The stock market rally saw massive losses Monday in AI hardware-related stocks amid fears that the AI model from China's DeepSeek will reduce the need for data centers, power and more. But the S&P 500 and Nasdaq pared weekly losses, while the Dow Jones moved toward record highs. Nvidia struggled to sustain a bounce, but many AI hardware plays did rebound significantly. Meanwhile, Apple, IBM and Meta Platforms were earnings winners, while Microsoft, ServiceNow and UPS among the notable losers. Tesla erased weekly losses despite weak results as Elon Musk said robotaxis will launch in June. Treasury yields tumbled, while the Federal Reserve paused and signaled no hurry to change.
Stock Market Resilient
The Dow Jones rose toward record highs, while the small-cap Russell 2000 climbed slightly, hitting resistance at the 50-day line. The S&P 500 was little changed for the week while the Nasdaq pared losses after both bounced off Monday's lows, holding key support. AI hardware stocks crashed Monday on DeepSeek-related fears, but many rebounded significantly, though Nvidia's bounce was modest. A slew of earnings reports also swung stocks and sectors. A significant number of stocks flashed buy signals. Treasury yields tumbled to 2025 lows.
Fed Pauses, Powell Upbeat
The Federal Reserve held its key interest rate steady on Wednesday, confirming that policy is in a holding pattern after three straight rate cuts. There's no need to cut now that job gains have firmed up and the Fed waits for clarity on the Trump agenda, Fed chief Jerome Powell indicated. However, he offered assurance that the trajectory of inflation and the Fed's key rate is lower. The setup looked even better after the Fed's primary inflation rate, the core PCE price index, rose just 0.16% in December, a touch less than expected. GDP growth eased to 2.3% in Q4 from 3.1% in Q3. The Boeing strike contributed to the softer growth, even as personal consumption grew a strong 4.2%, the most since Q1 2023. The Fed's primary gauge of compensation, the Employment Cost Index, eased to 3.8% annual growth in Q4 from 3.9% in Q3, more evidence that inflation is unwinding.
Tesla Robotaxi Overshadows Earnings
Tesla earnings rose 3% and revenue 2%, both missing views even with a one-time gain from the rising value of bitcoin holdings. Automotive gross margin excluding regulatory credits tumbled to the lowest since Q4 2017. Tesla and CEO Elon Musk also suggested that 2025 could be a lackluster year at best for the EV business. But Musk on the earnings said that unsupervised full self-driving will come to Texas in June, with robotaxi tests in many cities by year end. The Cybercab robotaxi should arrive in 2026. Musk also was bullish on Optimus, projecting the company could be selling units sometime in the first half of 2026. "Long term, Optimus will be overwhelmingly the value of the company," Musk said. Tesla stock popped on earnings, flashing early entries.
Tariff Hikes, Big Earnings Loom For Market
Microsoft Falls On Guidance
The tech titan reported fiscal Q2 EPS up 10% with revenue rising 12% to $69.6 billion, topping views. But the Azure cloud infrastructure business grew 31%, slightly below views, while Microsoft guided lower for current-quarter revenue, blaming currency headwinds. It said its AI business has surpassed an annual revenue run rate of $13 billion, up 175% year over year, but is capacity constrained. Microsoft also said fiscal 2026 capital spending growth will be slower than in 2025.
Apple iPhone Sales Stall
Consumer electronics giant Apple topped its earnings target on in-line sales in its fiscal first quarter ended Dec. 28. EPS rose 10% while sales climbed 4% to $124.3 billion. High-margin services and growth in Mac and iPad sales helped offset slumping iPhone sales. In fiscal Q1, iPhone revenue declined nearly 1% year over year to $69.14 billion, with sales especially weak in China. Adoption of the latest handsets was held back by the limited rollout of Apple Intelligence features late in the quarter, executives said. For the current quarter, Apple forecast its total revenue to grow in the low to mid-single digits amid forex headwinds.
Meta Earnings Jump, Guidance Weak
Meta Platforms earnings rose 50% while revenue climbed 21% to $48.38 billion, both beating. But revenue guidance was light while the Facebook and Instagram parent sees a big rise in expenses. In the prior week, Meta guided 2025 capital spending well above views. Meta stock rose strongly for the week, increasingly extended from a flat base.
ServiceNow Dives On Guidance
The enterprise software maker reported Q4 earnings rose 18%, slightly beating, while a 21% revenue gain to $2.957 billion was roughly in line. Subscription revenue missed by a whisker while current remaining performance obligations came in light. For 2025,, ServiceNow predicted subscription revenue growth in a range of 19.5% to 20% vs. estimates of 20.8%. Shares plunged from record highs to undercut the low of a base.
SAP reported Q4 adjusted EPS grew 17% with revenue up 4% to $9.7 billion, both slightly beating views for the German software giant.
Atlassian surged after the software maker beat fiscal Q2 estimates amid its shift to a subscription, cloud-based business model. Earnings per share rose 31% while revenue climbed 21% to $1.286 billion, with cloud revenue up 30%. Atlassian guided slightly higher for the March quarter.
Wireless Giants Strong
AT&T reported flat profit while revenue from continuing operations edged up 0.9% to $32.3 billion. Both slightly beat. The telecom giant added 482,000 postpaid wireless phone customers vs. estimates of 443,000. Also, AT&T added 307,000 landline fiber-optic broadband customers. AT&T reported free cash flow of $4.8 billion, down from $6.4 billion a year earlier, but in line with estimates. Free cash flow growth supports AT&T's dividend. T-Mobile US reported Q4 adjusted profit up 40% as revenue climbed 7% to $21.9 billion, beating. AT&T stock jumped to a multiyear high while T-Mobile jumped within a base.
Payment Giants Hit New Highs
Mastercard reported a 20% increase in earnings on a 14% revenue growth to $7.49 billion, slightly beating. Gross dollar volume rose 12% for the quarter, with lucrative cross-border volume up 20%. Mastercard expects low double-digit revenue growth in Q1 and 2025. Visa topped expectations with a 14% adjusted EPS rise with revenue up 10% to $9.5 billion. Payments volume increased 9%, with a 16% increase in cross-border volume. The Dow Jones component's Q2 guidance called for high-single digit earnings growth, with revenue up around 10%. Visa is also the first financial partner for X as Elon Musk's social media platform plans to roll out payment and banking services later this year.
Chip Gear Makers Rise On Earnings
Semiconductor equipment manufacturers ASML, KLA and Lam Research delivered better-than-expected December-quarter sales and earnings growth. The trio benefited from selling gear for producing leading-edge chips for artificial intelligence and high-performance computing applications. Investors responded positively to their reports. Meanwhile, chipmakers Intel, Qorvo and STMicroelectronics continued to post declining revenue and profit as they deal with cyclical downturns in their respective markets, including industrial, automotive, and personal electronics.
Defense Stocks Mixed
Shares of defense stocks were mixed this week as contractors announced their quarterly results. Lockheed Martin posted a major earnings miss after recognizing a $410 million loss on classified programs within its aeronautics business segment. A program in its missile and fire control business also recorded a $100 million loss, bringing the program's total for the year to $1.4 billion. In addition, Lockheed guided low on 2025. Shares plunged. RTX topped views, but the midpoint of its earnings and revenue outlook were just short of analyst estimates. Still, RTX shares rose to a buy point. General Dynamics beat expectations with a 14% increase in both earnings and revenue, driven by a 36% spike in aerospace sales. Northrop Grumman topped EPS forecasts but missed on revenue while guidance was also light. General Dynamics and Northrop shares fell.
Oil Giants' Earnings Mixed
Chevron and Exxon Mobil both reported big earnings declines in Q4 even as the U.S. supermajors increased production and returned more than $20 billion to shareholders in 2024. Exxon earnings fell 33%, beating views, while revenue dipped 1% to $83.43 billion, missing forecasts. Meanwhile, Chevron missed on EPS but topped on sales, with the former down 40% and the latter up 11% to $52.23 billion. Shell also reported softer Q4 results this week but is sticking to its guns on dividends, buybacks and capital expenditures. Meanwhile, oilfield services firm Baker Hughes rallied on a better-than-expected 37% EPS gain on a solid performance from its industrial and energy technology segment.
Chili's Parent Crushes Views
Brinker International reported Q2 EPS spiked 183% after Q1's 239% jump, far above views. Revenue jumped 26% to $1.36 billion, also beat. Brinker's overall comparable restaurant sales increased 27.4%, driven by a 31.4% spike from Chili's. Brinker guided full-year estimates significantly higher. EAT stock, a big winner over the past year, surged to fresh highs. Starbucks also scored a strong breakout on its Q1 results. Earnings fell 23% while revenue was flat, but the coffee chain still subdued expectations. Analysts were encouraged by turnaround efforts and expect Starbucks to return to positive growth in the U.S. soon.
Insurers
Chubb, seen as among the publicly traded insurers most at risk from the Los Angeles-area wildfires, estimated costs tied to the fires of around $1.5 billion, to be incurred in Q1 2025r. Chubb's Q4 EPS slid 28% amid hurricane claims, but that beat views. Warren Buffett, whose Berkshire Hathaway has a vast insurance business, revealed an equity stake in the Zurich-based insurer last year. Property catastrophe and casualty reinsurer RenaissanceRe posted a 32% EPS drop in Q4. Chubb rose to around the 50-day line while RNR tumbled below the 200-day. Progressive rallied on earnings while Brown & Brown slid. Most of the insurance stocks are in bases after solid rallies in the past year.
Stifel, Piper Sandler Flash Buys
Stifel Financial and Piper Sandler both reported better-than-expected four-quarter results. Brokerage and investment bank Stifel reported a 49% EPS gain with revenue up 15% to $1.59 billion. Piper Sandler EPS rose 19% while revenue climbed 9% to $499 million. Stifel shares cleared a traditional buy point, while Piper moved above its 50-day line, offering an early entry.
In Brief
IBM earnings topped views with the venerable tech giant signaling a strong 2025, citing AI growth. Shares surged, breaking out.
Boeing signaled a jet production and delivery recovery after a challenging 2024. The plane maker said it has restarted 737, 767 and 777 production. It expects deliveries of the 737 Max, its bestselling but troubled jet, to reach the "upper 30s" in January, up from 17 in December. For Q4, Boeing widened losses to $5.90 per share from a loss of 47 cents a year ago amid a two-month machinists' strike. It expects to turn cash flow positive in the second half of 2025 after burning through more than $14 billion last year. Boeing stock rose slightly.
Raymond James Financial posted a 22% earnings gain on a 15% revenue increase. Shares are trading near record highs and a buy point.
Deckers Brands reported a 19% EPS gain with revenue up 17% to $1.83 billion, both beating fiscal Q3 views. Ugg brand sales jumped 16.1% to $1.24 billion, while Hoka shoe sales spiked nearly 24% to $530.9 million. However, the shoemaker noted it faces difficult year-over-year comparisons for its Hoka and Ugg brands, and is left with little Ugg inventory for the current Q4. DECK stock dived Friday.
SoFi Technologies earned 29 cents a share vs. 2 cents a year. Revenue grew 19%, but slowed from 30% in Q3. Shares fell as the lender warned on Q1 and 2025 but did pare losses.
Dynatrace reported fiscal Q3 EPS grew 15% with revenue up 19% to $436 million, both topping. Annual recurring revenue from subscriptions rose 16% to $1.657 billion, in line with estimates. The software maker guided up on fiscal Q4 revenue with EPS roughly in line. Shares rose toward a buy point.
Check Point Software reported Q4 EPS rose 5% with revenue up 6% to $703.7 million, both slightly beating. The cybersecurity firm guided roughly in line for 2025. Shares jumped.
Royal Caribbean broke out to record highs after clearing Q4 views. The cruise giant posted a 30% EPS gain a 13% revenue rise to $3.76 billion. Royal said its bookings have accelerated since last quarter, which should boost yields and margins. The company gave bullish 2025 guidance and said it plans to start river cruises.
Vertex Pharmaceuticals rose after the FDA approved its non-opioid painkiller Journavx.
ResMed earnings rose 29% while fiscal Q2 sales grew 10% to $1.28 billion. But shares of the sleep apnea devices maker fell Friday, erasing weekly gains and pulling back below a buy point.
Stryker announced a plan to divest its U.S. spinal business to to Viscogliosi Brothers. The family-owned investment firm will spin off the spinal business into a specialized company called VB Spine. Stryker also reported adjusted EPS climbed 16% while revenue rose 11% to $6.44 billion in sales for the fourth quarter, beating expectations. Shares fell slightly after topping a buy point earlier in the week.
Teva Pharmaceutical plummeted on its light earnings outlook, which CEO Richard Francis chalked up to heavy R&D spending. The sales outlook, on the other hand, beat expectations, as did Teva's fourth-quarter sales of $4.23 billion, up 5%. Earnings tumbled 41%, meeting views.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
