The Week That Was, The Week Ahead: Macro & Markets, February 2, 2025

Everything to Know about Macro and Markets

Stocks ended the turbulent week mixed. The Dow Jones Industrial Average (DJIA) rose by 0.27%, while the S&P 500 (SPX) was down by 1%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX)  logged weekly losses of 1.64% and 1.36%, respectively. Despite the weekly slide, stocks are firmly in the green year-to-date, with the DJIA leading the gains.

The Market’s Deep Dive

On Monday, tech stocks pulled the broad market down following the news that Chinese start-up DeepSeek released a competitive AI model. U.S. technology stocks were rattled by DeepSeek’s claims that its AI chatbot performed just as well as the leading AI applications at a fraction of the cost, utilizing much less data and power. Investor anxiousness about tech leaders’ elevated valuations resurfaced again, heated up by questions regarding the necessity of the enormous capex surge into AI chips, data centers, and electricity. As traders feared that the U.S. AI leadership was threatened, tech stocks tumbled, with Nvidia (NVDA) alone losing nearly $600 billion in market value.

Deep Questions for Chinese AI

After Monday’s freefall, dip-buyers rushed in to pick AI leaders at a discount as questions arose regarding the viability of DeepSeek’s assertions. U.S. officials are investigating whether DeepSeek purchased advanced Nvidia chips, circumventing U.S. restrictions. At the same time, analysts estimated that DeepSeek’s overall expenses are almost 100x the training costs that the company revealed. OpenAI also reviewed evidence that the Chinese start-up improperly harvested its data.  

Meanwhile, the understanding dawned that Chinese AI models are not expected to gain traction in the West beyond limited use by individuals. DeepSeek AI has already been banned at NASA, the U.S. Navy, and several other federal agencies. In Europe, Italian authorities blocked the Chinese model over data privacy concerns, while other EU member states are conducting probes on the issue. South Korea has also launched an investigation of DeepSeek AI based on concerns about the model’s privacy vulnerabilities.

Goldilocks Feat. Tariffs

As stocks rebounded from Monday’s sell-off, reassured investors shrugged off December Core PCE, reading that inflation rose above November’s annualized pace, which was in line with expectations. The preliminary estimate of the Q4 GDP growth revealed that the economy remained firmly in growth mode. Although growth came in weaker than economists expected last quarter, the weakness was caused by the many disruptions, such as a strike at Boeing, two hurricanes, and LA wildfires. Besides, it capped a year in which the economy expanded by 2.8%, slightly below 2023’s pace.

The underlying economic strength—measured by consumer spending and private investment—remained healthy throughout the year. Analysts positively opined on the data, returning to the “Goldilocks” narrative. Given this background, the Federal Reserve’s decision to hold rates unchanged was largely a non-event for the stock markets, as it was a widely expected outcome.

The Fed Chair Jerome Powell said that policymakers didn’t need “to be in a hurry” to cut rates, as they believe a cautious approach is necessary given the stalled progress on the inflation front and uncertainty posed by economic policy. President Trump’s promise to cut corporate taxes and ease regulations could reduce inflation and speed up the economy, while high tariffs could have the opposite effects. As Trump reiterated his plan to impose 25% tariffs on Mexico and Canada—the U.S.’s top two trade partners—as soon as February 1^st, also threatening a 10% levy on Chinese imports, markets reversed course, registering a loss on Friday.          

Stocks That Made the News

▣ The earnings season is in full swing, with 36% of the companies in the S&P 500 having reported their quarterly results. So far, the Q4 earnings growth rate stands at 13.2%, its fastest since Q4 2021 and the index’s sixth consecutive quarter of year-over-year earnings growth. Among the companies that have already reported, the highest earnings growth has been registered in the Financials, Communication Services, Information Technology, Consumer Discretionary, and Utility sectors. In contrast, Energy and Industrials have reported the most significant year-over-year declines.

▣ Last week, four of the “Magnificent” cohort released their quarterly reports. Apple (AAPL), Microsoft (MSFT), and Meta (META) delivered strong results, above estimates for both earnings per share and revenue, while Tesla (TSLA) missed on both measures. Despite that, Tesla’s shares rose on an upbeat outlook amid enthusiasm for autonomous vehicles and robotics. Meanwhile, Microsoft’s stock clocked in a weekly loss as investors fretted over slower-than-expected cloud revenue growth. Apple’s shares jumped despite declining iPhone sales, as this was anticipated due to weak demand and higher competition in China. Meta’s stock surged nearly 9% on strong revenue and EPS growth.

▣ Last week, the best S&P 500 and DJIA performer was International Business Machines (IBM),, which surged over 16%. The company’s fourth-quarter earnings exceeded expectations, driven by its AI strategy. IBM also guided for a return to overall revenue growth in 2025, further supporting sentiment.  

▣ The worst performer outside of the AI-related stocks reeling from the DeepSeek hit was United Parcel (UPS). The delivery giant’s stock lost more than 15% over the week as UPS said its largest customer, Amazon, would lower its volume by more than 50% by the second half of 2026.

▣ Also on Wall Street’s losing end was Walgreens Boots Alliance (WBA), which dropped by over 14.5% following dividend suspension after nine decades of uninterrupted payouts.    

Upcoming Earnings and Dividend Announcements

The Q4 2024 earnings season is in full swing, with many notable earnings releases scheduled for this week.

The highlights of the week will be the reports from Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) on Wednesday, and from Apple (AAPL) on Thursday. Also in focus are chipmakers and other technology large caps, with reports coming from ASML Holding (ASML), SoFi Technologies (SOFI), SAP AG (SAP), ServiceNow (NOW), IBM (IBM), Qualcomm (QCOM), Lam Research (LRCX), KLA (KLAC), Intel (INTC), Check Point (CHKP), and KLA (KLAC). Other notable quarterly results will be released by AT&T (T), Stryker (SYK), Boeing (BA), Starbucks (SBUX), Visa (V), Mastercard (MA), Caterpillar (CAT), Exxon Mobil (XOM), and AbbVie (ABBV).

Ex-dividend dates are coming this week for Conagra Brands (CAG), Bank of New York Mellon (BK), Clorox (CLX), Lennar (LEN), Valero Energy (VLO), Enterprise Products Partners (EPD), Morgan Stanley (MS), Texas Instruments (TXN), and other dividend-paying firms.

For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.