EU stock surge, Key economic data expected tomorrow
Earnings reports; AI stocks stabilize as Nvidia rebounds; investors eye Fed policy, and GDP growth amid shifting market trends.
U.S. Stock Market, AI and Earnings
The AI-related stock sell-off has stabilized, with investors refocusing on earnings from megacap tech companies. Nvidia (NVDA.O) saw a partial recovery, regaining just over half of Monday’s 17% loss, which had wiped more than $500 billion off its market value. U.S. stock indexes showed mixed movement: the S&P 500 dropped 0.2%, the Nasdaq Composite declined 0.4%, and the Dow Jones Industrial Average edged up by 14 points (0.1%). Treasury yields also saw minor shifts, with the 10-year yield falling to 4.52% and two-year yields dropping below 4.2%.
Several U.S. companies reported earnings, with notable movements including Starbucks (+5.7%) after strong quarterly results, Norfolk Southern (+5.1%) on better-than-expected earnings, and Brinker International (+13.8%). Meanwhile, Danaher fell 6% after missing earnings expectations. Frontier Group Holdings announced a renewed merger attempt with Spirit Airlines following its bankruptcy filing last year.
Federal Reserve Policy and Economic Indicators
The Federal Reserve is expected to hold its policy steady after starting rate cuts in September. Inflation remains above 2%, and GDP estimates have climbed above 3% for the first time in 2025, according to the Atlanta Fed’s ‘GDPNow’ model. Meanwhile, U.S. consumer confidence dipped more than expected in January, leading Fed futures to price in two more rate cuts before the end of the year.
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European Markets and Central Bank Earnings
European stocks surged, with the Stoxx 600 rising 0.6% and the European technology sector posting a 4.5% earnings—its best day in a year. ASML (ASML.AS) led the rally, jumping 11% after reporting strong earnings and double the expected order volume. The European Central Bank is widely expected to cut rates by 25 basis points on Thursday, following Sweden’s Riksbank, which cut rates for the fifth consecutive time to 2.25%.
Asian Markets and China’s AI Disruption
Asian markets were mixed due to the Lunar New Year holiday. Japan’s Nikkei 225 climbed 1%. Chinese tech developments, particularly the launch of DeepSeek’s AI model, continue to impact global tech stocks. The U.S. government is reviewing national security risks associated with DeepSeek, while OpenAI and Microsoft investigate possible intellectual property theft. Alibaba (9988.HK) responded by releasing Qwen 2.5, claiming superior performance to DeepSeek-V3. Alibaba’s U.S.-listed shares rose 2% ahead of the market open.
Oil, Commodities, and Currencies
West Texas Intermediate crude dropped 0.7% to $73.27 per barrel, while gold fell 0.2% to $2,757.95 an ounce. In currencies, the dollar index strengthened by 0.2%, while the euro and British pound both declined 0.3%, to $1.0395 and $1.2405, respectively. The Japanese yen rose 0.1% to 155.36 per dollar. Bitcoin surged 1.9% to $102,161.11, and Ether earnings were 1.6% to $3,100.41.
Upcoming Economic Events and Corporate Earnings
Key events to watch include the ECB’s rate decision, U.S. GDP and jobless claims data (Thursday), and U.S. personal income and spending figures, PCE inflation, and the employment cost index (Friday). Additionally, corporate earnings from Apple, Deutsche Bank, and other major firms will be released later in the week.
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