Wednesday, January 14, 2026

Overnight Data Adds New Wrinkle to Fed Chaos: The market narrative, already dominated by the after-hours bombshell of a criminal probe into Fed Chair Powell, is now grappling with conflicting economic signals. While traders are still digesting the 'legal-for-longer' risk that could paralyze monetary policy, a fresh report shows US Q3 GDP surged to 4.3%, with Q4 forecasts hitting a blistering 5.1%.

Ordinarily a bullish sign, this red-hot economic data pours cold water on any remaining hopes for near-term rate cuts. It provides the Fed with ample justification to remain hawkish, compounding the uncertainty from the Powell investigation. This creates a classic 'good news is bad news' scenario, further solidifying the higher-for-longer rate environment that weighed on sentiment at yesterday's close.

Adding to the risk-off tone, fresh macro pressures are emerging. China has opened an antitrust probe into Trip.com (TCOM), sending its shares plunging in after-hours trading and reigniting concerns over regulatory crackdowns. Domestically, the bankruptcy filing of Saks Global highlights cracks in the retail sector, standing in stark contrast to the strong headline GDP figures.

9:41 PM EST - After-Hours Fears Mount as Geopolitical Tensions Add to Fed Chaos

While the cash session is long over, with the SPY closing at 689.3, the after-hours narrative is darkening considerably. The bombshell criminal inquiry into Fed Chair Jerome Powell, which we've been covering since it broke, remains the dominant theme. Bank of America's (BAC) warning that this could delay rate cuts has completely hijacked the market's focus, introducing a paralyzing 'legal-for-longer' risk on top of the 'higher-for-longer' rate environment.

As if that weren't enough, geopolitical risk is flaring up again. Fresh reports indicate Iran has temporarily closed its airspace, escalating regional tensions and adding another layer of uncertainty for traders to price in before the next session. This development pours gasoline on an already fearful market.

In this environment, company-specific news is being completely ignored. A dispute between Amazon (AMZN) and Saks, or a positive buyout offer for Toyota (TM), are mere footnotes. The only story that matters is the dual threat of a paralyzed Federal Reserve and escalating conflict in the Middle East, setting the stage for a volatile open.

9:26 PM EST - Final Word: Powell Probe Hijacks Market Narrative, Forcing a Total Rethink of 2026

The day's tech-led selloff, which saw the S&P 500 close down 0.5% at 689.3, is now a distant memory. The only story that matters tonight is the after-hours bombshell: a criminal inquiry has been opened into Federal Reserve Chair Jerome Powell.

This isn't just a headline; it's a potential seismic shift in monetary policy. As we've been covering, Bank of America (BAC) immediately fired off a note to clients warning this probe 'could potentially delay planned interest rate cuts.' The market's entire focus has been wrenched from inflation data to legal drama in Washington D.C. The 'higher-for-longer' narrative now has a dangerous new cousin: 'legal-for-longer'.

This political firestorm completely overshadowed what would have been major corporate news. Apple (AAPL) just announced its 'Creator Studio' subscription, a direct, AI-powered assault on Adobe's business model. On any other day, this would be a top story. Tonight, it's lost in the noise, along with positive news from Toyota (TM) sweetening a buyout offer. The Powell situation is the only thing that will matter at tomorrow's open, guaranteeing a volatile session as traders are forced to price in a level of political risk not seen in years.

9:22 PM EST - Closing Bell: Powell Probe Ignites After-Hours Firestorm, Eclipsing All Else

The market's 0.5% slide into the close, with SPY finishing at 689.3, is now ancient history. The real story detonated after the bell: a bombshell report that Federal prosecutors have opened a criminal inquiry into Fed Chair Jerome Powell. This isn't just a headline; it's a potential paradigm shift for monetary policy.

Wall Street is already reacting. Bank of America (BAC) wasted no time, firing off a note to clients warning the probe 'could potentially delay planned interest rate cuts.' This immediately throws the entire 'higher-for-longer' narrative into a new, chaotic light. Traders are now forced to price in a 'legal-for-longer' scenario, where the Fed could be paralyzed by political and legal battles, regardless of what the inflation data says.

In any other environment, we'd be focused on significant corporate news. Apple (AAPL) just unveiled its 'Creator Studio' subscription, a direct, AI-powered assault on Adobe's creative empire. Toyota (TM) shares also got a boost from a sweetened buyout offer. But tonight, that news is a footnote. The Powell investigation is the only story that matters, and it guarantees a volatile and uncertain open for the next session.

9:21 PM EST - Closing Bell: Powell Probe Throws Fed Policy Into Chaos, Overshadowing Market Action

As we close the books on today's session, the S&P 500's 0.5% slide to 689.3 and the Nasdaq's 1% drop are now a secondary story. The real market-moving event dropped after the bell: a bombshell report that Federal prosecutors have opened a criminal inquiry into Fed Chair Jerome Powell.

This development immediately changes the game for 2026. As detailed in a new note, Bank of America (BAC) is already warning clients this probe 'could potentially delay planned interest rate cuts,' introducing a massive wave of uncertainty. The 'higher-for-longer' narrative that has defined the market now faces a 'legal-for-longer' complication, throwing the Fed's playbook into disarray. Traders are now forced to handicap not just economic data, but legal proceedings in Washington.

This macro-shockwave completely drowned out any positive company-specific news. Apple (AAPL) made a significant strategic move, unveiling its AI-powered 'Creator Studio' subscription to directly challenge Adobe. Similarly, Toyota (TM) shares got a lift from a sweetened buyout offer. In a normal environment, these would be bullish catalysts. Tonight, they are footnotes. The Powell situation is the only story that matters heading into the next session, guaranteeing a volatile open as the market digests the potential for a paralyzed Federal Reserve.

9:14 PM EST - Powell Probe Casts Long Shadow Over Market Close; Tech Slides: The market closed out the session decidedly risk-off, with the S&P 500 sliding 0.5% and the Nasdaq Composite dropping 1%, driven by a significant wave of selling in technology stocks. The SPY settled at 689.3, reflecting the day's retreat.

However, the real bombshell arrived after hours: Federal prosecutors have opened a criminal inquiry into Fed Chair Jerome Powell. This 'unprecedented' probe, tied to the renovation of the Federal Reserve's headquarters, has prompted Bank of America (BAC) to issue a stark warning, suggesting it 'could potentially delay planned interest rate cuts.'

This development immediately shifts the landscape for monetary policy, with central bankers globally expressing concern for the Fed's independence. Powell himself, in a defiant statement, warned that the fight will determine whether the Fed can 'continue to set interest rates based on factual evidence... or if monetary policy will be swayed by political coercion.' This legal drama introduces immense uncertainty, threatening to make 'higher-for-longer' rates even 'legal-for-longer' and creating a choppier stock environment ahead, a sentiment already echoed by options traders betting on no Fed cuts in 2026.

Amidst this macro turbulence, Apple (AAPL) offered a glimmer of positive company-specific news. Just in, the tech giant unveiled its new Creator Studio subscription suite at a competitive price point, consolidating professional creative tools with deep AI integration. This move, following its historic partnership with Google (GOOGL) to integrate Gemini models into Siri, aims to bolster Apple's services strategy and address past criticisms regarding its AI features. While a positive for Apple, this news is largely overshadowed by the developing Fed situation, which promises to dominate headlines as we look towards tomorrow's open. Elsewhere, Toyota (TM) saw shares jump after a sweetened buyout offer, but the overarching mood remains cautious, with earlier reports indicating persistent macro headwinds from rising household costs and geopolitical risks.

Breaking on the AI front: Nvidia (NVDA) CEO Jensen Huang delivered a critical "reality check" on the extreme hype around "God AI," emphasizing practical solutions, which could re-calibrate investor expectations, even as the company's long-term position in the AI boom remains strong. This comes as Haivision (HAV) surges, reporting a 33% revenue increase in Q4 2025, driven by strong real-time video demand, indicating robust activity in select tech segments. Meanwhile, an earlier report confirms Apple's (AAPL) partnership with Google (GOOG, GOOGL) is viewed as a major loss for OpenAI, intensifying competition in the AI landscape.

Elsewhere in the AI infrastructure build-out, GE Vernova (GEV) continues to impress. Earlier reports reinforce its strategic positioning, boasting massive order growth from hyperscalers and reiterating its status as sold out through 2028 for power generation equipment, supported by a doubled dividend and increased buyback authorization. Conversely, micro-cap BRC Group (RILYL) detailed its previously reported strong quarter, with $277.87 million in revenue and $91.08 million in net income, explaining its earlier stock surge.

Broader market sentiment remains mixed with notable headwinds: Geopolitically, oil experts are flagging a heightened risk of revolutionary upheaval in Iran, adding fresh uncertainty to global oil supplies despite earlier de-escalation signals. China's new ban on cybersecurity software from U.S. and Israeli firms creates further tech sector friction. On the corporate front, Hilton (HLT) faces continued challenges, with an earlier report detailing multiple DoubleTree hotel closures nationwide and a lowered full-year RevPAR outlook due to operational underperformance. Adding to economic concerns, the escalating costs of extreme weather events, exemplified by impacts on companies like Coca-Cola (COKE), present a growing threat to corporate bottom lines.

In other corporate news, former President Trump's social media post, accusing Netflix (NFLX) of being 'woke,' introduces a new wrinkle and potential regulatory risk to the Netflix-Warner Bros. Discovery (WBD) merger. Dow Jones futures signal weakness, identifying Broadcom (AVGO) and AppLovin (APP) as key losers alongside Tesla (TSLA) and Wells Fargo (WFC). Separately, Butterfly Network (BFLY) is facing severe pressure with news of a potential delisting.

Breaking: AI Narrative Evolves, Broader Market Mixed on Macro Data. The AI sector remains a key driver, with Nvidia (NVDA) in focus. Just in, CEO Jensen Huang delivered a "reality check" on the extreme AI hype, though this comes on the heels of statements from Alphabet and Amazon potentially mitigating Nvidia's biggest risk to its AI leadership. Earlier, Nvidia and AMD shares dipped as OpenAI expanded its compute capacity with Cerebras in a deal reportedly worth over $10 billion. Despite this, TSMC (TSM) is still projected for a significant profit leap in Q4 driven by the AI boom.

Further into the AI infrastructure build-out, GE Vernova (GEV) signals strong conviction, confirming massive order growth from hyperscalers, doubling its dividend, and increasing buyback authorization. The company projects $22 billion in cumulative free cash flow by 2028, solidifying its role as a core AI backbone. Elsewhere in tech, Intel (INTC) surged to a nearly two-year high, driven by investor confidence in President Trump's support for chip manufacturing ambitions, while Microsoft (MSFT) remains "well underpriced" according to Morgan Stanley due to strong corporate enthusiasm for its AI offerings.

Broader market sentiment is currently mixed. The Nasdaq Composite logged its worst day in four weeks, with Big Tech and Major Banks sliding. While Wells Fargo (WFC) came up short on revenue, Bank of America (BAC) and Citigroup (C) both topped estimates, suggesting a nuanced picture within the financial sector. On the macro front, November data showed wholesale inflation was softer than expected, and retail sales moved higher, offering a constructive counterpoint to underlying inflation concerns.

Geopolitically, crude oil saw a significant reversal as prices fell nearly 2% after President Trump signaled a potential de-escalation with Iran, stating that killings are stopping and there are "no plan for executions." This provides a temporary relief from earlier concerns about potential revolutionary upheaval.

In other notable movers: Haivision (HAV) reported a strong Q4, with revenue surging 33% on growing real-time video demand. BRC Group (RILYL) soared after filing its quarterly report ahead of the Nasdaq deadline. Conversely, Tesla (TSLA) faces headwinds, dropping after Elon Musk's decision to shift Full Self-Driving (FSD) to a subscription-only model and ongoing struggles with inventory in India. Verizon (VZ) received FCC approval to make it harder for customers to switch, a move that could improve retention but is facing significant consumer backlash. Hilton (HLT) is seeing multiple DoubleTree hotel closures and lowered its full-year RevPAR outlook, signaling challenges in the hospitality sector. Lastly, a report highlights the rapidly rising costs of extreme weather events, posing a growing economic threat.

Breaking: AI Dynamics Shift, Macro Headwinds Persist. Just in, statements from Alphabet (GOOGL) and Amazon (AMZN) are seen as potentially mitigating Nvidia's biggest risk to its AI leadership. This provides a needed lift to the chip giant (NVDA) following earlier concerns this session regarding new tariffs on advanced chips and a broader AI sector selloff.

Further reinforcing the AI infrastructure narrative, GE Vernova (GEV) is charting a highly bullish course. Its CEO confirmed massive order growth from hyperscalers, booking $900M in Q3 2025 orders compared to $600M for all of 2024. GEV is strategically positioned as a core backbone for the AI revolution, boasting a strong balance sheet, a recently doubled dividend, and increased buyback authorization. Management projects generating at least $22 billion in cumulative free cash flow by 2028.

However, broader market sentiment continues to grapple with significant headwinds. Geopolitically, oil experts are flagging a heightened risk of revolutionary upheaval in Iran, implying increased uncertainty for global oil supplies and potentially upward pressure on crude prices.

Domestically, a new report paints a stark picture for American households, projecting rising costs across groceries, healthcare, utilities, and housing well into 2026. This signals sustained pressure on consumer spending power, forcing traders to weigh these macro and geopolitical pressures against the robust activity within the AI sector.