Concerns Over AI Spending Weigh on Stocks

The S&P 500 Index ($SPX) (SPY) today is down -1.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.30%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.69%.  March E-mini S&P futures (ESH26) are down -1.10%, and March E-mini Nasdaq futures (NQH26) are down -1.79%.

Stock indexes are sharply lower today, with the S&P 500 and Dow Jones Industrial Average falling to 1-week lows.   AI spending worries are weighing on stocks today, with Microsoft sinking more than -12% after reporting underwhelming growth in its cloud business and higher-than-expected expenses.  The rout in Microsoft is undercutting the Magnificent Seven technology stocks, sans Meta Platforms, and is weighing on the broader market. 

Meta Platforms is up by more than 7% today and is a positive factor for the market after providing a revenue outlook that was much stronger than expected.  Also, International Business Machines is up more than +5% after reporting Q4 results that beat expectations. 

WTI crude oil (CLH26) prices are up more than +3% to a 4.25-month high today to lift energy producers after President Trump on Wednesday said that he wants Iran to come to the table and negotiate a nuclear deal that is “a fair and equitable deal with No Nuclear Weapons.”  He warned Iran that time is running out to make a deal with the US, noting that a fleet of US warships entering the region is ready to complete their mission “with speed and violence.”

US weekly initial unemployment claims fell -1,000 to 209,000, showing a slightly weaker labor market than expectations of 205,000. However, continuing claims fell -38,000 to a 6-month low of 1.827 million, showing a stronger labor market than expectations of 1.850 million.

The US Nov trade deficit was -$56.8 billion, wider than expectations of -$44.0 billion and the largest deficit in 4 months.

US Nov factory orders rose +2.7% m/m, stronger than expectations of +1.6% m/m and the largest increase in 6 months.

Threats to stocks and the dollar remain.  President Trump has threatened new 100% tariffs on US imports from Canada, the possibility of a US government shutdown over ICE funding, and lingering concerns about Greenland.  In addition, there is the risk of another partial government shutdown.  Senate Democrats threatened to block a government funding deal over Department of Homeland Security/ICE funding after the ICE shooting of an ICU nurse in Minnesota on Saturday.  There could be a partial government shutdown when the current stopgap funding measure expires this Friday.

The market’s focus this week will be on new tariff news and the prospects for a continued resolution (CR) to fund the government.  On Friday, Dec PPI final demand is expected to ease to +2.8% y/y from +3.0% y/y in Nov, and Dec PPI ex-food and energy is expected to ease to +2.9% y/y from +3.0% y/y in Nov.  Also, the Jan MNI Chicago PMI is expected to climb by +0.8 to 43.5.

Q4 earnings season is in full swing, with 102 of the S&P 500 companies scheduled to report earnings this week.  Apple reports after the close today.  Earnings have been a positive factor for stocks, with 81% of the 106 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.6% in Q4.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 14% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets are mixed today.  The Euro Stoxx 50 fell to a 1-week low and is down by -0.68%.  China’s Shanghai Composite climbed to a 2-week high and closed up +0.16%.  Japan’s Nikkei Stock 225 closed up +0.03%.

Interest Rates

March 10-year T-notes (ZNH6) today are up by +5 ticks.  The 10-year T-note yield is down -0.6 bp to 4.237%.  T-note prices recovered from early losses today and turned higher after a slump in stocks boosted some safe-haven demand for government debt.  Also, today’s report on weekly jobless claims was higher than expected, a supportive factor for T-notes.  Gains in T-notes are limited with today’s 3% jump in crude oil prices to a 4.25-month high, which boosted inflation expectations.  Also, supply pressures are undercutting T-notes, as the Treasury will auction $44 billion of 7-year T-notes later today. 

European government bond yields are moving lower today.  The 10-year German bund yield slid to a 1.5-week low of 2.821% is down -2.9 bp to 2.828%.  The 10-year UK gilt yield fell from a 2.25-month high of 4.566% and is down by -3.8 bp at 4.506%.

The Eurozone Jan economic confidence indicator rose +2.2 to a 3-year high of 99.4, stronger than expectations of 97.1.

Eurozone Dec M3 money supply rose +2.8% y/y, weaker than expectations of +3.0% y/y.

Swaps are discounting a 0% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

Weakness in the Magnificent Seven technology stocks, sans Meta Platforms, is weighing on the broader market.  Microsoft (MSFT) is down more than -12% to lead losers in the Dow Jones Industrials on disappointment that Q2 Azure and other cloud services revenue ex-forex could not beat expectations, up +38% y/y, right on consensus.  Also, Amazon.com (AMZN), Nvidia (NVDA), and Tesla (TSLA) are down more than -2%.  In addition, Alphabet (GOOGL) is down more than -1%, and Apple (AAPL) is down -0.08%.

Cryptocurrency exposed socks are falling today with Bitcoin (^BTCUSD) down more than -5% at a 1.75-month low. Strategy (MSTR) is down more than -9%, and Galaxy Digital Holdings (GLXY) is down more than -7%. Also, Coinbase (COIN), MARA Holdings (MARA), and Riot Platforms (RIOT) are down more than -6%.

Energy producers and energy service providers are rallying today with WTI crude up more than +4% at a 4.25-month high.  APA Corp (APA), ConocoPhillips (COP), Diamondback Energy (FANG), Marathon Petroleum (MPC), and Valero Energy (VLO) are up more than +3%.  Also, Halliburton (HAL), Occidental Petroleum (OXY), Phillips 66 (PSX), and Devon Energy (DVN) are up more than +2%.  In addition, Chevron (CVX) and Exxon Mobil (XOM) are up more than +1%.

Las Vegas Sands (LVS) is down more than -14% to lead losers in the S&P 500 after reporting its Q4 Macau operations adjusted property Ebitda of $608 million, weaker than the consensus of $626.1 million. 

HubSpot (HUBS) is down more than -12% after BMO Capital Markets cut its price target on the stock to $385 from $465.

ServiceNow (NOW) is down more than -11% after reporting Q4 adjusted gross margin of 80.5%, weaker than the consensus of 81.2%. 

Whirlpool (WHR) is down more than -7% after reporting Q4 net sales of $4.10 billion, below the consensus of $4.26 billion, and forecasting full-year ongoing EPS of about $7.00, weaker than the consensus of $7.23.

Tractor Supply Co (TSCO) is down more than -6% after reporting Q4 net sales of $3.90 billion, weaker than the consensus of $3.99 billion, and forecasting full-year comparable sales up +1% to +3%, the midpoint below the consensus of +2.96%. 

Dow Inc. (DOW) is down more than -5% after reporting Q4 net sales of $9.46 billion, below the consensus of $9.50 billion. 

Meta Platforms (META) is up more than +7% to lead gainers in the Nasdaq 100 after reporting Q4 revenue of $59.89 billion, better than the consensus of $58.42 billion, and forecasting Q1 revenue of $53.5 billion-$56.5 billion, well above the consensus of $51.27 billion. 

International Business Machines (IBM) is up more than +6% to lead gainers in the Dow Jones Industrials after reporting Q4 revenue of $19.69 billion, stronger than the consensus of $19.21 billion.

Royal Caribbean Cruises Ltd (RCL) is up more than +15% to lead cruise stocks higher and gainers in the S&P 500 after forecasting full-year adjusted EPS of $17.70 to $18.10, stronger than the consensus of $17.67.  Also, Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) are up more than +6%.

Southwest Airlines (LUV) is up more than +3% after forecasting Q1 adjusted EPS of at least 45 cents, well above the consensus of 28 cents. 

Lockheed Martin (LMT) is up more than +5% after forecasting full-year EPS of $29.35 to $30.25, well above the consensus of $29.09.

C.H. Robinson Worldwide (CHRW) is up more than +2% after reporting Q4 adjusted diluted EPS of $1.23, better than the consensus of $1.13. 

Earnings Reports(1/29/2026)

A O Smith Corp (AOS), Altria Group Inc (MO), Ameriprise Financial Inc (AMP), Apple Inc (AAPL), Arthur J Gallagher & Co (AJG), Blackstone Inc (BX), Caterpillar Inc (CAT), Comcast Corp (CMCSA), Deckers Outdoor Corp (DECK), Dover Corp (DOV), Dow Inc (DOW), Hartford Insurance Group Inc/The (HIG), Hologic Inc (HOLX), Honeywell International Inc (HON), International Paper Co (IP), KLA Corp (KLAC), L3Harris Technologies Inc (LHX), Lockheed Martin Corp (LMT), Marsh & McLennan Cos Inc (MRSH), Mastercard Inc (MA), Nasdaq Inc (NDAQ), Norfolk Southern Corp (NSC), Parker-Hannifin Corp (PH), PulteGroup Inc (PHM), ResMed Inc (RMD), Royal Caribbean Cruises Ltd (RCL), Sandisk Corp/DE (SNDK), Sherwin-Williams Co/The (SHW), Southwest Airlines Co (LUV), Stryker Corp (SYK), Thermo Fisher Scientific Inc (TMO), Tractor Supply Co (TSCO), Trane Technologies PLC (TT), Valero Energy Corp (VLO), Visa Inc (V), Western Digital Corp (WDC), Weyerhaeuser Co (WY).