Daily Market Summary – Feb 25th

Nvidia Earnings Anticipation

Anticipation surrounding Nvidia's upcoming earnings report dominated market sentiment, positioning it as a critical test for the AI investment boom with potential to propel major gains or spark sharp declines across equities. Investors scrutinized the chipmaker's performance and guidance amid soaring expectations for AI demand, while options traders priced in the smallest post-earnings stock swing in three years, reflecting subdued volatility forecasts. Tech stocks rebounded ahead of the release, with futures climbing as broader indices like the Dow, S&P 500, and Nasdaq advanced, led by software in an AI relief rally. Unstable US tech trading weighed on global markets, underscoring Nvidia's role in anchoring sentiment during this pivotal moment.

Big Tech AI Pressures

Big Tech faced mounting pressure to address surging power demands from AI data centers, as President-elect Trump summoned executives from Amazon, Google, and Meta to pledge reductions in costs, with the White House hosting leaders for a similar commitment. Trump mandated that these firms secure their own power supplies for AI infrastructure to ease national grid strain, highlighting the sector's transformative energy footprint. Companies slashed thousands of jobs—over 60,000 this year from giants like Microsoft, Google, and IBM—to redirect capital toward AI, reshaping labor markets and defining dynamics in five industries through an AI 'scare trade.' Meta signed multibillion-dollar deals with AMD for MI300X AI chips and a 1.9GW clean energy agreement featuring massive battery storage, diversifying beyond Nvidia while powering data center expansion.

Tariff Trade Tensions

Tariff policies intensified global trade tensions, with the USTR announcing hikes to 15% or higher on select nations, volatility forcing supply chains into regional resets by 2026, and China declaring fulfillment of US obligations while warning against further measures. Trump's State of the Union forecasts outlined economic expansion via tax cuts, infrastructure, and trade reforms, urging portfolio shifts amid rising rates, while shielding domestic industries but risking inflation, retaliation, and slower growth. USTR's moves and Trump's America First agenda, boasting record stock highs and low unemployment, promised more deregulation and investments, though consumers reported persistent high costs despite optimism.

Auto Energy Updates

Stellantis approached earnings after a $26 billion writedown, with analysts focused on turnaround potential amid automotive challenges. In energy, the US government extended a record $26.5 billion loan to Southern Co., bolstering infrastructure, while nuclear expansion risked derailment from fuel shortages threatening reactor builds and clean power goals. Oil prices hovered near seven-month highs amid US-Iran talks anticipation and OPEC+ considerations for April output increases of 137,000 barrels per day, balancing geopolitical risks with supply outlooks. Canada's oil sector saw $38 billion in record consolidations through major mergers.

AI Investment Surge

AI advancements spurred massive investments, including SK Hynix's $15 billion in new South Korean semiconductor facilities, ASML citing surging demand as its primary 2025 growth driver, and top Chinese chipmakers planning advanced output boosts. Self-driving startup Wayve raised $1.2 billion from Nvidia, Uber, and automakers, while AI chip challengers like MatX secured $500 million and SambaNova $350 million with Intel partnerships. Anthropic abandoned its AI safety pledge to accelerate competition, and ChatGPT introduced ads contrasting ad-free rivals. India's AI focus prioritized user growth, TCS urged staff AI adoption despite revenue risks, and ByteDance's Doubao hit 100 million users.

Regulatory Crypto News

Regulatory scrutiny escalated with a Democrat senator launching a $1.7 billion probe into Binance for alleged Iran sanctions violations, Google testing search changes ahead of an EU antitrust fine, and a UK stablecoin sandbox selecting firms like Revolut and Circle, whose stock surged on 72% USDC circulation growth to $35 billion. Coinbase, Kraken, and Binance pushed tokenization as capital shifted to blockchain assets. Stripe explored early talks for a PayPal deal or tender offer valuing it at $159 billion amid stablecoin surges, while General Atlantic eyed ByteDance shares at $550 billion valuation.

Fed Inflation Concerns

Federal Reserve officials emphasized persistent high inflation as the top concern, outpacing others, with Philadelphia Fed President Patrick Schmid highlighting it over challenges like unemployment. The New York Fed warned of shrinking government bond appeal imposing economic costs amid higher yields and shifting preferences, stalling a bond rally as risk appetite grew. Bond traders bet on Fed rate cuts extending to 2027, pricing prolonged loose policy amid uncertainties. US banks may face requirements to collect customer citizenship data.

Economy Incentives Housing

Worker incentives strengthened through a new tax deduction exempting overtime pay, alongside Trump's proposal for retirement accounts targeting those without 401(k)s to enhance long-term savings. Trump's address hailed a 'golden age' economy with strong growth and low unemployment, though polls revealed public pessimism over prices and housing. Housing stocks plunged amid gloomy outlooks and Trump's sector dismissal, with new Minnesota construction stalling from immigration crackdowns curbing labor.

EV Auto Tech Launches

EV and auto sectors showed mixed signals, with Chinese giant tripling Europe sales amid competition, Stellantis writedown signaling struggles, and BYD flagged risky alongside alternatives. Samsung launched Galaxy S26/S27 lineups with AI enhancements, edging Apple, while prices rose due to chip costs. Xiaomi challenged India's royalty tariffs in court, potentially setting precedents for foreign tech taxes.

Markets Optimism Assets

Markets reflected cautious optimism, with European indices hitting records as tariff fears eased, Korea's KOSPI surpassing 6,000 on semiconductor demand, and US indices rising ahead of key events. Dow, S&P, and Nasdaq futures dipped post-Trump address but climbed overall, Bitcoin rebounding near $69,000 and surging past $66,000. Gold advanced amid uncertainty, inflation, and dollar weakness; commodities like soybeans, copper, and crude tracked shifts.

Mixed Corporate Earnings

Corporate earnings painted a varied picture, with DoorDash blockbuster results signaling delivery strength, Axon Enterprise exceeding profits on government spending for body cameras, and MercadoLibre strong in Latin American e-commerce. Workday plunged on weak forecasts from AI competition, First Solar record 2025 profits but shares dropped, and regional banks like First Horizon mixed amid conditions. TJX beat sales but forecasted subdued growth from consumer pullback, Lowe's cited remodel reluctance.

Job Cuts Media Battles

Job cuts extended beyond tech, with WiseTech slashing a third of its workforce for AI efficiencies, Aston Martin 20%, and Diageo dividends amid slumping sales. Media battles heated as Paramount raised bids against Warner Bros. Discovery and Netflix, with states urging DOJ antitrust probes. Clean energy braced for volatility despite investments, rare earth advances reduced China reliance for tech, EVs, and defense.