A surge within the US dollar has equity strategists expecting “FX headwinds” and other phrases concerning the strong dollar to be a heavily discussed topic this earnings season.

With the US dollar continuing to strengthen, firms with large international exposure are more likely to be discussing how their sales are weakening on account of the foreign exchange crossover.

However the equity research team at Goldman Sachs found an interesting point about when firms miss sales estimates on account of FX headwinds. Their stocks don’t underperform the market by nearly as much.

Dating back to 2016, the Goldman equity strategy led by David Kostin found that firms who miss sales estimates on a continuing currency basis see their stock underperform the market by 3.69% the subsequent day. But when the miss is not on a continuing currency basis, meaning it hasn’t been adjusted for the strong dollar, the corporate’s stock only underperforms by 0.69%.

So in some ways, the market often sees the headwind as a short-term one and is not overly judgemental about it. Still, Kostin notes “firms with domestic-facing sales have typically outperformed firms with international-facing revenues in other periods of US dollar strength.”

Yahoo Finance’s Laura Bratton reports:

Edison International (EIX) — the parent company of the utility Southern California Edison (SCE) — saw its stock drop greater than 12% Monday following an announcement from SCE late last week that it’s being investigated by California fire authorities for its potential link to the Los Angeles wildfires.

SCE said in an announcement Friday that the authorities are investigating whether its equipment “was involved within the ignition” of one among the wildfires in Los Angeles. The utility said one among its power lines fell Jan. 7 but that it “doesn’t know whether the damage observed occurred before or after the beginning of the fireplace.”

Read more here.

Yahoo Finance’s Brooke DiPalma reports:

Shake Shack (SHAK) posted preliminary fourth quarter results that beat expectations, but investors don’t seem convinced.

Shares of the fast-casual chain fell 6% on Monday after the corporate reported same-store sales grew by 4.3% last quarter. Total revenue jumped around 15% yr over yr to $328.7 million.

Shake Shack made a “lot of progress” this past yr “in an environment where you continue to have concerns around wage inflation and potentially some commodity inflation, and you have got some risks which might be form of popping up here over the previous few weeks [like the bird flu],” CEO Rob Lynch told Yahoo Finance on the ICR conference in Orlando, Fla.

For 2025, it projects to expand restaurant margins to 22% from 21.4%, the best margin within the last eight years.

Read more here.

Shares of Honeywell (HON) rose as much as 4% before paring gains on Monday after Bloomberg reported the commercial conglomerate is heading in the right direction to proceed with a breakup amid pressure from activist investor Elliott Investment Management.

In December Honeywell said it was exploring strategic alternatives to unlock shareholder value, including separating its aerospace business. Honeywell is predicted give an update on progress made when it reports its fourth quarter earnings on Febr 6.

Shares of US Steel (X) jumped following news reports that rivals Cleveland-Cliffs (CLF) and Nucor (NUE) are considering making a joint bid for the enduring steel-maker just weeks after the Biden administration blocked a takeover of the Pittsburg-based company by Japan’s Nippon Steel.

As a part of the offer, Cleveland-Cliffs would buy US Steel in money after which sell the corporate’s Big River Steel mill in Arkansas to Nucor, in response to people accustomed to the matter as reported by the Financial Times. News of the joint bid consideration was first reported by CNBC.

Cleveland-Cliffs reportedly plans to supply lower than $40 a share to purchase US Steel, far lower than the $55 a share that Nippon Steel had agreed to pay for the corporate last yr before the Biden administration blocked the merger citing national security concerns.

US Steel stock jumped greater than 5% on the news, while shares of Nucor and Cleveland-Cliffs also rose.

Stocks got here off their session lows by 1:00 p.m. ET on Monday with the main averages mixed.

The S&P 500 (^GSPC) pared losses to fall greater than 0.2% while the Nasdaq Composite (^IXIC) dropped 0.8%. The Dow Jones Industrial Average (^DJI) rose 0.5%.

Tech stocks lagged as investors rotated out of the sector. EV giant Tesla (TSLA) erased losses of greater than 2% to briefly flip above the flatline.

AI chipmaker Nvidia (NVDA) fell greater than 2%. Social media company Meta (META) and iPhone maker Apple (AAPL) each fell greater than 1%.

Oil prolonged gains to a five-month high on Monday as worries grew over supply disruptions impacting big importers China and India from wide-ranging sanctions against Russian crude.

West Texas Intermediate crude (CL=F) rose roughly 2% to trade above $78 per barrel while Brent crude futures (BZ=F), the international benchmark price, surpassed $81, the best level since August.

The move higher comes after an almost 4% surge on Friday in response to wide-ranging sanctions against Moscow imposed by the US, targeting oil executives, traders, and greater than 180 vessels, bringing the overall variety of ships sanctioned to 451, in response to JPMorgan evaluation.

“There are indications that, just like Indian refiners who avoid taking Russian oil in tankers under sanctions or in ships insured by sanctioned Russian insurers, China can be becoming a less-permissive buyer,” wrote JPMorgan analysts in a recent note.

Bitcoin (BTC-US) fell 3% over the past 24 hours to hover just under $92,000 per token. Enthusiasm for the token has waned in recent days as risk assets have sold off amid rising US Treasury yields and a better US Dollar.

Meanwhile bitcoin proxy MicroStrategy (MSTR) bought about 2,530 tokens for $243 million between Jan.6 and Jan. 12, in response to the corporate’s latest filing.

The corporate currently holds roughly 450,000 bitcoins. MicroStrategy stock slumped 4% on Monday.

‘Magnificent 7’ stocks led the tech sell-off on Monday as investor optimism over Federal Reserve rate cuts this yr began to fade ahead of a highly anticipated inflation print this week.

AI chip giant Nvidia (NVDA) fell roughly 3% after the Biden administration released an updated export rule aimed toward controlling the flow of artificial intelligence to “adversaries” comparable to China.

EV maker Tesla (TSLA) retreated around 1% while social media platform Meta (META) and iPhone maker Apple (AAPL) each shed greater than 2%. Microsoft (MSFT) and Alphabet (GOOG, GOOGL) posted smaller drops.

Tech stocks prolonged their declines from Friday, which got here as a hotter-than-expected jobs report dashed hopes that the Fed would cut rates at the least two times this yr. Investors expect policymakers to shift any easing to the autumn on the earliest.

Growth stocks lost ground because the yield on the 10-year Treasury (^TNX) ticked higher and the US Dollar Index (DX-Y.NYB) rose to its highest level since 2022.

Shares of UnitedHealth (UNH) rose nearly 4% on Monday morning, helping lift the Dow Jones Industrial Average (^DJI) into positive territory in early trading.

UnitedHealth, together with other insurers like Humana (HUM), rose after Medicare released a proposal that will allow for bigger-than-expected payments for insurance firms in 2026.

Shares of CVS Health (CVS) also rallied.

Moderna (MRNA) shares sank 23% on the open on Monday after the biotech giant lowered its 2025 sales guidance by $1 billion due to weak demand for its COVID-19 vaccines and a slower adoption of its latest respiratory syncytial virus (RSV) shot.

The corporate said it expects revenue in 2025 to are available in anywhere between $1.5 billion and $2.5 billion after hitting as much as $3.1 billion last yr.

Stocks opened lower on Monday, with tech leading the losses as optimism over rate of interest cuts this yr continued to fade and bond yields rose.

The S&P 500 (^GSPC) sank 0.8%, while the Nasdaq Composite (^IXIC) dropped 1.3%. The Dow Jones Industrial Average (^DJI) fell about 0.1%.

Stocks continued their sell-off from Friday’s plunge, which worn out all year-to-date gains for the main averages.

A hot December jobs report spooked the markets, as investors faced the chance that the Federal Reserve will make just two rate cuts this yr.

Amongst Monday’s laggards, shares of Nvidia (NVDA) and Tesla (TSLA) slid greater than 3% and a couple of%, respectively, because the “Magnificent Seven” group lost ground available in the market sell-off.

Investors awake to markets continuing their post-red-hot jobs report tantrum.

The rise in yields and now the rise in energy prices remain in focus. Each of this stuff happening at the identical time is the worst possible scenario for the bulls. On the time of this writing, premarket weakness is being seen in top momentum names comparable to Tesla (TSLA) and Nvidia (NVDA).

Vital point this morning by the Goldman Sachs team:

“The move in rates can be now tightening financial conditions such that it might weigh on growth and risk assets. Positions that profit from lower US yields now look more attractive, especially for portfolios that already embrace the US growth theme.”