Screaming man

War has pushed global markets into the danger zone

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

Low correlations have been one of the dominant features of this bull market.

That is, the S&P 500’s heavyweights have tended to march to the beat of their own drummers, despite seemingly having a common critical success factor (whether their AI spending binges will pay off). Low correlations help tamp down volatility at the index level — when one stock is down, another’s up. When volatility is suppressed, there are fewer scary daily drawdowns that inspire panic and send the index screaming even lower.

Tuesday’s rout is the most meaningful challenge to the low-correlation environment that’s been reestablished over the past few months. And that’s not only true for what’s within the stock market, but also between different asset classes.

There’s nowhere to hide (except the US dollar, really). This is poised to be the first session since February 27, 2025, in which the SPDR S&P 500 ETF, SPDR Gold Shares ETF, and iShares Bitcoin Trust are down at least 1% with the iShares 20+ Year Treasury Bond ETF also negative.

There have only been five sessions like this since IBIT’s inception in early 2024.

One-month correlations — the extent to which the S&P 500’s constituents are expected to move in the same direction, derived from options prices — are spiking, on track for their highest close since November 20 (the Q4 bottom for US stocks).

Max Knoblauch3h

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.

Luke Kawa3h

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.”

Matt Phillips3h

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

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%.

Max Knoblauch4h

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.

Luke Kawa4h

Nvidia, AMD slump as US government said to consider capping AI chip sales at 75,000 per Chinese buyer

The US is considering putting a cap of 75,000 on the number of AI chips that Chinese firms can purchase, per Bloomberg, citing people familiar with the matter.

Both Nvidia and Advanced Micro Devices are lower in premarket trading, as this limit would apply to the combined number of H200 and MI325 chips that buyers would be able to amass.

Of course, the broad risk-off tone as Middle East tensions weigh on global equities, in particular memory stocks, is also contributing to downside on Tuesday morning.

Leading Chinese tech companies like Alibaba and ByteDance (parent company of TikTok) would reportedly like to purchase a number of chips well above this potential limit.

These mulled limits are still currently a moot point. On Nvidia’s Q4 conference call, CFO Colette Kress mentioned that the company still does not yet know whether it will be able to ship any AI chips to China. Whether or not Beijing will allow tech companies to import the chips is an unsettled question.

In January, the Commerce Department revised its export license review policy for certain semiconductors, laying out some of the terms and stipulations that companies would need to abide by in exporting these processors to China. That came on the heels of US President Donald Trump’s Truth Social post in December that said export restrictions on these chips would be relaxed.

(Since more powerful AI processors have seemingly been able to make their way into China in violation of export controls, one wonders how difficult it would be for Chinese giants to ultimately accumulate all the H200s they desire if China permits these imports.)