When Lower Yields Turn into Bull Fuel: Today's Market Playbook

2026-01-12 16:56:59

The stock market is dancing to a familiar tune today—bond yields are falling, and equities are cheering. Here’s what’s actually happening under the hood.

The Yield Story Everyone’s Watching

Bond yields took a hit, and that’s turned into the market’s best friend. The 10-year T-note yield slipped 4.5 basis points to 4.128%, dragged down by two key catalysts: a softer-than-expected December ADP employment report (+41,000 vs. +50,000 expected) and weaker Eurozone inflation data.

Overseas, the decline was even sharper. Germany’s 10-year bund yield tumbled to a 1-month low at 2.792%, while the UK’s 10-year gilt fell to a 1.75-month low of 4.400%. This combination of lower global yields created a safe-haven flow that’s lifting equities across the board.

What the Index Action Is Telling Us

The S&P 500 ($SPX) climbed to a fresh all-time high, up +0.13%, while the Nasdaq 100 ($IUXX) posted a 1-week high, gaining +0.18%. The Dow Jones ($DOWI) lagged slightly, down -0.10%, but futures were pointing higher—March E-mini S&P futures up +0.10%, March E-mini Nasdaq futures up +0.19%.

The narrative is clear: lower yields are removing one headwind for equities. When bond returns shrink, growth stocks and rate-sensitive sectors suddenly look more attractive again.

The Economic Data Backdrop

Today’s weaker ADP number was dovish for Federal Reserve policy—exactly what stock bulls wanted to hear. The MBA mortgage applications rose just +0.3%, and the average 30-year fixed mortgage rate fell 7 basis points to 6.25%.

Looking ahead, the market’s focus is locked on this week’s economic calendar. The December ISM services index is expected to slip to 52.3, while November JOLTS job openings should climb to 7.679 million. Later in the week, attention turns to December nonfarm payrolls (expected +59,000) and the December unemployment rate (expected to dip to 4.5%).

The Fed futures market is pricing in just an 18% probability of a -25 basis point rate cut at the January 27-28 FOMC meeting, suggesting the market isn’t expecting aggressive action soon.

Sector Carnage: Chips and Metals Get Hammered

After Tuesday’s sharp rally, semiconductor and data storage stocks are giving back gains today. The selling is brutal: Western Digital ($WDC) is down more than -8%, leading S&P 500 losers. Seagate ($STX) is off -7%, while Marvell ($MRVL), Microchip ($MCHP), AMD, and Texas Instruments ($TXN) are all down more than -2%.

Mining stocks are equally underwater, with silver off more than -4% and copper down -1%. Hecla Mining ($HL) is cratering -11%, Coeur Mining ($CDE) down -7%, and Newmont ($NEM), Barrick ($B), and Freeport McMoRan ($FCX) all falling more than -3%.

Stock-Specific Drama

Downgrades Hitting Hard:

Apogee Enterprises ($APOG) crashed -12% after cutting full-year EPS guidance to $3.40-$3.50 (consensus was $3.66)
StoneCo ($STNE) slid -7% following CEO resignation effective March 2026
AST SpaceMobile ($ASTS) dropped -7% after Scotia Bank’s underperform downgrade (price target $45.60)
Wolverine Worldwide ($WWW) fell -6% on Piper Sandler downgrade to neutral
Deckers Outdoors ($DECK) slipped -3% after underweight downgrade
JPMorgan Chase ($JPM) led Dow decliners, down -2%, on Wolfe Research downgrade

Green Shoots:

Monte Rosa Therapeutics ($GLUE) erupted +44% on positive Phase 1 clinical trial data
Ventyx Biosciences ($VTYX) soared +37% after reports of Eli Lilly’s $1 billion acquisition interest
MicroStrategy ($MSTR) rallied +6%, leading Nasdaq gainers, after MSCI kept digital asset treasury companies in its indexes
Mobileye Global ($MBLY) jumped +5% after acquiring Mentee Robotics for $900 million
Amgen ($AMGN) led Dow gainers, up +3%, on UBS upgrade to buy (target $380)
Lowe’s ($LOW) and Wayfair ($W) both rose after Barclays upgraded both to overweight

The Global Picture

Overseas markets are mixed. China’s Shanghai Composite climbed to a 10.5-year high (+0.05%), while Japan’s Nikkei fell -1.06%. Europe’s Euro Stoxx 50 dipped -0.11%, but that’s before the wave of lower yields fully ripples through European equities.

The ECB story is quiet—swaps are pricing just a 1% chance of a +25 basis point hike at the February 5 meeting.

The Bottom Line

Lower global yields are providing a supportive backdrop for equities today, especially after softer economic data eased recession fears. But the breadth tells a more cautious story—semiconductors and commodities are under pressure, suggesting sector rotation is alive and well. Keep watching this week’s employment data for clues on whether this bond yield relief has staying power.

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