Weekly Market Preview: Feb 10–14, 2025
Markets Attempt to Rebound After Two-Week Slide
S&P 500 futures are up 0.6% in early Monday trading, attempting to recover from Friday’s selloff, which left major indices down for a second straight week. The market is shaking off renewed trade concerns following former President Trump’s announcement of 25% tariffs on steel and aluminum imports, with additional reciprocal tariffs expected midweek. Investors also appear to be looking past ongoing political uncertainty, including Republican infighting over tax cuts and the increasing likelihood of a near-term government shutdown. On the bullish side, optimism remains around a favorable U.S. macro backdrop, broadening earnings growth, strong retail buying, increased hedge fund participation, and continued AI-driven capital expenditures, despite heightened competition from China’s DeepSeek.
Key Economic Data and Fed Testimony Take Center Stage
The highlight of this week’s economic calendar is Wednesday’s January Consumer Price Index (CPI) report, which could provide further clarity on the Federal Reserve’s policy path. Fed Chair Jerome Powell will deliver his semiannual monetary policy testimony to Congress on Tuesday and Wednesday, with additional remarks expected from multiple Fed officials. Other key data releases include NFIB small business optimism (Tuesday), Producer Price Index (PPI) and initial jobless claims (Thursday), and retail sales, industrial production, and business inventories (Friday). The New York Fed’s one-year inflation expectations report this morning could influence early trading sentiment.
Corporate Developments and Earnings in Focus
Several corporate headlines are shaping market sentiment this week:
Semiconductors: Taiwan Semiconductor (TSMC) guided Q1 revenue to the lower end of its prior range due to earthquake-related production disruptions but maintained its full-year outlook. ON Semiconductor (ON) and Semtech (SMTC) both issued weak guidance, with SMTC citing disappointing CopperEdge sales.
Telecom & Tech: T-Mobile (TMUS) announced a July launch for its satellite-to-cell service, powered by SpaceX’s Starlink, at $15 per month.
Consumer & Retail: McDonald’s (MCD) reported better-than-expected same-store sales, driven by higher guest traffic despite lower average check sizes. Disney (DIS) executives are reportedly concerned that aggressive price hikes at theme parks have driven away customers.
Energy & Financials: BP (BP) shares are up following news that activist investor Elliott has taken a stake in the company. Meanwhile, TD Bank (TD) plans to exit its entire equity investment in Charles Schwab (SCHW).
Trade Tensions Escalate as China Retaliates
Trade policy remains a major market overhang. Trump’s newly announced 25% tariffs on steel and aluminum imports take effect today, with additional reciprocal tariffs expected midweek. In response, China imposed retaliatory levies on $14 billion worth of U.S. goods, reportedly targeting U.S. tech firms. Meanwhile, European firms are bracing for potential fallout, though reports suggest the EU may cut auto tariffs to de-escalate tensions. Analysts continue to debate whether Trump’s aggressive tariff strategy is a negotiating tactic or a longer-term headwind for corporate earnings and global growth.
Powell’s Testimony Likely to Reaffirm Fed’s Cautious Approach
Fed Chair Powell’s congressional testimony is unlikely to introduce major surprises, with analysts expecting him to stick to recent messaging: strong economic fundamentals and disinflationary progress allow the Fed to be patient with rate cuts. His second day of testimony on Wednesday coincides with the CPI report, which could prompt additional commentary on inflation trends.
Earnings Themes: Tariffs, AI, and Dollar Strength in Focus
Tariffs: FactSet data shows tariff mentions on earnings calls are at their highest level since 2019. Companies are flagging increased uncertainty but also highlighting supply chain adjustments and price hikes as mitigation strategies.
AI & Capex: Companies continue to emphasize AI-driven efficiency gains, but analysts remain divided on whether hyperscaler AI spending will drive earnings growth or remain an ongoing capital expenditure drag.
Currency Impact: A stronger U.S. dollar—up 6% year-over-year in Q4—has created headwinds for multinational firms, a trend expected to persist given ongoing trade disputes and policy divergences.
Looking Ahead
With inflation data, trade developments, and Fed policy in focus, markets are poised for potential volatility. However, investors will be watching closely to see if the recent pullback presents buying opportunities, particularly in AI and tech-driven names that continue to dominate market narratives.