The US stock market closed higher on Tuesday, driven by a strong performance in the technology sector. Investors grappled with China’s retaliatory tariffs against the US, assessed new jobs data, and reacted to a flurry of corporate earnings reports.
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The Dow Jones Industrial Average (^DJI) gained approximately 0.3%, while the benchmark S&P 500 (^GSPC) rose roughly 0.7%. The tech-heavy Nasdaq Composite (^IXIC) jumped nearly 1.4%, recovering some of Monday’s losses.
Trade War Tensions and Easing Concerns
China swiftly responded to the US imposition of additional 10% tariffs on Chinese imports. Beijing implemented tariffs of 15% on US coal and liquefied natural gas and 10% duties on imports of crude oil, farm equipment, and certain automobiles. While these tit-for-tat measures escalated trade war risks, some investors viewed China’s response as measured, potentially leaving room for compromise. This sentiment was further bolstered by President Trump’s announcement of expedited talks with Chinese President Xi Jinping. The US dollar index (DX-Y.NYB) fell about 0.9% as trade war worries eased.
Alphabet’s Cloud Revenue Disappoints
China also launched an antitrust investigation into Alphabet’s Google (GOOG, GOOGL) and added several US companies to its “unreliable entities list.” Alphabet’s earnings report further fueled investor concerns. Despite posting record highs during intraday trading, Alphabet shares dropped around 7% in after-hours trading due to lower-than-expected revenue in its cloud business and higher spending.
Mixed Earnings Reports Across Sectors
Other major companies reported mixed results. Chipotle’s stock declined after missing same-store sales estimates, while AMD (AMD) shares rose on strong guidance, alleviating concerns about a potential slowdown in the AI chip market. Snap (SNAP) stock surged after exceeding both revenue and earnings expectations and providing optimistic first-quarter revenue guidance.
Job Openings Decline, Labor Market Cools
Fresh jobs data revealed a decline in job openings in December, exceeding analyst predictions. While this signaled a cooling labor market, economists viewed the data as consistent with a healthy and stable employment landscape. The Federal Reserve is likely to consider this data when making future interest rate decisions.
Looking Ahead: Disney and Further Developments
As the market absorbs these developments, investors are anticipating Disney’s (DIS) fiscal first-quarter earnings report. Focus will likely be on updates regarding the company’s parks and streaming performance. The ongoing trade negotiations between the US and China, along with the evolving earnings season, will continue to shape market sentiment in the coming days. Hyperloop Capital Insights will be closely monitoring these developments and providing further analysis.
