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The three main U.S. equity indexes opened in the green, trended higher through the morning, buckled after lunch and took off during the last two hours of another trading session defined for better and for worse by President Donald Trump.
At the closing bell, the Dow Jones Industrial Average was up 1.2% to 49,077, the S&P 500 had added 1.2% at 6,875, and the Nasdaq Composite was higher by 1.2% to 23,224.
Early in the day, President Trump said he wouldn’t use force to annex Greenland, but he did argue for a peaceful transaction before the Davos crowd shortly after the opening bell. “We probably won’t get anything unless I decide to use excessive strength and force where we would be, frankly, unstoppable,” Trump said. “But I won’t do that.”
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Responding to criticism from Canadian Prime Minister Mark Carney that what we’re experiencing is “a rupture, not a transition,” and general European opposition to his Greenland ambitions, Trump said Canada “should be grateful to us,” adding that “Canada lives because of the United States.”
Later, in a post on Truth Social, Trump removed his threat of new tariffs against European countries that oppose his land grab.
“Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte,” the president posted, “we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.”
Meanwhile, the Supreme Court heard oral arguments today in Trump v Cook, a case that will determine whether Trump can fire Fed Governor Lisa Cook at will. Associate Justice Brett Kavanaugh, a Trump appointee, wondered whether allowing the president to fire Cook would “weaken if not shatter the independence of the Federal Reserve.”
There is no set timetable for a ruling from the Court, and Cook is expected to remain on the Fed board in the meantime.
The Cboe Volatility Index reverted to within its “normal” range at 17.11 from 20.09. A reading between 12 and 20 on the “fear index” reflects a calm market. The 10-year U.S. Treasury yield declined to 4.251% from 4.295% on Tuesday. The U.S. Dollar Index firmed to 98.77 from 98.64.
In a research note published before Trump’s statements today, analysts at Morgan Stanley identified the president’s policies on taxes and trade as well as his aggressive enforcement of immigration laws and attacks on public institutions as fresh drivers amid a longer-term shift away from the dollar as the lynchpin of a globalized economy.
“On net,” the analysts write, “we think these factors are neutral to slightly accelerating this transition away from the dollar, but their evolution over the near term will likely be critical in determining the extent of this shift.”
The original chip stock is on the move
Intel (INTC) was up 11.7% and hit a four-year high on Wednesday after multiple Wall Street analysts previewed fourth-quarter results and first-quarter guidance from the tech stock.
“We expect Intel to report better results and slightly higher guidance, supported by strong server CPU demand,” writes KeyBanc analyst John Vinh, who notes “visibility that server CPU supply is nearly sold out through 2026.”
Vinh upgraded INTC from to Overweight (Buy) from Sector Weight (Hold) and set a Street-high 12-month target price of $60.
Citi analyst Atif Malik upgraded INTC to Neutral (Hold) from Sell and upped his 12-month target price to $50 from $29, citing a “unique window of opportunity” for Intel Foundry Services to grab market share amid capacity problems for Taiwan Semiconductor Manufacturing (TSM, -0.3%).
Wedbush analyst Matt Bryson, who maintained a Neutral (Hold) rating and a $30 12-month target price, is more circumspect. “We see Intel’s valuation as stretched,” Bryson explains, “but also we remain unwilling to take a more cautious view given 1) near-term trends that could be better than expected, and 2) the stock’s variability tied to newsflow (that’s been difficult to predict).”
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So is Susquehanna analyst Christopher Rolland, who raised his 12-month target price to $45 from $40, but reiterated his Neutral (Hold) rating. Rolland notes that “continued share losses” to Advanced Micro Devices (AMD, +7.7%) “may limit upside” for INTC.
Intel, which was co-founded in 1968 by the guy who coined “Moore’s Law” and completed its initial public offering (IPO) in 1971, is up on the earnings calendar after Thursday’s closing bell.
The Oracle of Omaha doesn’t like KHC
Kraft Heinz (KHC) was down 5.7% and found a new 52-week low after management said in a regulatory filing that Berkshire Hathaway (BRK.B, -0.3%) may “offer to sell from time to time” shares of the consumer staples stock it holds as a result of the 2015 merger between Kraft and Heinz.
Kraft Heinz announced in September that it plans to split into two companies, and Warren Buffett said shortly afterward that he was “disappointed” in management’s decision.
Buffett conceded that the merger hasn’t worked out – the value of Berkshire’s stake is down from $9.8 billion to $7.8 billion. He also said he didn’t see much point in undoing the deal.
Berkshire remains the biggest holder of KHC stock, with 325.4 million shares and a 27.5% stake. And now we see what can happen when and if Buffett and Berkshire bail on Kraft Heinz stock.