US stock futures fell on Friday morning after a stronger-than-expected US Producer Price Index (PPI) reading. Dow Jones Industrial Average futures dropped 1%, while S&P 500 and NASDAQ futures also moved lower.<\/p>\n
Core PPI for January, which excludes food and energy, rose 3.6% year on year. This was up from 3.3% previously and above the 3% consensus forecast.<\/p>\n
Headline PPI increased 0.5% month on month. That compared with a 0.3% consensus estimate.<\/p>\n
Dell Technologies shares rose 11% in pre-market trading after issuing guidance. Dell forecast $13 billion in AI server revenue for the first quarter.<\/p>\n
Bank of America increased its price target for Dell from $135 to $155. Dell also guided for fiscal 2027 EPS growth of 25%, compared with prior guidance of 15%.<\/p>\n
This recent inflation surprise feels a lot like the challenges we navigated back in 2025. With the latest January 2026 Producer Price Index showing a 0.4% monthly increase, it is clear pricing pressure has not disappeared. Traders should consider buying volatility, as the CBOE Volatility Index (VIX) has already jumped to over 17, a level reminiscent of the uncertainty we saw last fall.<\/p>\n
Given this data, we believe the odds of a March rate cut from the Federal Reserve are now significantly lower. The fed funds futures market has already adjusted, now pricing in less than a 25% chance of a cut next month, down sharply from over 60% just weeks ago. This delay in expected easing will likely put downward pressure on interest rate-sensitive derivatives.<\/p>\n
We are seeing a clear split in the market where AI-related companies are defying the broader macro concerns. Dell’s incredible guidance reminds us of the explosive growth throughout 2025, when the AI infrastructure market grew by an estimated 35%. This suggests a pairs trading strategy could be effective, such as buying calls on strong technology names while buying puts on a broader index fund like the SPY.<\/p>\n
We should remember the market action from 2023, which offers a valuable lesson for today. Even as the Fed executed its aggressive rate-hiking cycle, a handful of mega-cap tech stocks fueled by the AI narrative led a massive market rally. This history suggests that even in a restrictive rate environment, thematic strength can overwhelm macroeconomic headwinds.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" US stock futures drop after hot PPI; Dell surges on AI server outlook and raised guidance.<\/p>\n","protected":false},"author":103,"featured_media":16994,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50416","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50416","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50416"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50416\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16994"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50416"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50416"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50416"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}