro Computer, Inc. (SMCI.US) surges 12%
• Southwest Airlines advances 2% after announcing historic 15% workforce reduction, targeting $210 million in cost savings for 2025
• Delta shares hold steady despite Toronto airport incident involving regional carrier, with 18 passengers injured in CRJ900 aircraft incident
• Constellation Brands jumps 7% as Warren Buffett’s Berkshire Hathaway reveals new stake, marking contrarian bet on beaten-down beverage sector

Major US indices are showing mixed performance, with most tracking slightly lower. The US2000 is down -0.07% to 2287.7, while the US500 declines -0.09% to 6139.9, and the US30 falls -0.45% to 44543. The US100 shows modest strength, gaining +0.05% to 22245.24. The VIX fear gauge has decreased by -0.59% to 16.98, suggesting reduced market anxiety.

European markets are displaying a mixed picture, with notable divergence across the region. The UK100 is down -0.17% to 8730.5, while the DE40 drops -0.18% to 22889.8, and the SUI20 declines -0.25% to 12827. However, several southern European indices are posting gains, with the SPA35 up +0.67% to 13099 and the AUT20 rising +0.34% to 4124. The EU50 shows modest gains of +0.06% to 5540.6, while France’s FRA40 advances +0.09% to 8206.4. The VSTOXX, Europe’s fear gauge, is up +0.87% to 17.38, suggesting slightly elevated market uncertainty. The Polish W20 is showing significant strength with a gain of +2.19% to 2661.6.

S&P 500 Sectors Show Mixed Performance. Source: Bloomberg Financial LP

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq-100 index, represented by the US100 contract, is trading slightly below its all-time high (ATH). Bulls will attempt to stay above the previous high of 22,020, while bears will try to push the price below this level. If successful, the 23.6% Fibonacci retracement level, which aligns with the early December high of 21,668 and the 50-day SMA at 21,633, could come into play. The RSI is continuing its bullish trend and approaching the overbought zone, while the MACD continues to widen, signaling strong momentum. Source: xStation

Market & Corporate News:

• U.S.-Russia Peace Talks Spark Market Movement: Defense stocks slide as unexpected peace negotiations between U.S. and Russian officials commence in Saudi Arabia. European defense contractors face particular pressure amid uncertainty around future military spending commitments. The talks, led by Secretary of State Marco Rubio and Russian Foreign Minister Sergei Lavrov, mark a significant shift in diplomatic relations.
• European Markets React to Defense Spending Plans: European banking stocks rally on speculation of potential joint borrowing initiatives to fund continental defense. French banks show notable gains as Paris pushes for coordinated fiscal response to changing U.S. foreign policy stance. ING analysts highlight growing support for increased European military independence.
• Delta Air Lines Stock Stable Despite Toronto Incident: Delta (DAL.US) shares show resilience despite a serious incident involving its regional carrier at Toronto Pearson Airport. The CRJ900 aircraft incident, resulting in 18 injuries, has triggered a Canadian investigation. Bombardier (BBDb.TO) and GE Aerospace (GE.US), manufacturers of the aircraft and engines respectively, face increased scrutiny.
• Intel Surges on Takeover Speculation: Intel (INTC.US) shares jump over 5% following reports of potential acquisition interest from Broadcom and TSMC. The speculation suggests a possible break-up of the company, with Broadcom eyeing the design business while TSMC considers manufacturing assets. The news offers a bright spot after Intel’s challenging 2024 performance.
• Southwest Airlines Rises on Restructuring Plan: Southwest (LUV.US) stock gains 2% after announcing its first major layoffs, cutting 15% of corporate workforce. The airline expects $210 million in cost savings for 2025 and $300 million for 2026. The restructuring includes elimination of 11 senior leadership positions.
• Berkshire’s Beverage Bet Boosts Constellation: Constellation Brands (STZ.US) surges 7% after Warren Buffett’s Berkshire Hathaway discloses a new $1.2 million stake. The investment comes as the Corona and Modelo beer maker’s stock trades near 52-week lows, down 35% over the past year.

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP

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