Stocks ended higher Tuesday as markets reacted to the fast-changing dynamic on tariffs and the potential for a protracted trade war between the world's two biggest economies.
The Dow Jones Industrial Average gained 134.13 points, or 0.3%, to finish the session at 44,556.04, while the S&P 500 rose 0.72% to close at 6,037.88 and the tech-heavy Nasdaq surged 1.35% to 19,654.02.
Kristian Kerr, head of macro strategy for LPL Financial, said that the current situation remains fluid, and looking ahead, investors should be prepared for the possibility of additional tariff announcements.
"President Trump recently signaled that the administration may also implement tariffs on specific categories of goods, such as semiconductors, pharmaceuticals, and steel," she said. "He has also suggested the potential for tariffs on European imports."
Kerr said that another layer of uncertainty arises from how businesses and consumers will react to tariff hikes if they last a long time.
"It is a lot to work through, and this intricate combination of dynamic factors will likely create some macroeconomic volatility in the short term as the true duration, scope, and ultimate impact of these new policies remains unclear," she said.
AMD reported better-than-expected fourth quarter earnings and sales, but missed estimates in its data center segment.
The company posted adjusted earnings of $1.09 per share on revenue of $7.66 billion, compare with Wall Street’s call for earnings of $1.08 per share on sales of $7.53 billion.
AMD reported $3.86 billion in data center sales, up 69% year-over-year, but falling short of the FactSet consensus of $4.14 billion in data center sales.
Shares were down 5.24% to $113.24 in after-hours trading at last check.
Updated at 1:17 PM EST
AMD on deck
Advanced Micro Devices (AMD) shares are moving higher into the chipmaker's fourth quarter earnings, slated for after the close of trading, with investors looking for a robust AI outlook to offset the likely muted forecast for memory sales.
AMD shares, which are down more than 32% over the past year despite its foothold as the world's second-largest AI chip producer, is expected to post adjusted earnings of $1.08 per share on revenues of $7.53 billion.
CEO Lisa Su is also likely to be pressed on the impact of DeepSeek's emergence as a cut-priced alternative to the AI strategies of hyperscalers such as Amazon (AMZN) , Meta Platforms (META) and Microsoft (MSFT) , which is likely its single-biggest customer.
AMD share were last marked 3.05% higher on the session and changing hands at $117.76 each.
Related: Goldman Sachs analyst revisits AMD stock price target as slump extends
Updated at 11:58 AM EST
Nvidia's China problem
Nvidia shares are holding solid early gains heading into the mid-day session, but could face renewed China risks tied to Beijing's retaliation to U.S. tariffs put in place by President Donald Trump.
Reports suggest China regulators are set to revive a December anti-trust probe, tied to Nvidia's $6.9 billion takeover of Melanox in 2020, as it looks to target U.S. tech companies in its response to Trump's move to apply an extra 10% levy on all China-made goods.
Nvidia is also fending-off accusations that its high-end chips found their way into the hands of DeepSeek, the China-based AI startup that emerged this month as a low-cost challenger to big tech hegemony despite export restrictions put in place during the Biden administration.
Nvidia shares were last marked 2.4% higher at $119.45 each, a move that still leaves the stock down more than 13.6% for the year.
Related: Nvidia stock faces fresh China concerns
Updated at 11:18 AM EST
Palantir untamed
Palantir Technologies (PLTR) shares hit a fresh record high in early trading, pegging its market cap at just over $240 billion, following a stronger-than-expected set of fourth quarter earnings and bullish outlook tied to "untamed" AI demand.
"There are some transformational tech stocks that come along every decade and change the landscape," said Wedbush analyst Dan Ives. "Palantir is one of them and proved it for all the tech world to see last night."
Palantir shares were last marked 25.3% higher in late-morning trading and changing hands at $104.92 each, a move that extends the stock's six-month gain to around 336%. Shares hit a fresh intra-day high of $106.91 each earlier in the session.
Related: Analysts race to overhaul Palantir stock price targets after Q4 earnings
Updated at 10:07 AM EST
Jolted
Around 7.6 million jobs went unfilled over the final month of last year, the Labor Department reported its December Job Openings and Labor Turnover report, a weaker-than-expected tally that could suggest slowing employment momentum into 2025.
The so-called quits rate, however, held at 2%, indicating workers are still finding higher-paying jobs compared to their current positions, while the layoff was also unchanged at 1.1%.
JOLTS showing some softness. Job openings fell to 7.6 mil and ratio of openings to unemployment rose. Conditions in the job market still appear solid but slowing. pic.twitter.com/rNFXmNOlrN
— Kathy Jones (@KathyJones) February 4, 2025
Updated at 9:40 AM EST
Mixed open
The S&P 500 was marked 5 points, or 0.09% higher in the opening minutes of trading, with the Nasdaq rising 74 points, or 0.38% higher.
The Dow slipped 58 points while the mid-cap Russell 2000 index, which hit a three-week low during the worst of yesterday's slump, was marked 2 points, or 0.11% higher.
S&P 500 Opening Bell Heatmap (Feb. 04, 2025)$SPY flat ⬜$QQQ flat ⬜$DJI -0.14% 🟥$IWM -0.15% 🟥 pic.twitter.com/Jw6yTpL4Wu
— Wall St Engine (@wallstengine) February 4, 2025
Updated at 7:37 AM EST
Merck slump
Merck & Co (MRK) shares slumped to the lowest levels in more than two years in early trading after the drugmaker said weak sales of its HPV vaccine in China would erode its 2025 outlook.
Merck posted stronger-than-expected fourth quarter earnings of $1.72 a share on revenue of $15.6 billion, but said it would pause shipments of Gardasil to China, a move that would likely trim 2025 sales to between $64.1 billion and $65.6 billion. Analysts were looking for something in the region of $67.3 billion, according to LSEG forecasts.
Merck shares were marked 8.9% lower in premarket trading to indicate an opening bell price of $90.90, .
$MRK Merck anticipates full-year 2025 sales to be between $64.1 billion and $65.6 billion, including a negative impact of foreign exchange of approximately 2% at mid-January 2025 exchange rates. This sales range reflects a decision to temporarily pause shipments of…
— Adam Feuerstein ✡️ (@adamfeuerstein) February 4, 2025
Stock Market Today
Tariff headlines dictated much of the market's direction on Monday. President Donald Trump's decision to impose import levies on goods from Canada, Mexico and China initially sent shares sharply lower, but they pared some of those losses following a 30-day reprieve for the U.S.'s two closest trading partners.
Goods coming from China, however, were hit with an extra 10% levy today, causing a quick and significant reprisal from Beijing, which slapped tariffs on crude oil, farm equipment and other key goods, and launched an antitrust probe into Google parent Alphabet (GOOGL) just hours before it reported fourth quarter earnings after the close of trading.
That's raised the prospect of a tit-for-tat trade war, which has the potential to both disrupt global supply chains and stoke inflation, leaving the Federal Reserve with little option but to hold its lending interest rate steady until the impacts are fully understood.
"It’s true that tariffs typically represent a one-off price adjustment that wouldn’t necessarily or durably impact the inflation rate," said Lauren Goodwin, economist and chief market strategist at New York Life Investments.
"However, tariffs are accentuating a larger trend towards supply chain movements – one that is prompting durable and capital-intensive investment in the U.S. and global economies.
"The question for investors and policymakers regarding inflation is therefore less about the initial impact of tariffs and more about the longer-term inflationary impact of supply chain reglobalization in response to a more volatile global business landscape."
Related: Goldman Sachs analysts warn on Trump tariff impact for stocks
The market's immediate reaction to last night's pullback on tariffs aimed at Canadian and Mexican imports was to sell the U.S. dollar, which retreated from its two-year high against a basket of its global peers and was last marked 0.4% lower at 108.493.
Treasury bond yields, meanwhile, inched higher, with 10-year notes last pegged at 4.581% and 2-year notes trading at 4.259% heading into the start of the New York session.
Stocks remain under pressure, however, and look set for a third consecutive day of decline with the S&P 500 called 7 points lower at the start of trading and the Dow Jones Industrial Average priced for an 85-point pullback.
The tech-focused Nasdaq, meanwhile, is set for a 2-point decline, with early gains from Nvidia (NVDA) and Alphabet offsetting declines for Tesla (TSLA) and Microsoft (MSFT) .
More Economic Analysis:
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- Jobs report has big implications for Fed rate bets, Treasury yields
In Europe, the Stoxx 600 was marked 0.11% lower in Frankfurt as investors fretted over the potential for new levies from the White House on goods exported from the EU. Britain's FTSE 100 was down 0.14% in London.
Overnight in Asia, Japan's Nikkei 225 finished 0.72% higher in Tokyo, with the regionwide MSCI ex-Japan index rising 1.67%.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
