Megacap tech stocks drag down market due to disappointing earnings and trade concerns

From Nasdaq: 2025-02-05 13:46:15

Stock indexes are mixed today, with the S&P 500 down -0.20%, the Dow up +0.04%, and Nasdaq down -0.38%. Megacap tech stocks are under pressure from disappointing earnings like Alphabet’s -8% drop and AMD’s -10% decline. Concerns about US-China trade relations and tariff impacts are also weighing on markets.

US markets recovered slightly as the 10-year T-note yield fell to a 7-week low. The Dec ADP employment change beat expectations at +183,000 jobs. However, the US trade deficit widened to -$98.4 billion, the largest in 2-3/4 years. The Jan ISM services index fell to 52.8, below expectations.

Earnings season is in full swing, with companies like Qualcomm and Amazon reporting soon. Analysts estimate S&P 500 earnings grew by +7.5% y/y in Q4. The markets are pricing in an 18% chance of a -25 bp rate cut at the next FOMC meeting in March. Overseas markets are mixed, with the Euro Stoxx 50 down -0.26% and China’s Shanghai Composite down -0.65%.

Treasuries are up today, with the 10-year T-note yield at 4.424%. European government bond yields are lower, with the German bund and UK gilt yields falling. Eurozone Dec PPI rose +0.4% m/m. Swaps are fully pricing in a -25 bp rate cut by the ECB in March. US stock movers include Alphabet, down -8%, and AMD, down -10%, while companies like Mattel and Johnson Controls are up more than +10%.



Read more at Nasdaq: Stocks Pressured by Weakness in Megacap Tech Stocks