US Stocks Struggle, Investors Digest Tech Earnings and Anticipate Apple Results
On Thursday, US stocks faced challenges as investors analyzed earnings from major technology companies and awaited Apple's (AAPL) results for insights into the prospects of Big Tech. The S&P 500 (^GSPC) gained 0.3%, while the Dow Jones Industrial Average (^DJI) rose by the same margin. The tech-heavy Nasdaq Composite (^IXIC) remained near flat, weighed down by sharp declines in Nvidia (NVDA) and Microsoft (MSFT) of 3% and 6%, respectively.
Following the Federal Reserve's decision to maintain interest rates, investors turned to scrutinize corporate earnings. The focus was particularly on the "Magnificent Seven" companies that have driven broader stock market gains. Tesla's (TSLA) stock climbed despite missing earnings estimates as investors expressed confidence in its pledge to resume growth in 2025. Conversely, Meta's (META) earnings beat helped bolster its shares, while Microsoft stock fell after its cloud revenue fell short of expectations.
The trust in Big Tech was tested after DeepSeek, a Chinese AI model, challenged assumptions about the viability of AI investments. The rationale for their massive investments in AI became the subject of scrutiny. Apple (AAPL), which has recently encountered multiple downgrades, is set to report its quarterly results after the closing bell. Investors will closely examine its update for signs of improving iPhone sales. Chipmaker Intel (INTC) is also expected to release its earnings.
Meanwhile, Mastercard (MA) stock reached all-time highs after the payment card company announced strong quarterly profits. Its peer, Visa (V), is scheduled to report later in the day. The Bureau of Economic Analysis's initial estimate of fourth-quarter gross domestic product (GDP) showed the US economy expanding at an annualized rate of 2.3%, below the 2.6% forecast by economists surveyed by Bloomberg.
In aviation news, American Airlines (AAL) CEO Robert Isom expressed condolences following a collision between an American passenger jet and a US army helicopter on Wednesday night. "We're absolutely heartbroken for the family and loved ones of the passengers and crew members and also for those that were on the military aircraft,” Isom said.
Logistics giant UPS's (UPS) announcement of reduced deliveries for Amazon (AMZN) caused its stock to plunge by as much as 15% on Thursday. UPS revealed plans to cut Amazon delivery volumes by over 50% in the second half of 2026. Additionally, UPS projected revenue of "approximately $89 billion" in 2025, falling short of Wall Street's consensus estimates of $94.9 billion.
The Federal Reserve's wait-and-see approach is unlikely to be affected by incoming GDP and inflation figures, according to Yahoo Finance's Jen Schonberger. The Fed Chair, Jay Powell, outlined this approach on Wednesday, highlighting the central bank's decision to pause rate increases after three consecutive cuts at the end of 2024. Policymakers are adopting a more cautious stance as they evaluate uncertainties in the economic policies of the new administration.
Housing contract activity slowed in December, suggesting higher interest rates are discouraging some buyers, as reported by Yahoo Finance's Claire Boston. The Pending Home Sales Index, which tracks contract signings on existing homes, dropped 5.5% from November to 74.2, ending a four-month streak of gains, according to the National Association of Realtors (NAR).
Comcast (CMCSA) stock suffered a drop of over 10% on Thursday morning after the company revealed a larger-than-expected decline in broadband customers in the fourth quarter and failed to acquire new subscribers for its Peacock streaming service. Despite these challenges, the company remains committed to its connectivity business and outlined strategic changes to enhance its position in the industry.
Bitcoin (BTC-USD) rose 3% to hover near $106,000 per token on Thursday. Some analysts attributed the increase to comments made by Fed Reserve Chair Jerome Powell regarding crypto adoption by banks. Oracle (ORCL) unveiled new AI agents tailored for manufacturers during its CloudWorld event in Austin. The agents are designed to assist supply-chain workers in various roles.
American Airlines CEO Robert Isom expressed profound sorrow following a fatal crash involving a plane operated by its subsidiary PSA Airlines and a military helicopter near Reagan Washington National Airport. All 64 passengers and crew members are presumed dead.
US stocks exhibited mixed performance at the open on Thursday as investors digested earnings reports from Microsoft (MSFT), Meta (META), and Tesla (TSLA). The Nasdaq Composite (^IXIC) gained 0.3%, while the S&P 500 (^GSPC) rose by the same margin. The Dow Jones Industrial Average (^DJI) remained almost flat. The market is attempting to regain momentum after the Federal Reserve's decision to maintain interest rates, indicating caution about inflation concerns.
The US economy grew slower than anticipated in the fourth quarter, based on preliminary data. The Bureau of Economic Analysis's advance estimate of US gross domestic product (GDP) for Q4 showed an annualized growth rate of 2.3%, below the 2.6% projected by Bloomberg-polled economists. This rate is lower than the 3.1% seen in the third quarter.
Analysts are offering their insights on Tesla's recent financial performance. RBC analyst Tom Narayan highlights the company's plans to launch unsupervised full-self driving (FSD) services and the anticipated production of driver-less cars and humanoid robots. Goldman Sachs maintains a rate-cut outlook despite the Federal Reserve's decision to hold rates steady.
Nvidia (NVDA) continues to face challenges, with shares declining 13% over the week due to concerns about competition from DeepSeek and potential restrictions on chip exports to China. However, individual investors have remained bullish, purchasing significant amounts of Nvidia stock. Meta (META) remains focused on leveraging AI to drive advertising revenue, despite concerns about its capital expenditures. The company's CFO, Amy Hood, indicated that Microsoft (MSFT) may face a potential slowdown in its AI growth in the second half of the year.