US Stocks Recover from Losses

On Wednesday, US stocks regained momentum to close higher after facing initial setbacks. Despite disappointing earnings from Alphabet and AMD, the tech sector received a boost from Nvidia's jump. The tech-heavy Nasdaq Composite gained 0.2%, while the benchmark S&P 500 added 0.4%. The Dow Jones Industrial Average led the recovery, rising 0.7% or over 300 points.

Alphabet's Cloud Performance Disappoints

Alphabet faced pressure after its fourth quarter cloud revenue fell short of estimates. Investors expressed concern that the Google parent's heavy investment in AI may not yield the desired returns in the near term.

Nvidia Benefits from AI Spending

Nvidia emerged as a potential beneficiary of Alphabet's AI spending. Its shares surged over 5%, contributing to the recovery in major indexes.

10-Year Treasury Yield Declines

The 10-year Treasury yield dropped nine basis points to 4.42%, its lowest level since December 2024. This decline provided support to interest-sensitive sectors.

AMD Earnings Raise Concerns

AMD's earnings provided a mixed outlook surrounding AI. While the chipmaker reported a quarterly revenue beat, a disappointing data-center sales forecast sparked worries about a decline in AI momentum. AMD shares tumbled over 6%.

Trade War Concerns Linger

The ongoing tariff dispute between the US and China continues to impact Big Tech and chip companies. Apple shares initially dropped about 2% but later recovered after a Bloomberg report suggested that Beijing planned to target its app store.

Fed Officials Cautious on Tariff Turmoil

Federal Reserve officials have expressed a unified message this week, indicating that they are not rushing to make policy changes in response to President Donald Trump's new tariffs.

Big Tech Spends Heavily on AI

Tech giants such as Alphabet, Meta, and Microsoft are expected to spend a combined $230 billion in capital expenditures in 2025, primarily driven by investments in AI infrastructure. Investors remain uncertain about the long-term benefits of this spending.

Trump's Tariffs Could Affect Housing Affordability

The implementation of President Trump's proposed tariffs could increase homeownership costs. Data suggests that a $10,000 increase in construction costs could lead to a $48 increase in monthly mortgage payments.

Services Sector Shows Signs of Slowdown

Activity in the US services sector expanded in January, but at a slower pace than in previous months. A recent report indicates a decline in new orders and a modest drop in prices paid, suggesting potential concerns over tariffs.