The U.S. stock market demonstrated notable volatility as Alibaba (BABA) and Palantir (PLTR) stocks took significant hits, each plunging more than 9%. This downturn followed reports suggesting the Trump administration may impose further trade measures against China, adding to market uncertainty. Meanwhile, the Dow Jones Industrial Average (DJIA) increased by 0.4% by midday in New York, whereas the S&P 500 remained stable and the NASDAQ fell by 0.4%.
The market's ambiguity stems from conflicting signals in U.S. trade policy. The Trump administration's oscillation between aggressive rhetoric and optimistic assertions has left investors wary. U.S. stocks have reacted to reports of potential global tariffs, with analysts, such as those at JPMorgan, predicting continued anti-free trade rhetoric.
"We see tariff headline news flow risk as a continuous theme through this year, and beyond. If the trade war escalates, business confidence generally will be hit, but the US is likely to be less affected than others," – JPMorgan analysts
Alibaba's stock decline reflects investor concerns over potential retaliatory measures from China in response to U.S. actions. Likewise, Palantir's stock fell after the Defense Department unveiled plans to slash its budget by up to 8% annually, impacting defense contractors like Palantir.
In contrast to these declines, the Dow Jones saw gains, buoyed by investor anticipation of upcoming earnings reports from major companies. Home Depot (HD) is set to report its fiscal fourth-quarter results on Tuesday before market opening, with expected adjusted earnings per share (EPS) of $3.04 on $39.07 billion in revenue. Despite inflationary pressures affecting consumer spending, Wedbush analyst Seth Basham remains optimistic about Home Depot's performance.
Wedbush analysts suggest that Nvidia (NVDA) could also surprise investors positively when it announces its fiscal Q4 results on Wednesday. Analysts anticipate an adjusted EPS of $0.85 on $38.15 billion in revenue. The company's performance could be driven by robust demand for its Blackwell GPUs.
"We believe demand is far outstripping supply with Blackwell [GPUs] in the field and after speaking with many enterprise AI customers, we have seen not one AI enterprise deployment slow down or change due to the DeepSeek situation," – Wedbush office
Salesforce (CRM), another key player, is slated to release its results on Wednesday as well. Analysts, including Wedbush's Dan Ives, forecast a "beat and raise" announcement from Salesforce, potentially boosting its share price by $80. The burgeoning AI sector is expected to be a significant growth driver for Salesforce's earnings.
While the broader market faces uncertainty, these individual firms offer a glimmer of hope for investors seeking reliable returns amidst tumultuous trade news. The forthcoming earnings reports could provide critical insights into how these companies are navigating current economic challenges.