Tech Stocks Lead Market Lower on Fed Decision Uncertainty
Tech-heavy stocks declined on Wednesday morning as investors await the first Big Tech earnings reports and the Federal Reserve's imminent interest rate decision.
The technology-focused Nasdaq Composite (^IXIC) fell more than 0.7%, retracing gains from Tuesday's rally. The broader S&P 500 (^GSPC) dropped approximately 0.4%, while the Dow Jones Industrial Average (^DJI) remained relatively flat.
Investors remain cautious ahead of the Fed's policy announcement, despite expectations that the central bank will maintain interest rates. Traders anticipate guidance from Fed Chair Jerome Powell's press conference on future rate cuts and the Fed's stance on President Trump's recent tariff moves.
ASML Boost on Surprise Bookings
ASML (ASML), a key supplier in the AI chip industry, provided a boost to tech stocks with a surprise rise in bookings. Shares of ASML surged 5% in early trading, leading peers like Applied Materials (AMAT) higher. However, Nvidia (NVDA) fell nearly 5% as its Tuesday gains faltered.
DeepSeek's AI Challenge
Markets are re-evaluating Chinese startup DeepSeek's challenge to expectations about AI spending and costs. Alibaba (BABA) shares rose over 4% after announcing a new AI model that it claims outperforms DeepSeek's ChatGPT rival.
Microsoft-backed (MSFT) OpenAI has accused DeepSeek of using its proprietary models to train its own, adding another layer to the ongoing saga.
Focus on Meta and Microsoft Earnings
Investors are now looking to Meta (META) and Microsoft's quarterly earnings reports, due after the bell, for reassurance about the returns on heavy AI investments by Big Tech. Tesla (TSLA) rounds out Wednesday's earnings announcements, with analysts watching for a catalyst to revive the stock.
Nvidia Stock Crash
Nvidia (NVDA) stock experienced a sharp decline on Monday following the emergence of DeepSeek's cost-effective AI model. However, retail investors bought the dip, pouring over $900 million into the stock over two days. Wall Street analysts generally agree with the bullish sentiment, expressing confidence that Nvidia will ultimately benefit from the trend.
Starbucks Turnaround
Starbucks (SBUX) shares jumped more than 5% after reporting improved sales trends and a commitment to future growth. CEO Brian Niccol stressed the company's ongoing turnaround but did not provide a specific timeline. This positive outlook has been sufficient to bolster Wall Street's confidence for now.
ASML Surges on Earnings, CEO Comments
ASML (ASML) stock rose 6% after surpassing expectations in its fourth-quarter earnings report. CEO Christophe Fouquet dismissed concerns about DeepSeek's AI models, stating that they could drive increased demand for AI chips.
Trump Media Expansion
Trump Media & Technology Group (DJT) shares soared nearly 15% pre-market as the company announced an expansion into financial services. Their "Truth.Fi" platform will offer a range of investment products, including Bitcoin and similar cryptocurrencies.
Apple Downgraded
Oppenheimer has downgraded Apple (AAPL) shares to Perform, joining Loop Capital and Jefferies in expressing concerns about slowing iPhone sales and a lack of AI innovation. The company's results for its fiscal first quarter, due out Thursday, are awaited with mixed expectations.