Wall Street Reacts to Trade Tensions and Mixed Economic Indicators
This week, renewed trade tensions, mixed economic signals, and a cautious Federal Reserve kept Wall Street on alert. The central bank held rates steady as expected. Fed Chair Jerome Powell cautioned of potential slowdowns due to rising prices and tariff-related pressures. Economic data added to the uncertainty, as the ISM services index climbed, while the S&P Global U.S. services purchasing managers’ index (PMI) fell to a multi-year low.
Investors monitored a widening U.S. trade deficit and the imposition of new tariffs on foreign-made films, which created challenges for the entertainment sector. The Nasdaq Composite (IXIC) approached 18,000 and the Cboe Volatility Index (VIX) touched its lowest close in over a month. Yet, Wall Street is still facing its first weekly loss in three.
Sector Highlights: EVs, Chips, and Quantum Innovations
While Big Tech earnings took center stage last week, the results provided a wider perspective on the sector.Palantir Technologies (PLTR) Stock experienced a decline despite reporting strong revenue and a lifted full-year outlook, as traders focused on modest growth and European weakness amidst valuation concerns. In the semiconductor industry, Advanced Micro Devices (AMD) posted impressive results and optimistic guidance, while Super Micro Computer (SMCI) struggled with a miss and a weak outlook.
In the electric vehicle (EV) arena, Rivian Automotive (RIVN) and Lucid Group (LCID) had mixed results. However, their updates enhanced sentiment across the sector, positively impacting Tesla (TSLA). At the same time, D-Wave Quantum (QBTS) and IONQ (IONQ) observed gains following smaller-than-expected losses and revenue growth. Lyft (LYFT) surged after increasing its share buyback program, dismissing a revenue miss thanks to double-digit growth in rides, bookings, and active riders.
Corporate Developments and Tariff Impacts
Berkshire Hathaway (BRK.B) saw a decline after Warren Buffett revealed plans to step down as CEO by year-end, with the company posting weaker-than-expected earnings. Alphabet (GOOGL) also dropped after Apple’s (AAPL) Eddy Cue testified that artificial intelligence (AI) could supplant traditional search engines. At the same time, new tariffs on foreign films pressured Netflix (NFLX), Disney (DIS), and Warner Bros (WBD), while semiconductors rebounded despite ongoing tariff issues, with the VanEck Semiconductor ETF (SMH) reclaiming a critical technical level.
Looking Ahead: Inflation and Earnings Focus
Next week shifts the spotlight to inflation, as the consumer price index (CPI) and producer price index (PPI) are set to be released—data that could influence expectations for the Fed’s next decision. Additionally, the earnings season continues, highlighted by results from Alibaba (BABA), Deere (DE), and Walmart (WMT). Furthermore, Schaeffer’s Senior V.P. of Research Todd Salamone suggests potential upside for the SPX, while Senior Quantitative Analyst Rocky White clarifies the implications of a bullish outside day for traders.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
