US stocks ended mixed on Wednesday as investors faced with trade policy uncertainty and weaker economic data. The S&P 500 managed to snap a four-day losing streak, closing just barely in positive territory, while the Dow Jones Industrial Average fell nearly 200 points after surrendering earlier gains. The Nasdaq Composite outperformed, lifted by strength in tech stocks following Nvidia’s strong earnings report. However, concerns over President Trump’s latest tariff announcements against Canada, Mexico, and the European Union dampened investor sentiment, fuelling volatility across asset classes. Weak consumer confidence data and a sharp drop in new home sales added to the cautious mood, with traders weighing the potential impact on economic growth in the months ahead.

Key Takeaways:

  • S&P 500 Ends Losing Streak with Fractional Advantage: The S&P 500 managed to snap its four-day losing streak, closing just 0.01% higher at 5,956.06. Despite the rebound, the index remains down nearly 1% for the week, reflecting a cautious sentiment in the market.
  • Dow Falls Nearly 200 Points After Giving Up Early Gains: The Dow Jones Industrial Average dropped 188.04 points, or 0.43%, to close at 43,433.12. Earlier in the session, the index was up as much as 245 points, fuelled by optimism over earnings. 
  • Nasdaq Climbs as Nvidia Delivers Blowout Earnings, Instacart Tumbles: The Nasdaq Composite outperformed, rising 0.26% to settle at 19,075.26. Tech stocks saw renewed strength following Nvidia’s fourth-quarter earnings report, which exceeded expectations as AI-driven demand fuelled a 78% surge in sales. The stock provided strong guidance for the current quarter, lifting market sentiment. 
  • European Markets Rally on Strong Earnings: European stocks closed higher on Wednesday as investors reacted to a wave of corporate earnings beats. The pan-European Stoxx 600 climbed 0.99%, with most sectors finishing in positive territory. Germany’s DAX led the rally, surging 1.73% (389 points), extending gains following the weekend’s federal election. France’s CAC 40 advanced 91 points (1.14%), while the UK’s FTSE 100 added 62.79 points (0.72%) to close at 8,731.46. Italy’s FTSE MIB gained 465 points (1.20%) as sentiment improved across the region.
  • Asian Markets Mixed as Hong Kong Surges on AI Investment: Asian markets saw mixed performance, with Hong Kong’s Hang Seng Index soaring 3.63% after the city announced a HK$1 billion investment to position itself as an artificial intelligence hub. The Hang Seng Tech Index surged 5.25%, led by JD.com (+9.03%), Xpeng (+9.34%), Alibaba (+6.05%), and Meituan (+10.47%). However, Japan’s Nikkei 225 fell 0.25% to 38,142.37, while the broader Topix dropped 0.30% to 2,716.40, marking its second consecutive session in the red. Australia’s S&P/ASX 200 declined 0.14% to 8,240.70 as investor sentiment remained cautious following weaker-than-expected inflation data.
  • US New Home Sales Drop, Highlighting Housing Market Weakness: Sales of new single-family homes in the US plunged 10.5% in January to a seasonally adjusted annual rate of 657,000 units, far below economist expectations of 680,000 units. High mortgage rates continued to weigh on demand, sidelining potential buyers. December’s sales pace was revised upward to 734,000 from the previously reported 698,000, but the weak January figure reinforced concerns about a slowing housing market.
  • US Treasury Yields Slip Amid Growth Concerns and Trade Tensions: The 10-year Treasury yield declined 4 basis points to 4.256% as investors sought safety in bonds amid escalating trade tensions and softening economic indicators. The 2-year Treasury yield dipped 1 basis point to 4.076%, reflecting increased caution after weaker-than-expected consumer confidence and declining new home sales.
  • Oil Prices Hold Near Two-Month Lows as Russia-Ukraine Talks Continue: Brent crude settled at $72.73 per barrel, down 0.40%, while West Texas Intermediate (WTI) crude slipped 0.20% to $68.79. Oil markets faced pressure from reports of a potential peace agreement between Russia and Ukraine, which dampened geopolitical risk premiums. Additionally, a surprise build in US gasoline and distillate inventories signalled weaker demand, adding to the bearish sentiment in energy markets.

FX Today:

  • EUR/USD Slides as Dollar Strengthens: The EUR/USD pair fell 0.25% on Wednesday to close at 1.0486, struggling to maintain momentum against the US dollar. The pair attempted to recover earlier in the session, reaching a high of 1.0525, but failed to hold its gains, keeping the downward trend intact. Last week, EUR/USD briefly tested 1.0550 before facing renewed selling pressure, reinforcing its weakness. The 50-day SMA at 1.0388 now acts as a crucial support level, with any break below this potentially dragging the pair further toward 1.0400. On the upside, resistance is seen at 1.0550.
  • GBP/USD Pushes Higher but Struggles at Key Resistance: GBP/USD ended Wednesday at 1.2678, gaining 0.09% as the pound extended its recent upward momentum. The pair briefly reached 1.2715 but failed to sustain a move beyond this level, facing stiff resistance. GBP/USD has tested 1.2700 multiple times in recent sessions but has struggled to break higher. Last week, the pair touched 1.2720 before reversing lower. The 50-day SMA at 1.2644 now provides immediate support, while the 200-day SMA at 1.2788 remains a key resistance level. If GBP/USD successfully clears 1.2715, it could pave the way for a push toward 1.2800, while a failure to hold current levels may see a pullback toward 1.2600.
  • USD/CAD Gains as Uptrend Extends: USD/CAD climbed 0.17% on Wednesday to close at 1.4335, marking another session of gains. The pair reached an intraday high of 1.4365 but struggled to break above this key resistance level, with sellers stepping in to limit further upside. Over the past two weeks, USD/CAD has been steadily climbing, recovering from a low of 1.4182 last week. The 50-day SMA at 1.4344 is now a crucial technical barrier. If USD/CAD manages to break through 1.4365, further gains toward 1.4500 could be expected. However, a failure to hold above 1.4300 may lead to a pullback toward 1.4250.
  • AUD/USD Tumbles as Risk Sentiment Weakens: AUD/USD fell 0.65% on Wednesday, closing at 0.6302 as selling pressure persisted. The pair attempted a rebound early in the session, reaching 0.6353, but faced strong resistance, leading to a pullback. Last week, AUD/USD briefly tested 0.6420 before reversing lower, failing to maintain bullish momentum. The 50-day SMA at 0.6260 now provides immediate support, while 0.6400 remains a strong resistance zone. A break below 0.6260 could accelerate losses toward 0.6200, while a move back above 0.6350 would allow for another attempt at 0.6400.
  • Gold Holds Above $2,915 as Bulls Struggle for Momentum: Gold prices remained stable on Wednesday, fluctuating within a range of $2,890.89 to $2,930.10 before closing at $2,915. The metal struggled to reclaim last week’s highs above $2,950, reflecting a loss of upside momentum. Despite the recent consolidation, gold remains in an extended uptrend, having posted gains in eight of the last ten weeks. Last week, gold reached $2,953.58 before facing resistance that led to a pullback. The 50-day SMA at $2,759.08 serves as key support, keeping the broader bullish bias intact. If gold manages to break above $2,950, it could trigger renewed buying interest, with the next major target at the psychological $3,000 level. However, failure to hold above $2,900 could increase selling pressure, with the next key support appearing near $2,870.

Market Movers:

  • General Motors Jumps on Dividend Hike and Buyback Plan: Shares of General Motors surged 4% on Wednesday after the company announced a 25% increase in its quarterly dividend to 15 cents per share. 
  • Advance Auto Parts Plummets as Guidance Disappoints: Advance Auto Parts tumbled 18% after the company issued weak first-quarter guidance. Management projected a 2% decline in same-store sales, missing estimate of a 0.7% drop.
  • Super Micro Computer Soars After Regaining Nasdaq Compliance: Super Micro Computer rallied 12% after the company successfully filed its delayed financial documents with the Securities and Exchange Commission, avoiding a potential Nasdaq delisting. 
  • Axon Enterprise Soars After Blowout Quarter: Axon Enterprise surged 15% after reporting fourth-quarter results that significantly outperformed analyst expectations. 
  • Lucid Group Falls as CEO Steps Down: Lucid Group saw its stock drop 14% after news broke that CEO Peter Rawlinson had stepped down. The electric vehicle maker also reported a narrower-than-expected loss for the fourth quarter and projected that it would more than double vehicle production in 2025 to 20,000 units. 

Stocks ended the session mixed on Wednesday, with the S&P 500 barely eking out a gain to snap a four-day losing streak, while the Dow Jones fell nearly 200 points and the Nasdaq advanced on strength in tech stocks. Nvidia’s strong earnings provided some optimism, but growing concerns over trade tensions weighed on sentiment after President Trump confirmed new tariffs on Canada, Mexico, and the European Union. Weak economic data, including a sharp decline in new home sales, added to worries about slowing growth. Treasury yields slipped as investors sought safety in bonds, while oil prices held near two-month lows amid reports of potential progress in Russia-Ukraine peace talks. As investors digest the latest trade policy developments and economic indicators, markets remain on edge, with volatility likely to persist in the days ahead.