The U.S. stock market staged a recovery on Wednesday, closing higher after initial losses earlier in the day. Earnings reports from Alphabet (GOOG, GOOGL) and AMD (AMD) fell short of expectations, but a surge in Nvidia (NVDA) shares provided a boost to Big Tech stocks.
The tech-heavy Nasdaq Composite rose by 0.2%, while the S&P 500 added 0.4%. The Dow Jones Industrial Average led the gains, rising by 0.7% or more than 300 points.
Alphabet’s stock faced pressure, dropping nearly 7%, after its fourth-quarter cloud revenue failed to meet estimates. Investors expressed concerns over the company’s heavy spending on AI and the potential delay in seeing returns on these investments.
On the other hand, Nvidia emerged as a potential beneficiary of increased AI spending, leading the charge in the major indexes’ recovery by rising more than 5%.
Meanwhile, the 10-year Treasury yield fell by nine basis points, dropping to 4.42%, its lowest level since December 2024.
AMD’s earnings report added to the mixed sentiments surrounding the AI trade. While the chipmaker reported a beat in quarterly revenue, a disappointing forecast for data-center sales raised concerns about a loss of momentum in the AI sector. As a result, AMD shares tumbled by over 6%.
Additionally, Big Tech companies like Alphabet were caught up in the ongoing tariff disputes between the U.S. and China. Apple shares initially dropped by around 2% following reports that Beijing was considering targeting its app store in an antitrust probe, before recovering later in the day.
Concerns over President Donald Trump’s tariff plans also contributed to market jitters. His unexpected suggestion that the U.S. could take control of the Gaza strip and develop it as a “Riviera of the Middle East” left investors even more uncertain about the direction of future policy decisions.
In summary, the day saw a mix of positive and negative developments in the stock market, with tech stocks facing challenges from earnings reports and geopolitical tensions impacting market sentiment. Despite these fluctuations, the market managed to recover by the end of the day, reflecting the resilience and volatility of today’s financial landscape.