Stocks climbed as broad gains across most major sectors overshadowed disappointing earnings from key technology companies. Meanwhile, Treasury yields fell to their lowest levels of 2025 following weaker-than-expected data on U.S. services.
Roughly 350 companies in the S&P 500 saw gains, with Nvidia Corp. leading a rally in chipmakers. However, the “Magnificent Seven” megacap stocks dropped 1.5% as Alphabet Inc. suffered its steepest decline in over a year due to concerns over capital expenditures. Advanced Micro Devices Inc. also fell 6.3% after issuing a lackluster outlook. In after-hours trading, Qualcomm Inc. advanced on an optimistic sales forecast, while Arm Holdings Plc delivered a muted projection. Ford Motor Co. warned that its profits may decline.
Market Volatility and AI Investments Weigh on Wall Street
Wall Street has faced heightened volatility amid uneven economic data, trade tensions, and skepticism over the return on massive artificial intelligence investments. Mark Hackett of Nationwide noted that recent market swings serve as a reminder that unexpected disruptions can quickly emerge.
Last week, Nvidia lost half a trillion dollars in market value following the rise of AI competitor DeepSeek. Alphabet’s earnings report has now raised fresh concerns about tech spending among the sector’s biggest players. While the Magnificent Seven have driven over half of the S&P 500’s gains in the past two years, their profit growth is now slowing.
Despite this, some analysts remain optimistic about opportunities beyond these tech giants. “Within the U.S. stock market, we favor large caps, particularly the S&P 493, which could expand profit margins through productivity-enhancing technologies,” said Ed Yardeni, founder of Yardeni Research. “We don’t believe the Magnificent Seven are significantly overvalued, but we see room for the S&P 493 to outperform.”
Major Indexes Edge Higher Amid Earnings Season
The S&P 500 and Nasdaq 100 both rose 0.4%, while the Dow Jones Industrial Average climbed 0.7%. UnitedHealth Group Inc. trimmed losses to 1% after addressing concerns from the U.S. Securities and Exchange Commission regarding investor Bill Ackman’s since-deleted social media post alleging the company overstated profits. Meanwhile, Uber Technologies Inc. slid 7.6% following weak gross bookings guidance.
The yield on 10-year U.S. Treasuries fell nine basis points to 4.42%, while the Bloomberg Dollar Spot Index declined 0.2%.
“Volatility has been the dominant theme this week, as markets navigate shifting tariff policies and mixed earnings reports,” said Daniel Skelly, head of market research at Morgan Stanley Wealth Management. He noted that while the S&P 500 hit record highs less than two weeks ago, the broader market has been in a “choppy consolidation” phase since early December.
Skelly also highlighted that ongoing tariff uncertainty may leave international sectors such as IT hardware, automobiles, and certain consumer goods more vulnerable. Conversely, domestically oriented industries like financials may see increased investor interest.
Unpredictable Risks and Earnings Performance
Legendary short seller Jim Chanos cautioned that the biggest risks to U.S. markets over the next six to 12 months will likely come from unexpected developments, such as the DeepSeek disruption that erased nearly $1 trillion in stock value.
“The real threats will be unforeseen events like DeepSeek that suddenly change investor sentiment,” Chanos told Bloomberg TV. “By definition, we don’t know what they are until they happen.”
As earnings season unfolds, Bespoke Investment Group is closely monitoring “triple plays”—when companies exceed analyst expectations on revenue and earnings while also raising forward guidance.
So far, 75% of companies have surpassed earnings-per-share estimates, while 66% have beaten revenue projections. However, 8% have lowered guidance, compared to just 5% that have raised their outlook.
“When triple plays were more common in 2021, stock prices barely reacted. But now, with fewer companies delivering strong results, those that do are seeing bigger gains,” Bespoke strategists noted. Over the past three months, 100 companies reported triple plays, with an average one-day share price jump of over 10%.
Jobs Report in Focus as Fed Monitors Labor Market
New data showed that private sector employment in January grew faster than anticipated, signaling a resilient labor market despite economic uncertainty.
Federal Reserve officials are closely watching employment trends as they consider rate cuts this year. A sharp rise in unemployment last summer led policymakers to slash interest rates by a full percentage point in 2024. However, the job market has since stabilized, with Fed Chair Jerome Powell recently describing conditions as “pretty stable.”
A survey from 22V Research found that only 24% of respondents expect Friday’s jobs data to trigger a “risk-on” reaction, while 30% anticipate a “risk-off” response, and 46% expect a neutral or mixed market impact.
“Investors have shifted focus to average hourly earnings this month, rather than payroll figures or the unemployment rate,” said Dennis DeBusschere of 22V Research.
Related topic:
Japan’s Tourism Surge Boosts Stock Market Outlook
Walgreens Faces Uncertainty as DOJ Lawsuit Hits Shares
Tesla Retains Lead in Global BEV Market Amid Rising Competition
