Wall Street Daily (January 15): Nasdaq plunges, all seven tech giants fall; small-cap stocks outperform for the ninth consecutive day; gold remains strong, Bitcoin hits a two-month high

[Summary] US stocks extended their decline on Wednesday, with the S&P 500 falling 0.53%, the Nasdaq plummeting 1.00%, and the Dow Jones Industrial Average edging down 0.09%. The Russell 2000 small-cap index bucked the trend to close up 0.70%. The rotation from tech stocks to cyclical stocks continued to accelerate, as all seven major tech companies fell, dragging down the broader market. The Russell 2000 has outperformed the S&P 500 for nine consecutive trading days, tying the longest winning streak since 1990. Bank earnings beat expectations overall, but stock prices still fell collectively. In asset classes, gold hit an intraday record of $4,647, closing up 0.86%; Bitcoin rose 1.61%, briefly breaking above $97,000, reaching a two-month high. Crude oil retreated after Trump eased Iran-related rhetoric, closing down 0.62%.

I. Major Events

1. Senate introduces cryptocurrency regulation bill on Monday, Coinbase withdraws support before deliberation

The Senate unveiled a long-awaited draft of the cryptocurrency regulatory framework on Monday, clarifying the jurisdiction of the SEC and CFTC over digital assets. The Banking Committee will deliberate tomorrow, having received 137 amendments. The bill bans digital asset service providers from paying interest on stablecoins. However, just 24 hours before the deliberation, Coinbase withdrew its support for the draft. CEO Armstrong stated that the related amendments “would kill stablecoin rewards.” Bitcoin rose to its highest level since November, with crypto-related stocks collectively gaining strength.

2. December PPI data below expectations, core PPI flat

The US Producer Price Index (PPI) for December increased 0.2% month-over-month, lower than the market expectation of 0.3%. Excluding food and energy, the core PPI was flat month-over-month, far below the expected 0.2% increase. Retail sales in November grew 0.6% month-over-month, higher than the expected 0.4%. Despite mild inflation data, it did not change market expectations that the Fed would keep rates unchanged at the end of January, with the CME FedWatch showing the probability of no action remaining above 95%.

3. Trump stated that the killings in Iran have stopped, easing market tensions in the closing session.

Trump, speaking from the Oval Office at the White House, said he had learned from a 'key source' that the killing of protesters in Iran has ceased and that the expected executions will likely not take place. Activists had previously reported over 2,500 deaths in the past 17 days. When asked whether military action was off the table, Trump responded, 'We'll see how things develop.' Additionally, the US military has withdrawn some troops from the largest airbase in the Middle East. Following his remarks, selling pressure in the market eased significantly, with the Nasdaq narrowing its losses from an intraday drop of 1.70% to close at -1.00%, while crude oil prices also declined in tandem.

II. Major Trends

1. The rotation from tech stocks to cyclical stocks has entered an intense phase.

The Nasdaq 100 Index fell by 1.07%, marking its largest decline in a month and nearly erasing its gains for the year. All seven major tech stocks closed lower, but more than 300 components of the S&P 500 rose against the trend, indicating that funds did not exit the stock market en masse but were redistributed among sectors.

2. Small-cap stocks continue to show relative strength, outperforming the broader market for the 9th consecutive day.

The Russell 2000 has outperformed the S&P 500 for nine consecutive days, matching the longest winning streak since 1990. On a three-month basis, small-cap stocks (IWM) gained 5.03%, outpacing large-cap stocks (SPY) at 2.74%. Investors are betting that Trump's policies may benefit small businesses more, while valuation adjustments in tech stocks have prompted capital to seek 'cheaper' opportunities.

3. Value style continues to dominate as growth stocks experience deeper corrections.

On a three-month horizon, value stocks (SPYV) gained 4.19%, outperforming growth stocks (SPYG) at 1.55%. Looking at a two-week timeframe, growth stocks saw a sharper pullback—SPYG dropped 1.03%, while SPYV rose 0.91%. Amid persistently high interest rate uncertainty, investors clearly prefer stocks with safer valuations.

III. Market Sentiment

Market sentiment retreated from the greed zone but has not yet entered panic. The VIX fear index closed at 16.75, up 4.82%, briefly touching 17.06 intraday. Rising volatility reflects uncertainties stemming from tech sector rotations, bank earnings reports, and developments in Iran, but overall remains within the common range of 15-20. The CNN Fear & Greed Index fell to 56, down four points from 60 the previous day. After two consecutive declines, the index moved from the greed zone back to neutral-greed territory, showing cooling sentiment but far from spiraling out of control.

Market breadth exhibited the relatively rare scenario of 'index down, individual stocks up.' While the S&P 500 fell by 0.53%, more than 300 constituents closed higher. The equal-weighted S&P 500 (RSP) continued to hit new all-time highs, reflecting ongoing internal support within the market.

IV. Market Scan

1. Index ETFs

The Russell 2000 (IWM) rose 0.70% against the trend, leading the four major indices and extending the strong performance of small-cap stocks. The Nasdaq 100 (QQQ) fell 1.07%, finishing at the bottom. The divergence between large and small caps continues to deepen, with small caps outperforming large caps for the ninth consecutive day, marking the longest winning streak since 1990. Large-cap tech stocks weighed on the broader market indices, but internal market breadth remained relatively healthy, with over 300 S&P components closing higher.

2. Industry Sectors

The energy sector (XLE) led gains with a 2.26% rise, mainly benefiting from the previous day’s strength in crude oil, while a surge in precious metals also boosted commodity sentiment. However, as Trump softened his stance on Iran-related statements, gains moderated towards the close. Consumer discretionary (XLY) fell 1.58%, hitting the bottom, with heavyweight stocks like Tesla under pressure amid sector rotation. A proposal to cap credit card interest rates also amplified concerns about consumer credit. Technology (XLK) dropped 1.22%, weakened by declines in the 'Magnificent Seven' tech stocks and warnings from state attorneys general regarding AI chatbots. Defensive sectors such as consumer staples (XLP), up 1.38%, and real estate (XLRE), up 1.12%, performed relatively better in a volatile environment.

3. Seven Major Tech Stocks

The 'Magnificent Seven' tech stocks closed collectively lower on Wednesday. Meta fell 2.47%, performing the worst, after being named in a warning letter from 42 state attorneys general regarding issues with AI chatbots, compounding pressure from prior layoffs of 10% at Reality Labs and concerns over AI spending. Microsoft dropped 2.40%, also affected by the AI warning letter, and has corrected by about 15% from its July 2025 high, testing the market's patience for an 'AI return cycle.' Google declined by 0.04%, showing the best relative performance with some defensive characteristics in rotational trading.

4. Chinese概念股

Chinese concept stocks showed mixed performance. Bilibili (BILI) soared 6.18% to hit a new 52-week high, leading the pack, with daily active users growing 9% year-over-year and advertising revenue increasing 23% annually. Multiple brokerages raised their target prices. Futu (FUTU) plunged 5.45% to finish at the bottom, PDD Holdings (PDD) fell 3.98%, and NetEase (NTES) dropped 2.74%.

5. Cryptocurrencies and related stocks

Bitcoin was last quoted around $96,000, up 1.61%. Progress on a Senate crypto regulatory bill draft provided clearer regulatory frameworks, lifting market sentiment. MicroStrategy (MSTR) gained 3.66%, continuing its strong performance, as the company holds 687,410 Bitcoins and benefits from MSCI's decision to retain digital asset companies in its index. Robinhood (HOOD) edged down 0.47%, showing lackluster performance.

$NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

492K Views