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Dow Edges Up; Nasdaq Falls as Meta and Tesla Shares Rally



Earnings, Market Divergence, and AI Spending Focus

Thursday’s trading session saw major indexes take divergent paths as investors digested mixed earnings reports and updates from the tech sector.

  • Meta (META), Tesla (TSLA), and IBM shares gained following strong results, while Microsoft (MSFT) dropped sharply after disappointing growth in its cloud-computing division.

  • Both Microsoft and Meta reiterated their commitment to AI investments despite competitive pressures from the Chinese startup DeepSeek.

  • In a significant development, SoftBank is reportedly in talks to invest as much as $25 billion in OpenAI, ChatGPT’s parent company.

Macroeconomic and Global Market Developments

1. U.S. Market Insights

  • Treasury Yields: Benchmark 10-year yields inched lower to 4.554% after the Federal Reserve kept interest rates steady on Wednesday, as expected.

  • GDP Growth: Data revealed that the U.S. economy grew at a 2.5% rate in 2024, slightly slower than 2023 but supported by robust consumer spending.

2. European and Asian Markets

  • European Central Bank (ECB): In contrast to the Fed, the ECB cut rates to 2.75%, signaling a more accommodative monetary stance.

  • Asian Markets: Several major markets in Asia remained closed due to Lunar New Year celebrations.

Key Stock Movements and Sector Developments

1. Tech Sector Update

Despite Thursday's decline in the Nasdaq, the tech sector remains a focal point:

  • Meta and Tesla Gains: Both stocks rebounded as investors responded positively to their earnings reports.

  • Microsoft Cloud Disappointment: The stock faced sharp declines as slower cloud-computing growth weighed on investor sentiment.

2. Semiconductor Sector Resilience

  • Shares of ASML, the Dutch semiconductor leader, rose 9% after reporting a surge in net bookings for Q4. CEO Christophe Fouquet indicated that despite concerns surrounding DeepSeek, AI-focused chips are expected to see sustained demand.

3. Financial Services Expansion by X (formerly Twitter)

  • Elon Musk’s Financial Push: X has partnered with Visa to enable peer-to-peer payments and digital wallet transactions, mirroring services like Zelle and Venmo. This move is part of Musk’s ambition to create a comprehensive financial ecosystem on the platform.

Looking Ahead: Key Market Drivers

  1. Tech Earnings Watch: Investors remain focused on Apple (AAPL), which is set to report its quarterly earnings after the market closes.

  2. Federal Reserve Outlook: The Fed’s decision to hold rates steady has heightened market speculation about the timing of future rate adjustments.

  3. AI Innovation and Competition: DeepSeek’s disruptive entry continues to influence market sentiment, as U.S. tech companies strategize to maintain their competitive edge.

Conclusion

The market’s divergence on Thursday highlights ongoing investor recalibration amid mixed earnings reports and macroeconomic shifts. While concerns about AI competition and slowing cloud growth persist, optimism surrounding technological innovation and sustained demand for semiconductors provides a counterbalance. With key earnings reports and macroeconomic factors still unfolding, the market remains dynamic, offering both challenges and opportunities for investors.

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