Wall Street ended with mixed dynamics on Tuesday, with a steady rise in Apple and Coca-Cola shares partially offsetting Tesla's decline. Investors were closely analyzing new statements from Federal Reserve Chairman Jerome Powell, who made it clear that the regulator is in no hurry to lower interest rates.
Speaking before the Senate Banking Committee, Powell said the U.S. economy remains "broadly strong." However, inflation is still above the Fed's 2% target, and unemployment remains at historically low levels. This means the Fed is not yet ready to ease monetary policy.
In addition to the Fed chief's rhetoric, investors were watching with bated breath the statements from the White House. U.S. President Donald Trump hinted at new trade measures in response to other countries' protective tariffs on American goods. The day before, he had already announced a sharp increase in tariffs on steel and aluminum imports, and in the next two days, according to him, new measures on mutual tariffs are planned.
Amid a positive report, Coca-Cola (KO.N) shares jumped 4.7%. The beverage maker showed excellent results for the fourth quarter, thanks to higher prices and stable demand for carbonated drinks and juices.
Meanwhile, Tesla (TSLA.O) shares fell 6.3% after a Reuters report that a consortium led by Elon Musk had offered $97 billion to acquire the non-profit that controls startup OpenAI. The news has raised concerns among investors concerned about the risks and potential financial impact of the deal.
Traders remain cautiously optimistic: according to LSEG, most expect the Fed to ease monetary policy in 2024. The likelihood of a 25 basis point rate cut is already priced into market forecasts. Moreover, almost half of analysts (44%) believe that the regulator may make a second similar cut before the end of the year.
An additional trigger for the markets will be fresh inflation statistics: on Wednesday at 8:30 a.m. ET (13:30 GMT), the consumer price index for January will be published. The data could change expectations for the Fed's future policy.
Apple (AAPL.O) shares rose 2.2% after reports of a partnership with Chinese tech giant Alibaba (9988.HK). According to The Information, the companies are developing and rolling out new artificial intelligence features for iPhone users in China. The news has sparked a positive reaction in the market as Apple seeks to strengthen its position in one of its key regions.
Stock indices ended the day with mixed results:
Among the 11 sectors in the S&P 500, eight showed gains. Consumer Staples (SPLRCS) led the way with a 0.91% gain, while Energy (SPNY) added 0.76%. Meanwhile, Discretionary Consumer Staples (SPLRCD) was the day's worst performer, falling 1.2%.
Refining giant Phillips 66 (PSX.N) jumped 4.7% after activist fund Elliott Investment Management acquired a stake in the company worth more than $2.5 billion. The move sparked optimism among investors, who are hoping for strategic changes in management and improved business performance.
Another leader of the day was DuPont de Nemours (DD.N), whose shares rose by 7%. The reason for this growth was an improvement in the profit forecast for 2025. The company specializing in the production of industrial materials expects stable growth in demand for products for the electronics industry, which became a key driver for the increase in estimates.
Water technology company Ecolab was not far behind. Its shares added 6.2% after publishing an updated forecast for adjusted profit for 2025, which was higher than analysts expected. Investors positively assessed the company's prospects amid growing demand for innovative solutions in the field of water supply and ecology.
However, not all companies had a good day. Fidelity National Information Services (FIS.N) shares plunged more than 11% after the banking and payment services company disappointed with its first-quarter earnings forecast. Its earnings expectations fell short of analyst consensus, sparking a sell-off.
The S&P 500 index favored rising stocks, with 1.1 gainers for every one that fell. However, the overall U.S. stock market was less optimistic, with decliners outnumbering gainers by 1.3 to 1.
U.S. trade policy continues to cause tension on the international stage. Mexico, Canada, and the European Union have sharply condemned the new tariffs imposed by Washington. In particular, the EU has declared its readiness to take "tough and proportionate countermeasures", which threatens a further escalation of trade conflicts.
Despite the mixed results of the US session, the MSCI Asia-Pacific stock index (excluding Japan) rose by 0.32%. The main support for the market was the growth of Apple and Coca-Cola quotes, which helped to compensate for losses associated with the fall in Tesla shares.
The stock market remains in a state of high volatility, with investors reacting to both corporate news and global economic and trade factors. In the coming days, the key drivers will be new inflation data, further statements by the Federal Reserve and possible retaliatory measures from US trading partners.
Futures on the EUROSTOXX 50 index added 0.2%, reflecting positive investor sentiment amid strong corporate reports. Meanwhile, the UK's FTSE showed a slight decline, losing 0.05%.
In the US, sentiment was more subdued:
Asian markets were mixed.
China's blue-chip CSI300 index lost 0.29%, while the Shanghai Composite fell 0.16%. This is explained by the continued weakening of demand for shares of large Chinese companies;
In Hong Kong, the Hang Seng Index rose 0.7%, thanks to a strong surge in Alibaba, whose shares added more than 5% on news of an artificial intelligence partnership with Apple;
In Japan, the Nikkei rose 0.25% ahead of SoftBank Group's quarterly results later in the day.
The dollar eased slightly against its major counterparts amid the trade news.
Global markets remain in a state of heightened uncertainty. Europe and the United States remain cautiously optimistic, while Asia is mixed. Expectations for Fed rates continue to adjust, while the dollar has temporarily paused its growth. Investors' main focus remains on the regulator's future policy and the development of international trade relations.
Amid ongoing tariff rows and global economic uncertainty, the Australian dollar showed a small gain, rising 0.06% to $0.6299.
Experts say the currency swings in recent weeks have been largely driven by the tariff news.
"We've seen a lot of volatility driven by tariff headlines," said Helen Given, a currency trader at Monex USA.
However, she stressed that not all of the tariffs announced will actually go into effect:
"These announcements don't necessarily mean that tariffs will be implemented immediately, and they may not be as soon as many expect."
The Japanese yen continued its slide, weakening more than 0.5% to 153.35 per dollar.
The main reason for the weakening of the national currency was the comments of the head of the Bank of Japan Kazuo Ueda, who confirmed that the regulator will adhere to a soft monetary policy until it is convinced that inflation is stably kept at the target level of 2%.
These words upset investors who hoped for a quick transition to a tighter monetary policy in Japan. In the meantime, the Bank of Japan continues to adhere to stimulating measures, which puts pressure on the yen.
After the recent jump in prices amid geopolitical concerns, oil began to fall in price.
Experts attribute this pullback to the easing of concerns about disruptions in oil supplies from Russia and Iran, as well as a technical correction after the recent rise in quotes.
Amid high uncertainty in financial markets, investors continue to seek safe havens, which supports demand for gold.
The price of spot gold remains near its all-time high of $2,894 per ounce.
This growth is explained not only by global economic risks, but also by expectations about the Fed's policy: if the US regulator really does postpone rate cuts, this could further strengthen the position of the precious metal.
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