Big Tech and AI Bid Lifts S&P 500, VIX Falls
U.S. equities opened a holiday-shortened week on firmer footing as investors leaned back into large-cap technology and AI-linked names. On Monday in New York, the S&P 500 rose 0.64% to 6,878.49, while the Nasdaq added 0.52% to 23,428.83 and the Dow gained 0.47% to 48,362.68.
The catalyst was a renewed bid for semis and AI infrastructure after a volatile early-December tape. According to a broad sector advance, nearly all 11 S&P sectors finished higher, with materials up 1.4% and energy up 1.1% as commodities strengthened.
- Nvidia rose on expectations it could resume China-bound shipments of its H200 AI chips by mid-February, as reported by Reuters.
- Micron climbed about 4% after upbeat outlook commentary, cited in CNBC’s session recap.
Immediate impact. Risk appetite looks steady, not euphoric. The VIX closed at 14.08, its lowest close in about a year, per Reuters, which suggests investors are not paying up for near-term protection even as year-end positioning intensifies.
Next steps likely hinge on whether the rally can broaden beyond AI and whether thin holiday liquidity exaggerates price action. Keep in mind U.S. markets close early Wednesday and shut Thursday, as noted by CNBC, which can amplify both breakouts and reversals.
Positioning for the last week of the year is about discipline. If leadership stays concentrated in chips and mega-cap software, treat breadth and volatility as your risk gauges, not the headlines.
Fed’s Miran Signals Cut Debate as Year-End Data Looms
Federal Reserve policy expectations are being re-litigated heading into year-end. In a Bloomberg TV interview, Fed Governor Stephen Miran argued that inflation readings may have been distorted by shutdown-related anomalies and that failing to keep cutting could raise recession risk, according to comments summarized by the FT.
Context matters. The Fed has been easing steadily since late 2024. Miran voted for a 50 bp cut at the December meeting, even as the committee delivered a 25 bp move, and he framed the next phase as an approach toward neutral rather than a rapid pivot. The same note highlights key rate markers: the 10-year yield is around 4.162%, the 2-year around 3.495%, and 30-year mortgage rates are back near 6.22% after peaking above 7%.
The immediate impact is less about a single governor and more about the debate he signals inside the Fed: whether policy is already close to neutral or still meaningfully restrictive. Miran said the case for another 50 bp cut has “diminished somewhat,” but he still pressed the idea that the policy rate should continue adjusting lower, per the FT recap. That split keeps markets sensitive to every incremental data point.
How it plays out this week. Investors will parse delayed releases stemming from the U.S. shutdown, including a preliminary Q3 GDP read and backdated PCE inflation updates, as flagged by Yahoo Finance. If those prints show cooling demand and benign inflation, the “keep cutting” camp gains traction. If they show resilience, longer yields could reprice higher even if the Fed eases.
For portfolios, the practical question is timing, not ideology. Rate cuts only help risk assets if they arrive before credit conditions deteriorate, so track incoming growth and inflation data together, not in isolation.
China Slaps Provisional Duties on EU Dairy Imports
China expanded its trade confrontation with Europe by imposing provisional duties on EU dairy imports. The tariffs, effective Tuesday, run from 21.9% to 42.7% and cover products like milk, cream, and cheeses, according to a Reuters report carried by Euronews.
Who and why. Beijing’s Ministry of Commerce said it found evidence EU dairy imports were subsidized and harming domestic producers. Brussels pushed back, calling the move “unjustified and unwarranted,” and said it is reviewing the preliminary determination ahead of the probe’s conclusion on Feb. 21, as reported by Reuters. The broader backdrop is the EU’s October 2024 tariffs on China-made electric vehicles, which have driven a tit-for-tat response across categories including brandy, pork, and now dairy.
How it hits. China imported about $589 million of the dairy products under investigation in 2024, similar to 2023, per the same report. Analysts warned the top-tier rate could make EU exports prohibitively expensive, and that substitution to other suppliers is straightforward for many cheese products, which could shift share toward competitors such as New Zealand.
Markets took the move as a near-term win for China’s domestic dairy industry, which has been dealing with oversupply and falling prices. Some listed dairy names jumped intraday after the announcement. Lanzhou Zhuangyuan Pasture closed 10% higher, according to a brief market update.
Next steps are negotiation-heavy. Talks over EV tariffs have resumed, and the EU is still exploring price undertakings as an alternative, but both sides say major issues remain, per Reuters via Euronews. For businesses, the message is clear: diversify China exposure and stress-test pricing, because sector-specific retaliation is becoming the rule, not the exception.
VIX, Nvidia China Shipments, Oil, and PCE in Focus
- Watch whether the VIX near 14.08 stays pinned in thin holiday liquidity.
- Monitor Nvidia’s H200 China shipments timeline. Export rules or approvals can quickly hit AI leadership.
- Track U.S. crude after Monday’s jump and Tuesday’s drift. Brent near $62 is pricing geopolitics against surplus fears.
- Follow the release schedule for shutdown-delayed U.S. data. PCE updates and GDP could swing rate-cut odds.
- Keep an eye on EU-China retaliation risk after dairy duties up to 42.7%. The next category targeted could matter more than dairy itself.
