January 29 Market Recap: The Fed Held Rates Steady as Expected; Storage Sector Continued Its Bull Run
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January 29 Market Recap: The Fed Held Rates Steady as Expected; Storage Sector Continued Its Bull Run
Gold may experience an 8%–12% technical correction; the storage sector, having posted substantial gains, faces a pullback; and ROI on AI investments remains uncertain.
Navigating Web3 tides with focused insightsBy Ma Mengniu, TechFlow
Fed Holds Rates Steady, Removes Reference to “Weak Labor Market”
At 3:00 a.m. Beijing time on January 29, the U.S. Federal Reserve announced its first interest-rate decision of 2026: the federal funds rate remains unchanged at 3.50%–3.75%, in line with market expectations.
The key change lies in the statement’s wording: the phrase “risks of labor market weakness outweigh risks of rising inflation” has been removed and replaced with “employment growth is slowing, unemployment has stabilized, and inflation remains somewhat elevated.” This signals the Fed’s view that its dual mandate—maximum employment and price stability—is now more balanced, reducing urgency for rate cuts.
In his press conference, Chair Jerome Powell emphasized that rates are “at an appropriate level” and stressed the need to monitor how Trump’s fiscal stimulus and tariff policies affect inflation and employment. Markets expect rates to remain unchanged throughout Q1; the next cut is most likely in June or September—and is expected to be led by Powell’s successor (whose term ends in May).
Political pressure has reached a peak: a Department of Justice criminal investigation, Trump’s threats to remove Fed governors, and the imminent announcement of a new chair are all testing the Fed’s independence. Yet Powell has maintained restraint, avoiding direct confrontation.
U.S. Equities: S&P Nears 7,000; Memory Stocks Surge
On Tuesday, January 28, U.S. equities diverged. The S&P 500 rose 0.41% to 6,978.60—approaching 7,000 and setting a new record high; the Nasdaq gained 0.91% to 23,817.10; while the Dow Jones Industrial Average fell 0.83% to 49,003.41, weighed down by sharp losses in healthcare stocks—UnitedHealth Group issued its first-ever revenue decline warning in 30 years and plunged nearly 20%.
Memory stocks extended their historic rally. Pre-market, Micron Technology rose over 4%, SanDisk over 5%, Western Digital over 2%, and Seagate Technology over 1%—all hitting new all-time highs.
This “memory supercycle” is being driven by AI data center construction. Core rationale: AI server storage demand vastly exceeds that of conventional servers; production capacity is shifting toward premium products (e.g., HBM), squeezing traditional supply and triggering industry-wide price hikes. In 2025, SanDisk surged 577%—topping the S&P 500 as the best-performing stock—while Western Digital rose 280%, Micron 235%, and Seagate 215%.
Analysts forecast the supercycle will persist through year-end 2026—or even into 2027. Samsung and SK Hynix continue cutting NAND output, and Micron executives reaffirmed memory shortages will extend beyond 2026. Citigroup raised SanDisk’s target price from $280 to $490.
Tech stocks led gains, with Apple, NVIDIA, and Microsoft outperforming. Investors await earnings reports this week from major tech firms (Apple, Microsoft, Meta, Tesla) and will closely assess whether AI investments deliver tangible returns.
Precious Metals: Gold Breaks Above $5,250; Silver Soars Then Retreats
On January 28, spot gold climbed steadily, breaking above $5,258 per ounce—up over $77 intraday—and decisively clearing the $5,200 threshold for the first time. Gold rose 20% in January and over 5% this week. Domestic gold jewelry prices have surged past ¥1,600 per gram, with Lao Feng Xiang quoting ¥1,620 per gram.
Silver posted a “reverse-V” pattern. Overnight, it spiked to $115.80 per ounce (+14%), but profit-taking by longs rapidly erased those gains, ending the day up only 0.4% at $103.625 per ounce. Year-to-date gains stand at 48%–55%.
Regulators began cooling things down: On January 27, CME raised margin requirements for silver futures to 11%; E Fund Gold Theme LOF and SDIC Silver LOF both suspended subscriptions the same day, with SDIC Silver LOF halting trading mid-session to warn investors of risks.
Institutional views are increasingly divided. Heraeus warns silver is excessively overvalued—the steepest rally since 1980. Former JPMorgan strategist Marko Kolanovic attributes the surge largely to speculation (“meme traders”) and expects silver could fall to half its current level later in 2026. Conversely, UBS forecasts gold may see an 8%–12% technical correction in Q2, while JPMorgan does not rule out a near-term move toward $6,000.
Cryptocurrencies: Volatility Returns, Sector Divergence Widens
Bitcoin trades at $89,273.70, up 1.78% over 24 hours and rebounding from yesterday’s low. Ethereum oscillates between $2,900 and $3,000. Overall, Bitcoin remains over 30% off its October 2025 peak of $126,080.
Among niche sectors, Hyperliquid (HYPE) stood out—surging 17% in one day.
HYPE jumped from ~$28 the prior day to $32.73, posting a 7-day gain of 58.3% and a monthly rise of 25.4%. Key catalysts include a CFTC commissioner’s remarks signaling potential near-term U.S. approval of crypto perpetual futures—prompting rapid capital inflows into perpetual markets—and silver perpetuals on Hyperliquid achieving $1.25 billion in 24-hour volume, ranking third on the platform behind BTC and ETH.
Core Narrative: Political Uncertainty vs. AI-Driven Demand
Markets reflect two competing narratives: one, political risk repricing—including Fed independence, tariff policy, and waning dollar credibility—fuels precious metals’ surge; the other, AI-driven demand across the supply chain (the memory supercycle) lifts tech stocks to new highs.
Silver’s intraday whipsaw (a 14% rally fully reversed), CME’s margin hike, and fund subscription suspensions highlight excessive speculation. Memory stocks remain strong—but investors await answers: Will massive AI capex (Microsoft, Amazon, Meta, and Alphabet collectively committing $440 billion) generate real returns?
The Fed’s pause signals entry into a “wait-and-see” phase for monetary policy. The true uncertainty lies ahead: How will Powell’s successor respond to Trump’s calls for rate cuts? Can the Fed preserve its independence? These questions will shape the dollar’s and broader markets’ medium- to long-term trajectory.
Risk Warning: Silver is overheated short-term—CME’s margin hike and fund subscription suspensions serve as red flags; gold may undergo an 8%–12% technical correction; memory stocks face pullback risk after outsized gains; AI investment returns remain uncertain; Fed leadership transition introduces policy uncertainty.
This article is for market observation only and does not constitute investment advice.
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