Major indices bounced following this morning’s economic data and after Trump hit pause on the 10% tariffs yesterday.

The Russell 2000 index, a critical barometer for domestic small cap health, hit a record high and is leading the broad rally.

Investors continue to have an insatiable appetite for stocks and ETFs. According to JPMorgan, retail investors have bought $12.9 billion, a new record so far.

Eight sectors are moving higher, with Communication Services (XLC) in the lead. The sector is led by Meta Platforms (META) and is also leading the magnificent seven. The company announced it is rolling out the first AI models from its new Superintelligence Labs team internally. Materials (XLB) are the runner-up as metal commodity prices continue to rise.

The more risk-off sectors such as Real Estate (XLRE) and Consumer Staples (XLP) are lagging this afternoon.

Sam Altman is reportedly meeting with Middle East investors for a new $50B funding round between a $750B and $830B valuation.

Investors are currently pricing in a 95% chance of no cut in the next FOMC meeting next week.

Economic Data

Q3 GDP was revised slightly higher to an annualized rate of 4.4% from the initial reading of 4.3%. The revision came primarily from stronger exports and a smaller drag on inventories.

Both Core and headline PCE came out in line with estimates for November, with the increase being primarily driven by services as well as gasoline and motor vehicles. The only part to miss estimates was Personal income, which accelerated from October to 0.3% M/M in November, compared to estimates of a 0.4% rise.

• PCE: flat from October at 0.2% MoM; Est. 0.2%
• Core PCE: flat from October at 0.2% MoM; Est. 0.2%
• PCE: edged up from 2.7% in October to 2.8% YoY; Est. 2.8%
• PCE Core: edged up from 2.7% in October to 2.8% YoY, Est. 2.8%
• Personal Income: up from 0.1% in October to 0.3%, Est. 0.4%
• Personal Spending: flat from October at 0.5%, Est. 0.5%

Initial Jobless Claims edged 1,000 higher to 200,000 for the week ending on January 17^th, below expectations of a rise to 212,000.