Market Recap: Wall Street Rebounds as Tech Stocks Recover from AI Scare
Major Indexes Stabilize After Monday’s Selloff
On Tuesday, January 28, 2025, Wall Street staged a modest recovery following Monday’s sharp downturn, with major indexes showing signs of stabilization. The tech-heavy Nasdaq Composite led the gains, rising 1.24% to 19,582.50 points. The S&P 500 added 0.49%, reaching 6,041.99, while the Dow Jones Industrial Average inched up 0.14% to 44,775.51.
AI Stocks Rebound After Chinese Startup Shock
The market’s rebound was largely driven by a recovery in artificial intelligence (AI) stocks, which had suffered significant losses on Monday due to concerns over competition from Chinese startup DeepSeek. Nvidia (NVDA), the AI chip leader, rose 2.6% after experiencing a staggering $593 billion wipeout in market value the previous day. Other tech giants also contributed to the Nasdaq’s gains, with Apple (AAPL) jumping 4.2%.
Jim Elios, chief investment officer at Elios Financial Group, commented, “The selloff was an overreaction. The fact that a Chinese company poses sincere competition for the whole AI ecosystem should not be surprising. A correction in some of the AI-related stocks was inevitable.”
Sector Performance and Notable Movers
Eight of the eleven S&P 500 sectors finished in the red, with utilities being the biggest decliner, falling 2.1%. However, technology stocks led the gains with a 2.2% rise. Several companies made significant moves based on their earnings reports and forecasts:
– Royal Caribbean (RCL) surged 12.3% after forecasting annual profit largely above expectations.
– General Motors (GM) posted better-than-expected fourth-quarter 2024 results and a 2025 earnings forecast. However, its shares slid 10.8% due to concerns over potential tariffs.
– Boeing (BA) shares were volatile, last up 4.4%, after reporting its biggest annual loss since 2020.
– Lockheed Martin (LMT) dropped 8.2% after forecasting 2025 profit below estimates.
– RTX (RTX), an aerospace and defense major, gained 2.1% after posting a rise in quarterly profit.
Upcoming Market Events and Economic Indicators
Investors are closely watching several key events that could impact market sentiment in the coming days:
1. Federal Reserve Meeting: The Fed is widely expected to hold its lending rate steady in its first interest-rate decision of the year on Wednesday, January 29.
2. Earnings Reports: “Magnificent 7” members Microsoft (MSFT), Meta (META), Apple (AAPL), and Tesla (TSLA) are scheduled to release their earnings reports later this week.
3. Economic Data: The December reading of personal consumption expenditures (PCE) is scheduled for release on Friday, January 31.
Tariff Concerns and Market Outlook
Markets remain on edge following U.S. President Donald Trump’s announcement of plans to impose tariffs on imported computer chips, pharmaceuticals, and steel. A media report suggested that newly elected Treasury Secretary Scott Bessent is pushing for new universal tariffs on U.S. imports, starting at 2.5% and rising gradually each month.
These potential tariffs have raised concerns about worsening inflationary pressures and the possibility of slowing Federal Reserve rate cuts. Investors will be closely monitoring how these policy developments unfold and their potential impact on various sectors.
Looking Ahead
As the market digests the recent AI-related volatility and awaits crucial earnings reports from tech giants, investors remain cautious but optimistic. The resilience shown by AI-linked stocks suggests that the sector’s long-term growth prospects remain intact, despite increased competition from global players.
With the Federal Reserve’s decision and important economic data on the horizon, market participants will be looking for signs of economic strength and potential shifts in monetary policy. The coming days will be crucial in determining whether the current rebound can sustain momentum or if further volatility lies ahead in the ever-evolving landscape of the U.S. stock market.
