Daily Market Recap: Wednesday Feb 5, 2025
Stocks Rally as Yields Drop; Tech and Industrials Lead
Equities & Sectors:
U.S. equities closed higher, with the Dow up 0.71%, S&P 500 up 0.39%, Nasdaq up 0.19%, and the Russell 2000 leading with a 1.14% gain. Stocks shrugged off early weakness, rallying into the close with breadth positive and equal-weight S&P outperforming. Semiconductors, AI-related stocks, networking, banks, credit cards, investment banks, pharma/biotech, utilities, REITs, cruise lines, and housing-related retail led the charge, while managed care, chemicals, consumer goods, food, casual dining, casinos, media, and Chinese tech stocks underperformed.
Macroeconomics & Treasuries:
Treasuries firmed, with the yield curve flattening as the 10-year yield approached 4.40%, its lowest level since mid-December. The dollar index fell 0.3%, driven by yen strength on firmer Japan wage data. Gold rose 0.6%, while Bitcoin futures dropped 1.5%. WTI crude fell 2.3% amid market volatility. The January ADP private payrolls report showed a stronger-than-expected 183K increase, surpassing the 150K consensus. However, the January ISM services report came in softer, with new orders at their lowest since June. Treasury's quarterly refunding statement was largely as expected, with no change to auction sizes for three-, ten-, and 30-year securities.
Earnings & Market Drivers:
Big tech saw mixed results, with GOOGL tumbling post-earnings on slowing Cloud growth and a major capex ramp, while NVDA surged on AI investment tailwinds. Other notable earnings reports included DIS beating estimates but warning of Q2 Disney+ subscriber declines, AMD slipping on a data center miss, and SNAP delivering a beat across key metrics but facing analyst skepticism. Additionally, Trump 2.0 policy uncertainty was a market theme, with tax policy and government shutdown risks under discussion.
Notable Gainers:
Mercury Systems (MRCY) soared 18.5% on strong earnings and upgraded guidance, while Mattel (MAT) jumped 15.3% on robust Hot Wheels demand and better-than-expected margins. Johnson Controls (JCI) climbed 11.3%following an EPS beat and CEO announcement. Amentum Holdings (AMTM) gained 10.6% on strong bid volumes and revenue momentum, while Super Micro Computer (SMCI) added 8.0% after unveiling full production of NVDA’s Blackwell chips. Other gainers included Cirrus Logic (CRUS) on strong iPhone demand, Electronic Arts (EA) on a returning growth outlook, and Nvidia (NVDA) up 5.4% after Google guided for $75B in AI capex spending.
Notable Decliners:
On the downside, FMC Corp (FMC) plunged 33.5% after missing revenue expectations and issuing weak guidance amid pricing pressure and inventory destocking. Capri Holdings (CPRI) fell 10.1% as its core brands saw double-digit sales declines. Snap (SNAP) slid 8.4% despite a strong quarter, as analysts warned of upcoming EBITDA pressures. Match Group (MTCH) dropped 7.9% following weak guidance and a sudden CEO change, while Uber (UBER) declined 7.6% as Q1 bookings guidance disappointed.
Key Takeaways
Big Tech Divergence: GOOGL fell on cloud growth concerns and capex ramp, while NVDA gained on AI spending optimism.
Treasury Rally & Dollar Weakness: Provided tailwinds for equities despite soft ISM services data.
Earnings Mixed: Some sectors, like semiconductors and consumer goods, saw strength, while others (FMC, managed care, and China tech) struggled.
Political & Macro Risks: U.S.-China tensions, Trump-era policy uncertainty, and government shutdown risks remain key overhangs.
Looking Ahead:
Thursday’s focus will be on weekly jobless claims and productivity/unit labor costs, while Friday’s key events include nonfarm payrolls (expected +170K) and Michigan consumer sentiment data. Investors will also monitor Fed commentary and ongoing discussions around fiscal policy and trade tensions.