U.S. equity markets demonstrated a notable resurgence, with key indices like the Nasdaq and Dow Jones registering gains, even as new tariffs initiated by former President Trump came into effect. This market recovery was particularly bolstered by the strong performance of technology giants IBM and Salesforce, which saw significant upward movement. The broader market sentiment, however, remained a complex mix, influenced by varying economic indicators and lingering anxieties surrounding the transformative, yet potentially disruptive, impact of artificial intelligence on the labor market.
On Tuesday, U.S. stocks experienced a recovery, clawing back some of the ground lost during the preceding trading session. The Nasdaq surged by 0.9%, the Dow Jones climbed 0.8%, and the S&P 500 advanced 0.6% by late morning. This positive turn was observed globally, as noted by IG chief technical analyst Axel Rudolph, who remarked on the resilience of most international stock indices despite a backdrop of mixed economic data. Cryptocurrencies, however, did not share in this recovery, remaining under pressure, with Bitcoin dipping below the $63,000 threshold and other major digital assets like BNB and Ether hovering near early February lows, signaling potential further declines.
The day began with a slight hesitation in U.S. stock futures, but markets soon moved higher. The Dow Jones started with a 0.4% increase, followed by the Nasdaq with a 0.2% gain, while the S&P 500 hovered just above its flatline. Leading the charge for the Dow were IBM and Salesforce, both experiencing robust rebounds of 4.4% and 4.3% respectively. Home Depot also contributed significantly, rising 3.9% after exceeding its earnings expectations. Other notable performers included Apple, Nike, and Disney. In the S&P 500, Keysight Technologies, AMD, Albemarle, Ford, and DoorDash were among the top movers, alongside IBM and Salesforce.
The market's initial cautious optimism on Tuesday was largely in response to the implementation of former President Trump's new 10% global tariff, which took effect overnight. Nasdaq futures were up 0.2%, Dow Jones futures indicated a 0.1% gain, and S&P 500 futures remained steady. This contrasted sharply with the previous day's performance, where the Dow had dropped approximately 820 points (1.7%) to 48,804, the Nasdaq fell 1.1% to 22,627, and the S&P closed down 1% at 6,837 points.
A primary factor in Monday's decline was the widespread fear regarding artificial intelligence, which impacted various sectors, including delivery and payment stocks. Companies like American Express, Mastercard, Visa, DoorDash, and Uber saw declines ranging from 4% to 7%. This reaction was attributed to a research report from Citrini Research titled "The 2028 Global Intelligence Crisis," which posited a hypothetical scenario where AI adoption could push the U.S. unemployment rate into double digits by mid-2028. The fears of AI disruption also extended to software companies such as Workday, Datadog, and IBM, and subsequently to private capital groups like Ares, KKR, and Blackstone, due to concerns about their exposure to the software sector and Blue Owl's recent announcement of halting redemptions and selling over $1 billion in loans to manage liquidity.
Amidst these developments, European and Asian markets exhibited mixed performances earlier on Tuesday. The introduction of Trump's 10% tariff occurred at midnight Eastern Time, although plans for a higher 15% tariff were temporarily postponed due to international backlash, particularly from the EU and the UK. Reports also suggested that the Trump administration was considering new Section 232 national security investigations into industries like batteries, telecommunications equipment, and industrial chemicals. The White House indicated that the 15% tariff was not entirely abandoned but merely delayed, with no specific timeline provided for its implementation. In company-specific news, AMD saw a significant pre-market jump of 12% following a multi-year partnership with Meta to develop large AI data centers, incorporating up to 6GW of advanced graphics processors. Home Depot's shares also rose by 2.3% after reporting fourth-quarter results that modestly surpassed analyst forecasts, offering reassurance about the company's stability despite a cautious spending environment among its core customers. Other key corporate earnings announcements included Workday, HPQ, Lucid, Cava, and AMC, while broader economic data on U.S. consumer confidence and Trump's State of the Union address were also anticipated.
The market's performance underscores a complex interplay of geopolitical factors, technological advancements, and economic data. While specific tech stocks demonstrated resilience, the broader landscape remains shaped by trade policies and the evolving narrative around artificial intelligence's economic implications, creating a volatile but dynamic environment for investors.
