The blunt truth on Nvidia, the 'Magnificent 7,' and markets

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This is The Takeaway from today’s morning that you can register to receive in your mailbox every morning:

Bull markets often carry with them high expectations of future growth.

Sometimes those expectations of the investing masses are too lofty given the new incoming realities.

I believe that is the case today as we prepare to enter a firestorm of news over the next month that could inject new volatility into the markets.

The potential from that firestorm includes the potential for President Trump’s market-moving social media posts, immediately tariffs on countries such as Mexico and Canada, and the Federal Reserve meeting in late January, where another rate cut will take place probably not in the cards (which may lead to more market-moving social media posts from said president).

“You can look [hot] names like Palantir, Tesla, some of the sales that we’re seeing — I think overall, we’re just going to see some white fists over the next six months,” Wedbush analyst. Dan Eaves told me at Yahoo Finance Opening application podcast (see video above, listen below): “Trump’s top risk, rates, the 10-year Treasury as it hits 5%, and what it means for the Fed [are all risks] — And so I think we’ll see some of that [volatility]”.

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Markets fell on Friday after the December jobs report blew past expectations, adding 256,000 jobs versus the 155,000 estimate for the S&P 500 (^GSPC) fell by 1.5%, and the Dow Jones Industrial Average (^ DJI) and the Nasdaq Composite (^ IXIC) each lost 1.6%. The 10-year Treasury yield (^ TNX) continued its recent rally as investors braced for a higher interest rate environment.

By Friday, the market had already begun to feel the shakeout in areas that had been the leaders of the bull market.

Investors were left wanting more from Nvidia (NVDA:) CEO Jensen Huang CES keynote on Monday night. In response, stocks posted their worst day since Sept. 3 on Tuesday.

Nvidia shares are down 11% since hitting an intraday high on Jan. 6.

NasdaqGS – Delayed quote USD

Closing: January 10th at 4:00:01 PM EST

NVDA: AMD PLTR:

Other rich value momentum names (known as “momo” trades) such as Palantir (PLTR:) and AMD (AMD) have sold off more than 10% over the past month as traders priced in a backdrop of higher interest rates, a strengthening US dollar and increased headline risks.

The de-risking tone has also spread to crypto-patch.

Bitcoin (BTC to USD) is trading at levels not seen since November and is down about 15% from its record highs.

Meanwhile, the Street has come out of the gate this year stock downgrade from longtime favorites like Apple (AAPL:).

The sell-off in Momo names and crypto has coincided with a pivot to more defensive areas of the market, possibly as investors prepare for more volatility.

iShares US Healthcare ETF (IYH:) and the SPDR Gold ETF (GLD:) each outperformed the S&P 500 (^GSPC) and the Nasdaq Composite (^ IXIC) from date to date.

This week, Goldman Sachs went so far as to say that markets could be heading for a necessary correction, crushed under the weight of high valuations and over-concentration in Magnificent Seven stocks.Where does Goldman see the best near-term opportunities?

Market defensive segments.

“We think there are attractive opportunities for quality comps in markets outside of the tech sector. Many of these companies are relatively sheltered and have been hit harder by rising interest rates than megacap tech,” said Goldman Sachs strategist Peter Oppenheimer.

Others on the Street agree that the road ahead for the markets could be rockier.

“The weight of evidence suggests that the primary market trend remains higher, driven by a resilient economy that supports steady earnings growth of around 10% in 2025,” Truist co-chief investment officer Keith Lerner wrote in a client note. “However, investors should expect a bumpier road than last year, which should provide tactical opportunities.”

Lock it up, people.

Brian Sozzi is the executive editor of Yahoo Finance Follow Sozzi on X @BrianSozzi:, Instagram: and on and on LinkedIn:. Story Tips: Email brian.sozzi@yahoofinance.com Three times a week, Sozzi features conversations with the biggest names in business and the markets. Opening application podcast. Find more episodes on our website video loop. View yours preferred streaming service. Or listen and subscribe Apple Podcasts:, Spotify:or wherever you find your favorite podcasts.