8 Items Shaping the Market and Our Holdings Tuesday

These are the early headlines and other items catching our attention that are poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures are mixed with the S&P 500 and Nasdaq Composite pointing to a higher open, while the Dow Jones Industrial Average is pointing lower.

1. Washington is charging toward a partial government shutdown over President Donald Trump’s immigration enforcement agenda even as senators and the White House scramble to find an elusive off-ramp. (Politico) Congress is running out of time to pass a sprawling appropriations package before current funding for much of the federal government expires at 12:01 a.m. ET on Saturday. Senate Democrats said they won’t support the bill without changes to the provisions regarding the Department of Homeland Security, raising the risk of a partial government shutdown this weekend. (WSJ)

We will want to see if an off-ramp is reached in the coming days, if not, the duration of a shutdown will be what matters most. Given developments in Minneapolis, we would not be surprised to see President Trump move to put the situation behind us. We will want to see what, if any, changes come for the Department of Homeland Security and what that could mean for our position in Axon Enterprise (AXON) . Per Axon, the total federal market opportunity is ~7.5% of its $159 billion total addressable market.

2. The dollar fell to a four-month low against other major currencies on Monday, while gold remained at record levels of more than $5,000 an ounce. The yen strengthened against the greenback to around ¥154, as traders speculated that America and Japan would launch a co-ordinated intervention to support Japan’s currency. That, along with fears of another government shutdown in America, is piling pressure on the dollar. (The Economist)

This continues the dollar’s sharp drop that began in mid-January, but the causes noted above for the recent decline could abate as we move past them. While a prolonged decline in the dollar would be good for the international businesses of U.S. companies, here too, the question is one of duration. We’ll be listening to management comments about the dollar as we move through the current earnings season.

3. The European Union and India concluded a free-trade agreement after almost two decades of negotiations, part of an effort to deepen economic ties that has gained momentum due to the Trump administration’s aggressive tariff policies. (Bloomberg) U.S. trading partners, feeling burned by an unpredictable and transactional White House, are reassessing China in a drive to lessen their longstanding reliance on America. From Canada to Europe and South Korea, America’s postwar allies are scouring the globe for alternative markets. Some are weighing closer ties to China… (WSJ)

This raises questions of international trade and supply chains as countries react to increasing trade uncertainties. How President Trump responds in the near-term could have longer-term implications for us as investors. This bears watching.

4. The Centers for Medicare and Medicaid Services (CMS) said late Monday that payments to private Medicare Advantage plans would rise by 0.09% on average in 2027, way below what analysts had been expecting. The proposed increase is worth about $700 million for health insurers. By contrast, the rate increase of 5.06% for the current year is expected to net them more than $25 billion in extra revenue. (Barron's) Shares of UnitedHealth Group, the biggest Medicare insurer by membership, fell more than 9% in after-hours trading Monday afternoon, after The Wall Street Journal first reported the plans. Rival Medicare insurer Humana’s shares were down 12% and CVS Health fell more than 9%. (WSJ)

While we are not involved directly in those affected companies, the much smaller than expected increase will pressure margins and EPS expectations. The smart move now is to wade through earnings calls for those companies named above and other related ones, to see how they aim to respond and what kind of cost-cutting efforts are part of their plans. Perhaps, this will be a catalyst for greater AI adoption in this part of the economy?

5. US airlines are still paring back flights as a deep freeze hampers the restart of operations at some major hubs, with the industry bracing for further disruptions as another arctic blast looms later this week. (Bloomberg)

We are already seeing airlines, like Delta Air Lines (DAL) , announce another round of flight cancellations. Back-to-back winter storms, should that happen, will hobble construction activity, which means we could get softer guidance from United Rentals (URI) when it reports later this week. We’ll focus on the backlog of mega projects and what any Q1 2026 slowdown means for a stronger Q2 2026. We also see Costco (COST) benefiting as folks look to restock should the possibility of this second winter storm become a reality.

6. Meta plans to test new subscriptions that give people access to exclusive features on its apps, the company told TechCrunch on Monday… In the coming months, Meta said it will offer a premium experience on Instagram, Facebook, and WhatsApp that gives users access to special features and more control over how they share and connect, while keeping the core experiences free. (TechCrunch)

When we hear about the testing of new revenue models, we are first interested in seeing if they become permanent. Whether that happens depends on consumer adoption, which in turn relies upon a compelling reason and user experience. In other words, while this could be a nice development for Meta’s (META) revenue stream, which today is 98% advertising, the proof, as they say, will be in the pudding. Still, an interesting flip of the move that Netflix (NFLX) made from all subscription to subscription tiers supplemented by advertising.

7. Economic data today per TipRanks: FHFA Housing Price Index (November), Case-Shiller Home Price Index (November), Consumer Confidence (January).

8. Companies reporting today per TipRanks: American Airlines (AAL) , Applied Industrial (AIT) , Boeing (BA) , General Motors (GM) , HCA Healthcare (HCA) , JetBlue (JBLU) , Kimberly-Clark (KMB) , NextEra Energy (NEE) , Northrop Grumman (NOC) , Polaris Industries (PII) , Sysco (SYY) , Union Pacific (UNP) , UnitedHealth (UNH) , United Parcel Service (UPS) ; F5 (FFIV) , Logitech (LOGI), PPG Industries (PPG) , Qorvo (QRVO) , Texas Instruments (TXN) , Waste Connections (WCN).

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At the time of publication, TheStreet Pro Portfolio was long AXON, URI, COST and META.