The S&P 500 hit its second consecutive record close on Wednesday, as investors looked past concerns over potential tariffs proposed by former President Donald Trump. Despite initial market nerves, stocks remained resilient, driven by gains in the technology sector and optimism surrounding corporate earnings. Microsoft led the charge with a 1.3% rise after unveiling its first-ever quantum computing chip, while Tesla added nearly 2%. Meanwhile, the Federal Reserve’s latest meeting minutes reinforced a cautious stance on interest rates, due to concern about the impact of Trump’s tariffs. European markets, however, faltered under disappointing earnings, while Asia-Pacific markets traded mixed amid ongoing trade policy uncertainty.

Key Takeaways:

  • S&P 500 Closes at Record High for Second Consecutive Session: The S&P 500 rose 0.24%, settling at 6,144.15 and marking its second straight record close. The index also touched a fresh intraday all-time high, shrugging off investor concerns about potential tariffs from former President Trump. 
  • Dow Rises 71 Points, Nasdaq Inches Higher: The Dow Jones Industrial Average climbed 71.25 points, or 0.16%, to close at 44,627.59, while the Nasdaq Composite added 0.07% to finish at 20,056.25. Despite early session volatility, gains in major technology names such as Tesla, which advanced nearly 2%.
  • European Markets Slump as Earnings Disappoint: The Stoxx 600 index fell 0.9%, marking its biggest daily drop in 2025, while major European indices struggled. The FTSE 100 slid 54.20 points, or 0.62%, to 8,712.53, as inflation fears resurfaced in the UK. The DAX in Frankfurt fell sharply, dropping 385 points, or 1.68%, as weak earnings from companies such as Philips, which plummeted 11%, weighed on sentiment. France’s CAC 40 declined 97 points, or 1.18%, while Italy’s FTSE MIB lost 0.5%. Meanwhile, the UK’s inflation rate rose to 3% in January, surpassing market expectations of 2.8% and marking a sharp increase from December’s 2.5% reading. Core inflation jumped to 3.7%, up from 3.2% in December.
  • Asia-Pacific Markets Trade Mixed Amid Economic Concerns: Japan’s Nikkei 225 fell 0.27% to 39,164.61, while the broader Topix index declined 0.3% to 2,767.25. South Korea’s Kospi outperformed, gaining 1.7% to close at 2,671.52, while the small-cap Kosdaq rose 0.6% to 778.27. Mainland China’s CSI 300 climbed 0.7% to 3,940.16, but Hong Kong’s Hang Seng index slipped 0.14% to 22,944.44. Meanwhile, Australia’s S&P/ASX 200 dropped 0.73% to 8,419.20 after the Reserve Bank of Australia cut interest rates by 25 basis points to 4.10%. 
  • US Mortgage Demand Drops as Housing Affordability Struggles: Mortgage applications fell 6.6% last week as higher borrowing costs continued to weigh on potential homebuyers. The average interest rate for 30-year fixed mortgages with conforming loan balances declined slightly to 6.93% from 6.95%, but demand remained weak. The Mortgage Bankers Association reported that points increased to 0.66 from 0.64 for loans with a 20% down payment, further adding to affordability challenges.
  • Treasury Yields Slip as Fed Signals Rate Cuts Are on Hold: The 10-year Treasury yield edged lower, dipping less than 1 basis point to 4.535%, while the 2-year yield dropped 3 basis points to 4.274%. The Federal Reserve’s meeting minutes revealed that officials remain cautious about cutting interest rates, citing the need for further progress on inflation. Additionally, concerns over Trump’s proposed tariffs and their potential inflationary impact have added another layer of uncertainty to rate expectations.
  • Oil Prices Hold Near One-Week High Amid Supply Concerns: Brent crude rose 0.3% to settle at $76.04 per barrel, while West Texas Intermediate (WTI) crude climbed 0.6% to $72.25 per barrel, marking the highest close for both contracts since February 11. Supply disruptions in Russia and the US contributed to price stability, with Russia’s Caspian Pipeline Consortium cutting oil flows by 30-40% following a Ukrainian drone attack. In the US, North Dakota’s oil production is expected to decline by as much as 150,000 barrels per day due to extreme weather conditions.

FX Today:

  • Euro Struggles to Maintain Footing as Dollar Strength Persists: The euro remained under pressure against the US dollar, declining 0.20% to 1.0424 as bearish momentum continued to weigh on the pair. An early attempt to break above resistance at 1.0480 was quickly rejected, indicating that sellers remain in control. The pair has been trending lower in recent sessions, with the 50-day SMA at 1.0399 acting as the immediate support level. If EUR/USD fails to hold above this mark, selling pressure could intensify, pushing the pair toward the next key psychological level at 1.0300. However, should buyers regain control, resistance stands at 1.0566 (100-day SMA), followed by 1.0743 (200-day SMA), which could pave the way for a broader recovery. 
  • British Pound Faces Resistance as Upward Momentum Fades: The British pound dipped 0.23% to 1.2585 after struggling to sustain earlier gains, having reached a session high of 1.2639. The pair remains caught between key technical levels, with resistance at the 100-day SMA at 1.2674 preventing further upside. On the downside, the 50-day SMA at 1.2467 is acting as a major support zone. If GBP/USD fails to break above 1.2674, the pair could enter a period of consolidation or face renewed downside pressure. A break below 1.2467 would expose the 1.2400 level, potentially leading to further weakness. However, should bulls push the pair above the 100-day SMA, the next upside target stands at 1.2789 (200-day SMA).
  • Canadian Dollar Under Pressure as US Dollar Gains Ground: The Canadian dollar weakened against the US dollar, with USD/CAD climbing 0.27% to 1.4232 as investors digested the latest Federal Reserve meeting minutes. The Fed signalled it remains cautious about cutting interest rates, keeping the US dollar in demand and weighing on the Canadian dollar. USD/CAD found key support near the 100-day SMA at 1.4111, which has been limiting further declines. A continued upward push could see the pair test resistance at 1.4338 (50-day SMA), with a further breakout potentially sending it toward the 1.4500 level. However, if the Canadian dollar regains strength and USD/CAD dips below 1.4111, focus will shift to the 200-day SMA at 1.3883.
  • Japanese Yen Strengthens as Dollar Retreats Below 152.00: The US dollar lost ground against the Japanese yen, slipping 0.37% to 151.49 as selling pressure mounted. The pair had previously attempted to hold above the 152.00 mark but failed to maintain momentum, reinforcing a bearish shift. With the price now sitting below the 50-day SMA at 155.13, the near-term trend is leaning toward further downside. The 200-day SMA at 152.62 was recently tested but proved too strong for buyers, signalling potential weakness ahead. If USD/JPY falls below 151.00, the next key support level is at 150.00, a major psychological threshold that could attract further selling. However, if the dollar stages a recovery, initial resistance remains at 152.62, with a move beyond that opening the door for a test of 153.29 (100-day SMA).
  • Gold Pulls Back from Multi-Month Highs as Fed Minutes Weigh on Sentiment: Gold prices eased slightly on Wednesday, slipping 0.09% to $2,932 after recently hitting fresh multi-month highs. The retreat came after the Federal Reserve reaffirmed its cautious approach to rate cuts, dampening near-term bullish sentiment. Despite this, gold remains in a strong uptrend, with investors continuing to view the metal as a hedge against uncertainty. The 50-day SMA at $2,732 offers solid technical support, while the 100-day SMA at $2,700 reinforces the overall bullish structure. If gold breaks above $2,950, the next major target stands at the psychologically significant $3,000 mark, a level that could trigger further buying interest. On the downside, immediate support lies at $2,900. 

Market Movers:

  • Klaviyo Surges on Strong Quarterly Earnings: Shares of software firm Klaviyo jumped nearly 6% after reporting stronger-than-expected fourth-quarter earnings. The company posted adjusted earnings of $0.07 per share on revenue of $270 million. 
  • Imax Drops After Missing Revenue Estimates: Imax shares fell 4.9% on Wednesday following a weaker-than-expected earnings report. The company reported fourth-quarter earnings of $0.27 per share on revenue of $93 million. 
  • Biomarin Pharmaceutical Jumps on Strong Results: Biomarin Pharmaceutical saw its stock surge 7.2% after posting robust fourth-quarter earnings that exceeded analyst projections. The company reported earnings of $0.64 per share on revenue of $747 million.
  • Carvana Sinks Despite Beating Earnings Expectations: Online used-car marketplace Carvana plummeted 11.8% as investors reacted negatively to its latest earnings report. The company reported fourth-quarter earnings of $0.56 per share and revenue of $3.55 billion, topping analysts’ forecasts. 
  • Palantir Slides as CEO’s Trading Plan Raises Investor Concerns: Defence and data analytics firm Palantir saw its stock decline another 5% after falling 10% in the prior session. Investors reacted negatively to the news that CEO Alex Karp had adopted a new stock trading plan. 

As the trading session wrapped up, the S&P 500 reached another record high, while the Dow and Nasdaq edged higher, supported by gains in the technology sector. Despite lingering concerns over Trump’s proposed tariffs, investor sentiment remained largely resilient, with strong corporate earnings helping to offset market uncertainty. European stocks faced pressure as disappointing earnings and inflation concerns weighed on sentiment, while Asia-Pacific markets delivered mixed results amid shifting economic conditions. Treasury yields drifted lower following the Federal Reserve’s reaffirmation of its cautious stance on rate cuts, while oil prices held firm on ongoing supply concerns. As markets continue to navigate a complex mix of policy developments and economic data, investors remain watchful for signals on the next phase of monetary and trade policies.