Stock Traders Look Past AI Jitters as Bonds Climb: Markets Wrap

“Volatility has been the story this week, with the stock market trying to find its footing as it navigates a shifting tariff landscape and mixed earnings,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team. “The S&P 500 hit new record highs less than two weeks ago, but taking a step back, it’s really been in a ‘choppy consolidation’ since early December.”

Given ongoing tariff uncertainty, Skelly says “international” sectors like IT hardware and equipment, autos, and parts of the consumer goods space may be more vulnerable. Meantime, domestically-oriented areas of the market, such as financials, may attract investor interest.

Legendary short seller Jim Chanos says no one can see the biggest risks facing US markets over the next six to 12 months — because the challenges are going to be unpredictable events, like the recent DeepSeek concern that wiped out roughly $1 trillion in market value from US stocks.

“The real risks will be something like DeepSeek that comes out of left field that changes people’s thinking,” Chanos said in an interview with Bloomberg TV Wednesday. “By definition, we do not know what that is.”

As the earnings season rolls in, one thing Bespoke Investment Group strategists are keeping a close eye on is the percentage of stocks reporting “triple plays.” That’s when a company exceeds analyst estimates on the top and bottom lines while boosting forward guidance.

So far this year, 75% of stocks have beaten consensus earnings-per-share estimates, while 66% have exceeded revenue estimates, they said. While those rates are strong relative to history, we’ve also seen 8% of companies lower guidance — compared to just 5% that have raised guidance.

“When triple plays were super common in 2021, share prices were reacting much less positively to them,” Bespoke strategists said. “Now that triple plays have become less common again, the stocks that are reporting triple plays are reacting more positively.”

Over the last three months through Tuesday, there have been exactly 100 stocks that have reported triple plays, Bespoke noted. And these stocks have averaged a one-day share price gain of more than 10% in response.

As traders gear up for Friday’s jobs report, data showed employment at US companies picked up in January by more than forecast, highlighting resilient labor growth despite mounting uncertainty.

Federal Reserve officials are closely tracking developments in thejobs market as they assess how much to lower interest rates this year. A rapid pickup in the unemployment rate last summer was a key driver behind policymakers’ decision to lower rates by a full percentage point in 2024. That said, the job market has showed renewed strength since then, with Fed Chair Jerome Powell describing it last week as “pretty stable.”

A survey conducted by 22V Research shows only 24% of respondents think Friday’s data will be “risk-on.” Thirty percent said “risk-off” while 46% “mixed/negligible.”

“Investors have turned their focus to average hourly earnings this month after being far more focused on payrolls and the u-rate last month,” said Dennis DeBusschere at 22V.

Corporate Highlights:

• MicroStrategy Inc., the software maker that has been tapping capital markets to fund purchases of Bitcoin, announced on Wednesday that the company would now be doing business under the name Strategy.

• Chipotle Mexican Grill Inc.’s sales rose less than expected, highlighting the high bar the company set by defying an industrywide traffic slowdown in recent years.

• Walt Disney Co. reported fiscal first-quarter results that topped analysts’ estimates, fueled by the blockbuster film Moana 2 and higher income from its streaming services.

• Johnson Controls International Plc jumped following a boost in its profit forecast and the hiring of a new chief executive officer.

• Match Group Inc. named Zillow Group Inc. co-founder Spencer Rascoff as its new chief executive officer, replacing Bernard Kim who has struggled to end a persistent decline in subscribers to the company’s flagship dating app Tinder.

• Snap Inc. issued a disappointing earnings outlook, taking away from stronger-than-expected revenue gains in the last quarter.

Key events this week:

• Eurozone retail sales, Thursday

• UK rate decision, Thursday

• US initial jobless claims, Thursday

• Fed’s Christopher Waller, Lorie Logan speak, Thursday

• Amazon earnings, Thursday

• US nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday

• Fed’s Michelle Bowman, Adriana Kugler speak, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 4 p.m. New York time

• The Nasdaq 100 rose 0.4%

• The Dow Jones Industrial Average rose 0.7%

• The MSCI World Index rose 0.5%

• Bloomberg Magnificent 7 Total Return Index fell 1.5%

• The Russell 2000 Index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro rose 0.3% to $1.0405

• The British pound rose 0.2% to $1.2502

• The Japanese yen rose 1.1% to 152.70 per dollar

Cryptocurrencies

• Bitcoin rose 0.8% to $97,327.01

• Ether rose 4.7% to $2,764.03

Bonds

• The yield on 10-year Treasuries declined nine basis points to 4.42%

• Germany’s 10-year yield declined three basis points to 2.37%

• Britain’s 10-year yield declined eight basis points to 4.44%

Commodities

• West Texas Intermediate crude fell 2% to $71.22 a barrel

• Spot gold rose 0.7% to $2,862.27 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Robert Brand, Margaryta Kirakosian and Winnie Hsu.

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