Tuesday was one of those sessions where there was nowhere to run and nowhere to hide, except for Consumer Staples (XLP) names. Meanwhile, I do now believe the OpenAI story has become a ‘show me’ story, and names under that umbrella (see Oracle (ORCL)) will continue to come under pressure.

Rotation Picks Up

There was a stampede out of “Mag Seven” and Mega-cap tech yesterday, but banks positioned to benefit from such an exodus also fared poorly.

Large-caps took the brunt of selling, with growth and momentum stocks taking the hardest hits.  Conversely, small-caps endured less pain, though it's not a flight-to-safety play. Considering the spike in bond yields, small-caps held up well.

Bond Yields Spike

The 10-year yield (TNX) broke higher yesterday, a move reminiscent of the surge seen after the announcement of reciprocal tariffs last year.

But this was not just a US-centric move; it may have had more to do with the spike in Japanese bond yields on the 30-and 40-year maturities. After decades of coasting along, after giving up dreams of global economic superiority, Japan voted for growth. But it might be too late, and now the government is pushing the Japanese Yen in one direction, and the Bank of Japan (BOJ) is pushing it in the other direction.

The Street awaits President Trump’s speech at Davos, Switzerland, and the latest read on inflation. On that note, truflation has signaled inflation in freefall.

Final Observation

Last thought on yesterday’s stock market session. Investors are still clamoring to be in hot names, driven by solid fundamental underpinnings, including the expansion of the artificial intelligence (AI) story beyond picks & shovels.

President Trump is expected to make officials rework globalism. Not sticking a stake in its heart, but making sure America and Americans are no longer collateral damage.

Today’s Session

I’m watching President Trump’s ongoing address at Davos. The market is stable for the moment. Big banks in Japan are trying to turn the situation around, and maybe the market shifts its focus back to fundamentals. When that happens, this market resumes its upward march.