US equity futures trade near session highs, after rising much of the overnight session amid muted volumes. Yesterday, US stocks recovered their early losses starting just after the EU close and that momentum has carried through to global markets today with what appears to be re-grossing in EU and continued momentum in the Japan trade. As of 8:15am ET, S&P futures are 0.4% while Nasdaq 100 contracts rise 0.5% with broad premarket gains across software names and tech heavyweights. Mag7 names are mostly higher (NVDA +1.8%, AMZN +1.4%) and most sectors are higher pointing to what JPMorgan calls an"Everything Rally"today as the market tries to find a bottom and was less reactive to AI headlines yesterday than we have seen most of the year. Europe’s Stoxx 600 hit a record high following a slate of positive earnings. Bond yields are +1-2bp with a USD that has caught a bid. In commodities, all 3 complexes are higher with precious metals leading; brent crude is headed for the highest level in a week. Overnight we learned that Japan would $36bn (of $550bn commitment) into US infra (natgas, crude export, and synthetic diamond production). Today’s macro data focus is on Cap / Durable Goods, Housing Starts, regional Fed indicators, TIC data, and the latest Fed Minutes.

In premarket trading, Mag 7 stocks are all higher: Nvidia (NVDA) rises 1.9% after Meta Platforms Inc. agreed to deploy “millions” of its processors over the next few years, tightening an already close relationship between two of the biggest companies in the artificial intelligence industry (Amazon +1.3%, Microsoft +0.4%, Alphabet +0.2%, Apple +0.06%, Meta unch, Tesla +0.3%)

After months of gains fueled by optimism over AI, equity markets have turned cautious amid a clash between disruption fears and doubts that heavy spending will yield meaningful returns. The setbacks in US stocks have prompted investors to look elsewhere, with European and Asian benchmarks far outpacing the S&P 500 this year.

“It’s hard to know where the floor on valuation is going to be,” Sophie Huynh, portfolio manager at BNP Paribas Asset Management, told Bloomberg TV. “So I think there’s going to be some temptation to buy on dips.”

Apple has decoupled from the Nasdaq amid the recent AI angst: It’s seen as a safer bet because it isn’t participating in the capex bonanza and doesn’t have a major business line that’s threatened by AI. Rotation is also cropping up among regions — with renewed interest in European equities — and in the latest batch of 13F filings. Berkshire Hathaway slashed its stake in Amazon by more than 75% in the fourth quarter, while also building a stake in the New York Times, in Warren Buffett’s last new bet as chief executive officer of the conglomerate.

Rotation is also cropping up among regions — with renewed interest in European equities — and in the latest batch of 13F filings. Berkshire Hathaway slashed its stake in Amazon by more than 75% in the fourth quarter, while also building a stake in the New York Times, in Warren Buffett’s last new bet as chief executive officer of the conglomerate.

Digging into earnings estimates suggests that AI’s impact on corporate growth is seen as limited outside of Big Tech. Earnings growth estimates for the Mag 7 in 2026 have gone up to 18% from 14% in the aftermath of last year’s tariff-related selloff. For the remaining 493 companies in the S&P 500, expectations have fallen to 11% from 12.5%, according to data compiled by Bloomberg Intelligence. In other AI news, Meta agreed to deploy “millions” of Nvidia processors over the next few years, tightening an already close relationship between the pair. ION Group’s founder said investors are punishing the wrong companies after more than $2 trillion was wiped off the value of software firms in recent weeks.

Other interesting observations in 13F filings include Third Point increasing its weighting in healthcare while reducing exposure to consumer staples. Pershing Square cut its position in Alphabet and boosted its stake in Amazon, while Meta represented its biggest new buy in the fourth quarter.

In central banks, some Fed officials have begun suggesting that productivity growth from AI could mean higher rates, a view that would put them at odds with the Trump administration. The FT reported that Christine Lagarde plans to leave the ECB before her eight-year term ends in October 2027. An ECB spokesperson said that Lagarde “is totally focused on her mission and has not taken any decision regarding the end of her term.”

Analog Devices, Moody’s and Global Payments are among companies expected to report results before the market opens. Moody’s outlook for 2026 will be in focus following S&P Global’s worse-than-expected profit forecast earlier this month. Earnings from Carvana and Molson Coors follow later in the day.

Source: ZeroHedge News