Wall Street Rises, Overcoming AI Concerns:
U.S. stock indices increased as gains in most major sectors outweighed disappointing earnings from some tech giants.
However, Treasury yields fell to their lowest levels since 2025 following weak data from the U.S. services sector.
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Mixed Performance of Tech Stocks
Mixed Performance of Tech Stocks Amid Market Volatility
Shares of approximately 350 companies in the S&P 500 index rose,
with Nvidia leading gains in the semiconductor sector.
However, the “Magnificent Seven” index (Alphabet, Apple, Amazon, Nvidia, Meta, Microsoft, Tesla)
declined by 1.5% after Alphabet’s stock recorded
It’s the worst drop in over a year due to disappointing financial results.
Advanced Micro Devices (AMD) shares also fell by 6.3% due to weak forecasts.
Qualcomm shares rose on optimistic sales forecasts in extended trading after market close,
while Arm Holdings issued weak projections.
Ford Motor also warned of a potential decline in profits.
Wall Street Challenges and Market Volatility
Economic markets have been impacted by fluctuating data, trade tensions,
and questions about whether massive AI investments will start generating returns.
According to Mark Hackett of Nationwide,
recent market events serve as a stark reminder to investors that volatility can arise unexpectedly.
The Emergence of “DeepSeek” and Its Market Impact
Last week, Nvidia lost half a trillion dollars in value after the emergence of the AI competitor DeepSeek.
Additionally, Alphabet’s earnings raised concerns about capital expenditures,
affecting major tech stocks and driving the bull market.
While the “Magnificent Seven” contributed to more than
half of the S&P 500’s gains over the past two years, their earnings growth has slowed.
According to Ed Yardeni, founder of Yardeni Research,
Other S&P 500 companies now have a greater chance of growth and benefit from productivity-enhancing technologies.
Market and Index Performance:
The S&P 500 index rose by 0.4%, the Nasdaq 100 added 0.4% in gains,
and the Dow Jones Industrial Average increased by 0.7%.
Meanwhile, UnitedHealth Group trimmed its losses to 1% after announcing its communication
with the U.S. Securities and Exchange Commission (SEC)
regarding concerns over a deleted post by Bill Ackman on the “X” platform,
which claimed the company had exaggerated its earnings report.
On the other hand, Uber shares dropped 7.6% due to weak guidance on booked revenues.
The 10-year U.S. Treasury yield fell by 9 basis points,
reaching 4.42%, while the Bloomberg Dollar Spot Index declined by 0.2%.
Market Volatility and Future Investments
According to Daniel Skelly from Morgan Stanley,
markets are struggling to stabilize amid shifts in the economic landscape,
including anticipated tariffs and mixed corporate earnings.
With ongoing uncertainty, global sectors such as information technology, equipment,
and automotive industries may be more vulnerable,
while domestic sectors, such as financial services, could attract more investor interest.
Unforeseen Risks and Their Market Impact
According to Jim Chanos, one of the most renowned shortsellers,
real market risks remain unpredictable until they occur.
He pointed to the DeepSeek impact, which unexpectedly erased nearly $1 trillion in market value.
As earnings season approaches,
analysts closely watch companies that achieve a “Triple Play.”
beating revenue and earnings expectations while improving future guidance.
This year:
75% of companies exceeded earnings per share (EPS) expectations
66% surpassed revenue estimates
8% lowered future guidance
Jobs Report Expectations and Market Reaction
Traders are eagerly anticipating Friday’s jobs report.
Data has shown strong job growth, reinforcing labor market resilience amid economic uncertainties.
The Federal Reserve closely monitors labor market trends to determine the extent of interest rate cuts this year.
Last year’s rising unemployment rate was key
to the Fed’s decision to cut interest rates by a percentage point in 2024.
However, Fed Chair Jerome Powell recently described the labor market as “very stable.”
A survey by 22V Research found that:
24% of participants believe Friday’s report will be “a risk indicator.”
30% see it as a “low-risk indicator.”
46% think it will have “little to no impact”
According to Dennis DeBusschere of 22V Research,
investors are now focusing on average hourly earnings,
shifting away from payroll numbers and unemployment rates were last month’s key concerns.
Wall Street Rises, Overcoming AI Concerns