Midday Markets: Stocks Slip as Warsh Pick, Hot PPI Stir Volatility

Introduction
U.S. equities are lower into lunch after an eventful morning that blended a hotter wholesale inflation print with a consequential Fed leadership headline. According to Monexa AI intraday data around midday, the S&P 500 (^SPX) is at 6,934.44 (-0.50%), the Dow (^DJI) is at 48,680.09 (-0.80%), and the Nasdaq Composite (^IXIC) is at 23,535.14 (-0.63%). Implied volatility is firmer, with the CBOE Volatility Index (^VIX) at 17.50 (+3.67%) and the CBOE Russell 2000 Volatility Index (^RVX) at 22.81 (+1.78%). The morning tone turned risk-off as investors digested President Trump’s intention to nominate former Fed governor Kevin Warsh as the next Fed Chair alongside a hotter‑than‑expected Producer Price Index (PPI) release. Bloomberg and Reuters both flagged the nomination and its potential policy implications, while the Bureau of Labor Statistics reported headline PPI of +0.50% month-on-month and core PPI of +0.70% for December, each above consensus, reinforcing concerns about sticky pipeline inflation BLS, Reuters, Bloomberg.

The opening bell saw indexes gap near flat-to-lower, with losses broadening as the session progressed. Sector leadership bifurcated: telecom-heavy Communication Services outperformed on company-specific beats, while Technology and Basic Materials lagged on semiconductor and metals weakness. A handful of outsized single-stock moves—particularly in memory, wireless, and chemicals—drove dispersion even as the aggregate market drifted lower. The immediate question for the afternoon is whether the defensive rotation persists if rate volatility remains elevated and whether mega-cap tech stabilizes enough to limit index downside.

Market Overview#

Intraday Indices Table & Commentary#

Monexa AI’s intraday tape shows the S&P 500 trading in a 6,910–6,964 range so far today, with breadth negative and volatility up, consistent with a headline-driven session. The Dow underperforms as several large industrials and payments names trade lower, while the Nasdaq’s losses are contained by relatively modest weakness in mega-cap software/hardware counterparties. The ^VIX rising to 17.50 (+3.67%) and ^RVX up to 22.81 (+1.78%) corroborate the steady uptick in risk premia as investors reprice policy and inflation risks Reuters, Bloomberg.

Macro Analysis#

Economic Releases & Policy Updates#

The Bureau of Labor Statistics reported that headline PPI rose +0.50% month-on-month in December, with core PPI (ex-food and energy) up +0.70% month-on-month—well above the +0.30% expectation referenced in pre-market commentary. On a year-over-year basis, headline producer inflation held near +3.00%, while core accelerated to +3.30%. Markets interpreted the upside surprise as a near-term setback to the disinflation narrative, contributing to the intraday rate and equity volatility lift BLS, Reuters.

Regionally, the Chicago Business Barometer rose to 54.0 in January, its first expansionary reading in roughly two years, signaling improving activity in orders, production, and employment. While a single regional print does not define national momentum, the move above the 50 threshold added to the mixed macro picture—firmer activity alongside hotter pipeline inflation—which keeps the policy path in focus Reuters, Financial Times.

The most market-moving policy headline was President Trump’s announcement that he intends to nominate Kevin Warsh as Federal Reserve Chair. Coverage from Bloomberg and the Financial Times emphasized Warsh’s prior hawkish tilt during the financial crisis and his skepticism toward large-scale asset purchases, with analysts highlighting potential shifts toward balance sheet normalization and changes to Fed communications if confirmed Bloomberg, Financial Times. Reuters additionally noted that regulatory experts expect a Warsh-led Fed to be more open to easing certain Wall Street bank rules, even as the bond market remains focused on the inflation/rates nexus Reuters.

There was also noise around governance: CNBC interviewed National Economic Council Director Kevin Hassett, who suggested a Department of Justice matter involving Chair Powell should be resolved quickly and not impede the Warsh process. While not directly market-moving, the commentary underscores the sensitivity around Fed independence during a leadership transition CNBC.

Global/Geopolitical Developments#

Outside the U.S., risk sentiment has been influenced by the drawdown in cryptocurrencies, with bitcoin sliding toward $80,000 in morning trade. The slump has pressured crypto-exposed equities, including COIN, and weighed on broader risk appetite, according to Monexa AI and Bloomberg coverage of the crypto tape. Precious metals sold off as well, with miners sharply lower, a move widely noted across market commentary and consistent with sector performance screens Bloomberg, Reuters.

With the Warsh nomination, investors are also parsing potential U.S. regulatory shifts, particularly for large banks. The Financial Times has reported that a Warsh-led Fed could tilt toward governance reforms and a more deregulatory stance for Wall Street, a factor that may eventually influence bank capital and supervision frameworks. For now, the intraday impact is subtle: financials are modestly weaker, with payments and crypto-sensitive names underperforming, while the broader policy debate keeps implied volatility supported Financial Times.

Sector Analysis#

Sector Performance Table#

Note: Two data feeds show discrepancies today. Monexa AI’s heatmap indicates a telecom/staples defensive bid with Technology and Materials lagging, while one sector snapshot shows more uniform negatives. The table below reflects the more granular intraday breadth and single‑stock leadership observed across the tape.

Within Technology, the drag is concentrated in semiconductors and equipment. Monexa AI’s heatmap flags outsized losses in KLA Corp (KLAC at roughly -12.80% and Advanced Micro Devices (AMD at about -4.66%, alongside softness in mega-caps like Apple (AAPL at around -0.84%. This weakness is partially offset by memory leader SanDisk (SNDK, up about +10.10% on a major earnings beat and guidance implying “unprecedented demand,” and Broadcom (AVGO near +0.61%. The mixed leadership leaves the sector firmly negative and the primary index headwind.

Communication Services is the standout positive group, supported by a large upside move in Verizon (VZ near +9.00% intraday after a Q4 beat and upbeat 2026 outlook. Cable also rallied, with Charter (CHTR up around +8.30%, and wireless peer T-Mobile US (TMUS near +3.52%. Notably, the ad platforms traded softer—Meta Platforms (META around -2.95%, Alphabet (GOOGL and (GOOG slightly negative—so the sector’s strength is concentrated in telecoms rather than internet platforms.

Basic Materials is the weakest small-to-midweight sector, with large drawdowns in miners and specialty materials. Newmont (NEM is down roughly -8.99%, Freeport-McMoRan (FCX around -7.64%, and Albemarle (ALB near -6.75%, consistent with pressure in precious and industrial metals. Industrial gases provided a counterpoint: Air Products (APD rose about +5.07%, while Dow Inc. (DOW gained roughly +2.96%, highlighting idiosyncratic strength within chemicals.

Consumer Defensive shows a clear haven bid, led by Church & Dwight (CHD at about +3.49% and Colgate-Palmolive (CL near +3.40% following earnings beats. Packaged food names like General Mills (GIS gained around +2.05%, while beverages Coca-Cola (KO and PepsiCo (PEP added +0.63% and +0.92%, respectively. One outlier: Costco (COST fell around -2.29% despite broader staples strength.

Energy is essentially flat in aggregate, masking dispersion among integrateds and E&Ps. Chevron (CVX is up roughly +1.86% after reporting an EPS beat and a 20.7% jump in production driven by the Hess deal and Permian growth, while Exxon Mobil (XOM is slightly negative at around -0.65% despite topping revenue estimates. Gas‑levered EQT (EQT is up about +1.99%, and ConocoPhillips (COP around +0.82%, while services like Schlumberger (SLB trend modestly lower (-0.76%).

Utilities and Real Estate underperformed as rate volatility picked up, with NextEra Energy (NEE down around -1.85%, Vistra (VST near -1.94%, American Tower (AMT around -2.50%, and Equinix (EQIX near -1.28%. A few exceptions—Welltower (WELL around +0.55% and PG&E (PCG around +0.07%—showed resilience but didn’t alter the sector tone.

Industrials lagged broadly, with L3Harris (LHX down about -3.77%, United Airlines (UAL around -2.41%, and Emerson Electric (EMR near -2.33%. Defense pockets showed relative strength, with Lockheed Martin (LMT up about +1.11% and GE Aerospace (GE near +2.20%, reflecting the market’s preference for quality cash flow within cyclicals.

Company-Specific Insights#

Midday Earnings or Key Movers#

Verizon (VZ surged roughly +9.00% intraday after posting adjusted EPS of $1.09 versus $1.06 expected and revenue of $36.4 billion versus $36.1 billion consensus. The company highlighted its strongest mobility and broadband volumes since 2019, including 616,000 postpaid phone net adds and 372,000 broadband adds. Management’s 2026 outlook was described as stronger than anticipated, supporting the rally (Monexa AI; Reuters.

Chevron (CVX reported adjusted EPS of $1.52, ahead of the $1.45 consensus, with production up 20.7% year over year to 4,045 MBOE/d, driven by Hess integration and Permian growth. Revenue of $46.87 billion missed slightly versus ~$47.15 billion estimates, and profit declined year over year due to lower crude prices, but investors focused on scale, volumes, and the durability of cash returns (Monexa AI; Bloomberg.

Exxon Mobil (XOM also beat on earnings (EPS $1.71 vs. $1.68) and topped revenue expectations at $82.31 billion. The company generated $12.7 billion in operating cash and reiterated strategic strength in Guyana, the Permian, and downstream/chemicals, according to its commentary (Monexa AI; Reuters. Shares traded modestly lower intraday, reflecting commodity sensitivity and the day’s risk tone.

American Express (AXP slipped more than -3.00% intraday despite revenue slightly ahead of estimates ($18.98 billion vs. $18.92 billion) and EPS roughly in line ($3.53 vs. $3.54). The company’s outlook midpoint topped consensus, but the tape punished cards and payments amid broader concerns about discretionary spend and rate sensitivity (Monexa AI; Financial Times.

Colgate-Palmolive (CL rose more than +4.00% after beating on revenue ($5.23 billion vs. $5.12 billion) and EPS ($0.95 vs. $0.91), despite a sizable non-cash impairment in skin health. Church & Dwight (CHD advanced about +4.00% on an EPS beat ($0.86 vs. $0.84) and a 90 bps gross margin expansion to 45.5% thanks to productivity, mix, and volumes (Monexa AI; Reuters.

Memory standout SanDisk (SNDK “stunned” with a large upside surprise and guidance that more than tripled Wall Street estimates, powering an intraday gain of roughly +10.10%, according to company commentary aggregated by Monexa AI. The result contrasts with semiconductor equipment, where KLA (KLAC fell near -12.80% despite headline beats—an indication of high expectations and order-book sensitivity. Advanced Micro Devices (AMD traded down around -4.66%, while mega-cap tech tracked slightly negative to flat: Apple (AAPL near -0.84%, Nvidia (NVDA little changed, and Broadcom (AVGO modestly positive. The dispersion underscores the market’s scrutiny of AI-capex dependencies and memory pricing dynamics Bloomberg.

Consumer cyclicals featured outsized winners and losers. Deckers (DECK rallied around +15.30% on strong brand momentum and guidance, while Tesla (TSLA was up roughly +4.35%. In contrast, cruise operators fell sharply—Royal Caribbean (RCL near -7.64%, Norwegian (NCLH around -5.34%, and Carnival (CCL near -4.83%—with online travel bellwether Booking Holdings (BKNG down around -2.74% (Monexa AI; Reuters.

Healthcare rotated defensively within the sector. Large-cap pharma and selected medtech outperformed—Eli Lilly (LLY near +1.12%, Abbott (ABT around +1.85%, Gilead (GILD near +0.99%, Medtronic (MDT about +0.98%—while biotech and services lagged: Moderna (MRNA approximately -4.42% and Thermo Fisher (TMO around -1.87%.

Conflicting Sector Reads—and Why We Favor Breadth#

We note a discrepancy across feeds: one sector snapshot lists Consumer Defensive at about -1.07% and Communication Services near -0.05% at midday, while Monexa AI’s heatmap shows Consumer Defensive roughly +0.50% and Communication Services around +0.81%. Given clear stock-level confirmation—VZ +9.00% and CHTR +8.30% in Communication Services; CL and CHD both roughly +3–4%—we prioritize the breadth-consistent view that telecoms and staples are outperforming. We will continue to flag divergences when they arise and anchor conclusions in the strongest corroborated evidence set.

Extended Analysis#

Intraday Shifts & Momentum#

The morning’s narrative was framed by two macro impulses: a hotter PPI print and the Warsh nomination. The PPI upside (+0.50% headline, +0.70% core month-on-month) revived concerns that producer-price disinflation has stalled, which tends to lift rate volatility and pressure long-duration equities. That dynamic was visible in the underperformance of Real Estate and Utilities, while the ^VIX and ^RVX climbed. The Warsh headline added a policy-uncertainty layer: Financial Times and Wall Street Journal analyses have associated Warsh with a preference for balance sheet normalization and a more restrained view of asset purchases, even as some regulatory experts anticipate a friendlier posture toward bank rule easing Financial Times, Wall Street Journal.

Price action revealed the classic “quality‑defensive and idiosyncratic winners” playbook. Telecoms led within Communication Services, courtesy of VZ execution and a constructive 2026 outlook, while staples rallied on resilient margins and cash-flow visibility—CL and CHD. At the same time, cyclicals tied to discretionary travel and commodity beta struggled. Miners (NEM, FCX, ALB were hit hard as metals sold off, aligning with headlines about traders taking profits in gold and silver amid rising rate volatility Reuters. Airlines and selected industrials lagged, consistent with a risk-off tone.

Technology’s story was more nuanced. The tape punished high-expectation subsectors—semiconductor capital equipment (KLAC—and high-beta AI beneficiaries (AMD, while rewarding memory (SNDK where supply/pricing dynamics and company-specific guidance have turned decisively positive. Mega-cap software/hardware staples (AAPL, MSFT, NVDA, ORCL were modestly negative to flat, reminding investors that even small percentage moves in the largest weights can anchor the broader index.

Another under‑the‑surface theme is crypto sensitivity. With bitcoin sliding toward $80,000, equity proxies COIN and MSTR traded lower, contributing to weakness within Financials and the broader risk complex. This is consistent with prior episodes in which crypto drawdowns parallel softer risk appetite, even if causality is hard to isolate Bloomberg.

For positioning into the afternoon, the focus is on whether index-level volatility subsides as the morning headline flow fades. If mega-cap tech stabilizes around flat and telecoms/staples retain leadership, indexes could hold near current levels despite cyclical weakness. Conversely, a further pick-up in rate volatility could extend losses in Utilities, Real Estate, and high‑beta growth, reinforcing the defensive tilt.

Conclusion#

Midday Recap & Afternoon Outlook#

By midday, U.S. stocks are down modestly, with risk premia higher after a hotter PPI and the Fed leadership headline. According to Monexa AI, the S&P 500 trades near 6,934.44 (-0.50%), the Dow at 48,680.09 (-0.80%), and the Nasdaq at 23,535.14 (-0.63%). Sector leadership is bifurcated: telecoms and staples rally on earnings quality and cash‑flow resilience, while Technology and Materials lag on semiconductor and metals weakness. Energy is mixed but supported by upside in CVX on strong production and a print from XOM that underlines cash-generation strength.

The afternoon path hinges on whether rate volatility cools and whether mega-cap tech steadies. Key swing inputs include any additional commentary on the Warsh nomination, incremental reads on inflation expectations, and the durability of the telecom/staples bid. With ^VIX and ^RVX elevated relative to recent lows, risk management and selectivity remain paramount into the close Reuters, Financial Times.

Key Takeaways#

• According to Monexa AI, major indexes are modestly lower at midday: ^SPX -0.50%, ^DJI -0.80%, ^IXIC -0.63%, while ^VIX is up to 17.50 (+3.67%) and ^RVX to 22.81 (+1.78%).
• BLS reported PPI of +0.50% m/m and core +0.70% m/m, above expectations, lifting rate and equity volatility BLS, Reuters.
• President Trump’s plan to nominate Kevin Warsh as Fed Chair added a policy-uncertainty layer. FT and WSJ coverage point to his preference for balance sheet normalization and potential regulatory shifts Financial Times, Wall Street Journal.
• Sector rotation favors telecoms and staples—VZ and CHTR up sharply; CL and CHD higher on margin resilience—while semis (KLAC, AMD and miners (NEM, FCX weigh on Technology and Materials.
• Energy dispersion continues: CVX advances on volumes and execution; XOM prints solid cash flow but trades slightly lower amid commodity sensitivity.
• Crypto weakness (bitcoin toward $80,000) pressures equity proxies COIN and MSTR, adding to a cautious risk tone Bloomberg.

Investors should maintain a selective stance—leaning into defensives with demonstrated pricing power and visibility—while keeping tight risk controls on high‑beta cyclicals and semis until rate volatility and policy signals settle.