Stocks gained as broad industry strength offset lackluster earnings from major tech firms. Treasury yields hit their lowest level in 2025 following weak U.S. services data.
Markets Rally Amid Mixed Tech Earnings
According to Bloomberg, about 350 companies in the S&P 500 advanced. Nvidia Corp. led chipmakers higher, while a “Magnificent Seven” gauge slipped 1.5% as Alphabet Inc. posted its steepest drop in over a year. Advanced Micro Devices Inc. fell 6.3% after a weak outlook, though Qualcomm Inc. later rebounded with a bullish sales forecast. Arm Holdings Plc issued a tepid estimate, and Ford Motor Co. warned of potential profit declines.
Wall Street has been grappling with volatile economic data, trade concerns, and uncertainty over AI investments. “The flurry of market-moving headlines in the first weeks of 2025 serves as a stark reminder that volatility can emerge unexpectedly,” said Mark Hackett at Nationwide.
Last week, DeepSeek’s entry as an AI disruptor erased $500 billion in Nvidia’s market value. Alphabet’s earnings raised questions about capital expenditures in big tech, which has powered the bull market but now faces slowing profit growth. “We do not believe the Mag Seven are grossly overvalued,” said Ed Yardeni, founder of Yardeni Research. “However, we see room for the S&P 493 to outperform.”
Indexes and Bond Yields
- The S&P 500 gained 0.4%.
- The Nasdaq 100 climbed 0.4%.
- The Dow Jones Industrial Average rose 0.7%.
- The 10-year Treasury yield fell nine basis points to 4.42%.
- The Bloomberg Dollar Spot Index declined 0.2%.
UnitedHealth Group Inc. trimmed losses to 1% after addressing SEC concerns over Bill Ackman’s now-deleted X post alleging profit overstatements. Uber Technologies Inc. tumbled 7.6% following weak gross bookings guidance.
Unpredictable Market Risks
“No one can see the biggest risks to U.S. markets in the next six to 12 months,” legendary short seller Jim Chanos told Bloomberg TV. “By definition, we do not know what they are.” He pointed to the sudden emergence of DeepSeek as an example of how unexpected shifts can rattle investor sentiment.
Morgan Stanley’s Daniel Skelly noted ongoing tariff uncertainty, saying, “International sectors like IT hardware, autos, and consumer goods may be more vulnerable, while domestic areas such as financials could attract investor interest.”
Earnings Season Insights
Bespoke Investment Group highlighted the importance of “triple plays”—when a company beats estimates on revenue, earnings, and raises guidance. This year, 75% of firms beat earnings-per-share estimates, while 66% exceeded revenue expectations. However, 8% have lowered guidance compared to 5% raising it.
“Now that triple plays have become less common, stocks that deliver them are reacting more positively,” Bespoke analysts noted. Over the last three months, stocks reporting triple plays have gained over 10% in one-day returns.
Jobs Report and Fed Outlook
With Friday’s jobs report approaching, U.S. private employment growth exceeded expectations in January. The Fed, closely monitoring the labor market, has been weighing interest rate cuts. “The job market has shown renewed strength,” said Fed Chair Jerome Powell, calling it “pretty stable.”
According to 22V Research, only 24% of investors expect Friday’s data to be “risk-on,” while **30% foresee risk-off sentiment and 46% expect mixed or negligible impact.”
“Investors are now focused on average hourly earnings rather than payrolls or unemployment rates,” said Dennis DeBusschere at 22V.
Corporate Highlights
- MicroStrategy Inc. rebranded as “Strategy,” emphasizing its Bitcoin-focused approach.
- Chipotle Mexican Grill Inc. reported lower-than-expected sales.
- Walt Disney Co. beat estimates, boosted by Moana 2 and streaming growth.
- Johnson Controls International Plc jumped after raising its profit forecast and hiring a new CEO.
- Match Group Inc. appointed Zillow co-founder Spencer Rascoff as CEO, replacing Bernard Kim.
- Snap Inc. issued a weak outlook, despite stronger revenue gains.
Key Events This Week
- Thursday: Eurozone retail sales, UK rate decision, U.S. initial jobless claims, Fed speakers (Waller, Logan), Amazon earnings.
- Friday: U.S. nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Fed speakers (Bowman, Kugler).
Market Performance
Stocks
- The S&P 500 rose 0.4%.
- The Nasdaq 100 added 0.4%.
- The Dow Jones Industrial Average gained 0.7%.
- The MSCI World Index climbed 0.5%.
- The Bloomberg Magnificent 7 Total Return Index dropped 1.5%.
- The Russell 2000 Index gained 1.1%.
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%.
- The euro rose 0.3% to $1.0405.
- The British pound increased 0.2% to $1.2502.
- The Japanese yen surged 1.1% to 152.70 per dollar.
Cryptocurrencies
- Bitcoin climbed 0.8% to $97,327.01.
- Ether surged 4.7% to $2,764.03.
Bonds
- 10-year U.S. Treasury yield fell nine basis points to 4.42%.
- Germany’s 10-year yield declined three basis points to 2.37%.
- UK’s 10-year yield slipped eight basis points to 4.44%.
Commodities
- WTI crude oil dropped 2% to $71.22 per barrel.
- Spot gold gained 0.7% to $2,862.27 an ounce.
This story was produced with Bloomberg Automation, with assistance from Robert Brand, Margaryta Kirakosian, and Winnie Hsu.
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