markets

Luke Kawa1/27/25

DeepSeek AI is reviving the most beaten-down part of the US stock market

DeepSeek AI is putting a deep dent in the US stock market, especially the chip companies who’ve been the beneficiaries of a big spending binge.

But the hit to the S&P 500 is also pushing Treasury yields lower as investors leave riskier assets for safer ones, perhaps also taking a bit of a dimmer view on economic growth should AI-adjacent business investment moderate. This drop in yields is a big boon for stocks tied to the real estate sector, which has gotten shellacked as long-term borrowing costs stayed high despite the Federal Reserve’s rate cuts. Mortgage rates tend to follow long-term bonds, and the 10-year Treasury yield hit its lowest level of the year today, just below 4.5%.

Mortgage lender Rocket Companies (disclosure: I own it) is on a tear, up more than 5%, while the iShares US Home Construction ETF is up nearly 2% as of 12:15 p.m. ET.

Call it a silver l-AI-ning: while this new chatbot has struck at the heart of the US stock market’s greatest strength, it may be reducing the US economy’s most obvious vulnerability at the same time.

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War has pushed global markets into the danger zone

Correlations within the US stock market and between asset classes are rising.

Screaming Man

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Max Knoblauch4h

Versant climbs in its first quarter after spin-off, announces dividend and $1 billion stock buyback

Versant Media, the owner of cable TV assets including CNBC, MS Now, and Golf Channel, reported its first earnings since spinning off from Comcast earlier this year. The stock climbed 3% after markets opened.

Investors appear to like Versant’s $1 billion stock buyback plan and its newly announced quarterly dividend of $0.375 per share.

Versant reported Q4 revenue of $1.55 billion, shy of the $1.56 billion expected by analysts polled by FactSet. The company posted earnings of $0.72 per share in the quarter, below estimates of $0.96 per share.

MS Now, formerly MSNBC, was the most watched news channel on election night in November, Versant said. The network will launch a direct-to-consumer platform later this year.

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Energy price spike on Mideast war has traders betting on no Fed cuts through June

A war in the Middle East, and the resultant upward pressure on oil prices, has caused traders to reverse bets that the Federal Reserve will cut interest rates in the first half of this year.

The prediction market-implied odds of a rate cut in June are less than 45% on Tuesday morning. Last week, the odds of a rate cut in June were around 60%. This comes as US national average gasoline prices rose 3.7% on Monday, their biggest one-day jump since 2005, according to data from the American Automobile Association.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

In the short term, higher energy prices put upward pressure on inflation and downward pressure on economic activity. Higher gasoline prices reduce households’ ability to spend more on other discretionary goods and services.

Normally, Fed officials would want to “look through” the impact of higher energy prices as a temporary source of upward pressure on inflation that is not indicative of the underlying trend. That’s why energy (and food) prices are stripped out of core inflation. However, this time might be different:

Inflation has run above the Federal Reserve’s target for a prolonged period.
The central bank is a little scarred by the un-transitory and severe postpandemic inflation (which was meaningfully accelerated by Russia’s invasion of Ukraine).
Monetary policymakers were already signaling that the stabilization in jobs data and previous cuts, which brought their policy rate closer to a neutral setting, meant the bar for additional easing was higher.

“I think the Fed will be reluctant to elevate growth over inflation risks right now,” wrote Neil Dutta, head of US economics at Renaissance Macro Research. “Cuts have been a close-call as it is; thus, it’s tough to look through inflation when you are coming off a period of high inflation.”

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Matt Phillips5h

Dave Inc. reports better-than-expected Q4, snags price target hikes

Small-cap neobank Dave Inc. got an initial pop before paring those gains shortly after market open and falling into the red. It reported better-than-expected Q4 adjusted numbers yesterday after the bell and then collected a few price target hikes from analysts at Canaccord Genuity, Keefe Bruyette & Woods, and B. Riley Securities, but the shares were unable to hold on to the early enthusiasm.

The stock has had a pretty stupendous run, rising 937% in 2024 and 155% last year. Through yesterday’s close, 2026 hasn’t been as much fun, with the shares down 10%.

It does seem like the business has been turning toward steadier profitability, with GAAP net income hitting a quarterly record of $92 million in Q3 and following that up in Q4 with $66 million, up more than 290% from the same quarter last year.

Dave Inc. (DAVE) Surpasses Q4 Earnings Estimates

Dave Inc. (DAVE) Surpasses Q4 Earnings Estimates

The stock has had a pretty stupendous run, rising 937% in 2024 and 155% last year. Through yesterday’s close, 2026 hasn’t been as much fun, with the shares down 10%.

It does seem like the business has been turning toward steadier profitability, with GAAP net income hitting a quarterly record of $92 million in Q3 and following that up in Q4 with $66 million, up more than 290% from the same quarter last year.

markets

Max Knoblauch5h

AutoZone dips on weaker-than-expected Q2 sales growth

AutoZone reported results for its fiscal second quarter, ended February 14, before markets opened Tuesday. Its shares were down 4% in premarket trading.

AutoZone posted earnings of $27.63 per share, beating Wall Street estimates of $27.15 per share, but the company booked only $4.27 billion in revenue in the quarter, shy of the $4.31 billion consensus estimate from analysts polled by FactSet.

Domestic same-store growth of 3.4% underwhelmed expectations of 4.9%, with CEO Phil Daniele pointing to January and February winter storms as a disrupting factor.

The auto parts retailer said it plans to open between 350 and 360 stores globally in the full fiscal year, ahead of the 304 expected by Wall Street.

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