Daily Market Recap: Tuesday Feb 4, 2025

Equities Rebound, Led by Tech and Industrials

U.S. stocks staged a broad rebound, with the S&P 500 gaining 0.72% and the Nasdaq surging 1.35%, recovering from Monday’s losses. The rally was led by strength in big tech, energy, media, airlines, autos, and industrials, while defensive sectors such as utilities, consumer staples, and managed care lagged. China tech stocks also saw notable gains as sentiment improved around U.S.-China trade relations.

Bonds, Currency, and Commodities

Treasury yields declined, with the yield curve steepening as investors assessed softer labor market data. The U.S. dollar weakened, providing a tailwind for gold, which rose 0.7%, closing at a record high. Meanwhile, Bitcoin futures fell 2.5%, continuing their recent volatility. Crude oil prices also remained under pressure, with WTI down 0.6%, despite former President Trump’s remarks on potentially reinstating a “maximum pressure” policy on Iran, which could affect future supply dynamics.

Key Market Drivers: Trade, Economic Data, and Earnings

Trade policy remained in focus as Trump engaged with leaders from Mexico and Canada, signaling a potential easing of recent tariff concerns. China also announced retaliatory tariffs on certain U.S. goods, but Trump’s statement that he would speak with President Xi “at the appropriate time” helped stabilize market sentiment.

On the economic front, the December JOLTS job openings report came in softer than expected, which contributed to the bond market rally and helped ease some of the stagflation concerns that had pressured stocks on Monday. Meanwhile, corporate earnings continued to drive individual stock moves, with strong reports from Palantir (PLTR), Infineon (IFX), and Spotify (SPOT) lifting sentiment in the tech sector.

Top Gainers: Tech and Industrials Outperform

Technology stocks led the market’s rebound, with Palantir (PLTR) soaring 24% after reporting a strong 76% year-over-year increase in commercial revenue and continued robust demand from U.S. government contracts. Spotify (SPOT) jumped 13.2%, posting record-breaking subscriber additions across all geographies.

Other notable gainers included Grab Holdings (GRAB) (+12.6%), which surged on reports of a potential merger with GoTo, and Super Micro Computer (SMCI) (+8.6%), which rallied ahead of its FY25 business update. Industrial names also performed well, with Ferrari (RACE) (+7.1%) and Marathon Petroleum (MPC) (+6.7%) posting strong earnings.

Biggest Decliners: Consumer and Pharma Struggles

On the downside, Estée Lauder (EL) plunged 16.1% as weak Asian travel retail sales and a slower-than-expected North America recovery led to disappointing Q3 guidance. PayPal (PYPL) fell 13.2%, as strong quarterly results were overshadowed by concerns over slowing Braintree growth and weaker margin expansion.

In healthcare, Merck (MRK) dropped 9.1% after missing revenue expectations due to weak Gardasil sales in Chinaand issuing a below-consensus FY25 outlook. Clorox (CLX) slid 7.2%, despite raising guidance, as investors worried about ERP transition-driven sell-in dynamics. Archer-Daniels-Midland (ADM) declined 5.1%, lowering its FY25 EPS outlook due to uncertainty in biofuel demand and trade policies.

Economic Data & Fed Commentary

The latest JOLTS job openings report showed a decline to 7.6 million, reversing some of November’s gains and suggesting some cooling in the labor market. While this helped ease concerns over wage-driven inflation, markets are closely watching for additional labor data this week.

San Francisco Fed President Mary Daly commented that while the economy remains resilient, the Fed remains flexible on policy adjustments given ongoing uncertainties. Investors now turn their attention to upcoming economic reports, including ISM Services and ADP Payrolls on Wednesday, Jobless Claims on Thursday, and the highly anticipated Nonfarm Payrolls report on Friday, which is expected to show a gain of approximately 170,000 jobs, down from December’s 256,000 increase.

Investment Takeaway: Overall, today’s market action reinforced the ongoing strength in select tech names while highlighting weakness in defensive sectors and rate-sensitive stocks. The drop in Treasury yields provided a tailwind for growth stocks, but the mixed earnings reactions — such as PayPal’s decline despite solid results — underscore the need for selectivity. Meanwhile, geopolitical uncertainty in energy markets and the temporary rebound in China-related stocks suggest that macro risks remain in play. Investors should stay focused on companies with strong pricing power, improving margins, and exposure to durable growth trends like AI and automation.

How are you positioning your portfolio in this environment? Let us know in the comments.