U.S. Stocks Exhibit Muted Gains Amid Tariff Uncertainty and Nvidia’s Mixed Signals
U.S. stock markets opened with modest gains Thursday morning, buoyed initially by the strong quarterly performance of semiconductor giant Nvidia. However, President Donald Trump’s ongoing rhetoric regarding tariffs cast a shadow over the market, limiting potential upward momentum.
Nvidia, a market darling whose performance is often seen as a bellwether for the broader technology sector, released its earnings report after Wednesday’s closing bell. The company’s results for the past three months surpassed analysts’ expectations, fueling optimism about the continued strength of the artificial intelligence (AI) market. Nvidia also issued robust guidance, projecting that spending on AI-related technologies would remain elevated, further driving its growth.
Despite the positive headlines, Nvidia’s gross margin forecast, which represents the percentage of revenue remaining after deducting the cost of production, proved disappointing. This raised concerns among investors about the company’s profitability and ability to maintain its competitive edge in the face of rising costs and increasing competition.
Moreover, Nvidia’s management team acknowledged the potential impact of tariffs on its business. Colette Kress, Nvidia’s chief financial officer, stated during the earnings conference call that tariffs remain a "wildcard" for the company, echoing the sentiments of many other companies that have reported quarterly earnings in recent weeks. The uncertainty surrounding trade policy continues to weigh heavily on corporate decision-making and investment strategies. As of late morning, Nvidia shares were trading down almost 2%.
As of 9:45 a.m. ET, the broad-based S&P 500 index had gained 0.32%, or 19.07 points, reaching 5,975.13. The blue-chip Dow Jones Industrial Average rose 0.48%, or 209.94 points, to 43,643.06. The tech-heavy Nasdaq Composite index experienced a more modest increase of 0.035%, or 6.77 points, to 19,082.03. The benchmark 10-year Treasury yield edged up slightly to 4.289%.
The market’s response to Nvidia’s earnings and guidance underscores the complex interplay of factors influencing investor sentiment. While the company’s strong financial performance and optimistic outlook for the AI market are undoubtedly positive, concerns about gross margins and the potential impact of tariffs have tempered enthusiasm.
The tariff situation took a turn for the worse Wednesday when President Trump slapped a 25% tariff on the European Union. Trump also sent confusing signals about whether or not Mexico and Canada would meet the same fate on March 4 or be delayed until April 2. He clarified that on Thursday morning, confirming Mexico and Canada would face a 25% levy on March 4. Additionally, he said China would get another 10% tax on that day.
Adding to the market’s unease, President Trump’s recent pronouncements on trade policy have injected significant uncertainty into the economic outlook. On Wednesday, Trump imposed a 25% tariff on goods from the European Union and initially sent mixed messages regarding the fate of Mexico and Canada. He later clarified that Mexico and Canada would also face a 25% levy beginning on March 4, while China would be subject to an additional 10% tax on the same date.
Analysts said that Trump’s "back-and-forth tariff talk" is creating a lot of uncertainty in the markets, which is keeping investors sidelined. The unpredictable nature of trade policy makes it difficult for businesses to plan for the future and assess the potential impact on their bottom lines. This uncertainty, in turn, discourages investment and dampens economic activity.
Beyond trade policy, investors also remain wary of the overall health of the U.S. economy and whether inflation is still falling after a spate of weak economic data and Januarys hotter-than-expected consumer price index. Recent economic data has raised concerns about the pace of economic growth and the trajectory of inflation.
U.S. weekly jobless claims rose by 22,000 to 242,000 in the latest week from the prior weeks upwardly revised number, the Labor Department said Thursday. That was higher than the Dow Jones estimate for 225,000 and in line with other recent soft economic data, including lower consumer sentiment and confidence and disappointing retail sales.
The Labor Department reported that U.S. weekly jobless claims rose by 22,000 to 242,000 in the latest week, exceeding the Dow Jones estimate of 225,000. This increase in jobless claims aligns with other recent soft economic data, including lower consumer sentiment and confidence and disappointing retail sales figures, suggesting a potential slowdown in economic activity.
On Friday morning, investors will see the Federal Reserves preferred inflation gauge used to determine interest rate policy. The personal consumption expenditures price index is expected to drop to 2.6% in January from Decembers 2.8%, according to FactSet’s consensus estimates. Thats going in the right direction but still above the Feds 2% goal, and many economists fear inflation could reverse course later this year if Trump implements all his tariff threats. All of this will keep Fed rate cuts on hold for a while, they said.
Looking ahead, investors are eagerly awaiting the release of the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, on Friday morning. The consensus estimate from FactSet is that the PCE price index will drop to 2.6% in January, compared to 2.8% in December. While this represents progress toward the Fed’s 2% inflation target, it remains above the desired level. Many economists fear that inflation could reverse course later this year if Trump implements all his tariff threats. All of this will keep Fed rate cuts on hold for a while, they said. Persistent inflation pressures could prompt the Fed to maintain its current monetary policy stance, potentially delaying any future interest rate cuts.
Besides Nvidia, investors had other corporate news to chew on. It includes:Bitcoin prices rebounded, attracting some buyers after the digital unit fell below some key psychologocal milestones like $90,000 and $88,000.Reports noted institutional interest in bitcoin is picking up. According to the latest quarterly Securities and Exchange Commission (SEC) filings, billionaire hedge fund manager Paul Tudor Jones nearly doubled his stake in the iShares Bitcoin Trust to 8.1 million shares from 4.4 million shares. As of mid-February, he had 4.5% of his $9 billion portfolio invested in this spot Bitcoin exchange-traded fund (ETF).Institutional interest typically means large amounts of money flowing from large organizations like pension funds, mutual funds, insurance companies, and investment banks. It is sometimes seen as the smart money. Bitcoin was last up 1.62% at $85,507.33.
In addition to Nvidia’s earnings, investors are also digesting other corporate news and economic developments. Bitcoin prices rebounded, attracting some buyers after the digital unit fell below some key psychologocal milestones like $90,000 and $88,000. There are reports of institutional interest in bitcoin is picking up. According to the latest quarterly Securities and Exchange Commission (SEC) filings, billionaire hedge fund manager Paul Tudor Jones nearly doubled his stake in the iShares Bitcoin Trust to 8.1 million shares from 4.4 million shares. As of mid-February, he had 4.5% of his $9 billion portfolio invested in this spot Bitcoin exchange-traded fund (ETF).Institutional interest typically means large amounts of money flowing from large organizations like pension funds, mutual funds, insurance companies, and investment banks. It is sometimes seen as the smart money. Bitcoin was last up 1.62% at $85,507.33.
Overall, the U.S. stock market is navigating a complex landscape characterized by strong corporate earnings, but also by trade policy uncertainty and lingering concerns about the economic outlook. Investors will continue to monitor these factors closely as they assess the potential risks and opportunities in the market.
