February 3, 2025: Markets Navigate Mixed Tech Earnings as S&P 500 Tests Support—AI Developments Reshape Landscape

The S&P 500's lackluster start to February (hovering near 5979) coincides with China's DeepSeek AI launch and mixed Big Tech earnings, creating a perfect storm of opportunity and uncertainty. Here's how traders and investors can position themselves amid this technological inflection point.

Key Developments:

• S&P 500 maintaining levels above 20-day MA (5979), despite historically weak February performance (+0.1% average)
• NASDAQ showing resilience (+0.6% last session) driven by Meta and IBM's strong AI-related earnings
• TSX outperforming with 2.63% YTD gain, breaking above 25,320 on rate cut expectations

Sector/Topic Breakdown:

• Tech Leaders: IBM (+12%) demonstrating strong AI business growth, while Microsoft (-6.2%) faces pressure
• Traditional Finance: Banking sector weighted by Fed's reduced rate cut projections for 2025
• Canadian Markets: Mining and e-commerce stocks leading gains despite trade tensions

Strategic Playbook

For Traders (Short-Term):

• Consider momentum plays in AI-focused companies showing strong earnings beats
• Watch for technical support levels around S&P 500's 20-day moving average
• Monitor Bitcoin movement around $105,200 and gold futures at record $2,850

For Investors (Long-Term):

• Build positions in seasonal strength leaders: ALL, ROP, YUM, LIN, KDP
• Consider Canadian mining exposure through TSX as hedge against market volatility
• Focus on companies with strong AI implementation and growth potential

Forward Outlook

Catalysts to Watch:

• Apple's upcoming fiscal Q1 results
• Federal Reserve commentary on rate path
• Further developments in AI space following DeepSeek launch
• Q4 U.S. economic growth data

Risk Radar:

• Geopolitical tensions affecting trade (US tariffs on Canada, Mexico, China)
• Tech sector volatility from AI investment scrutiny
• Reduced rate cut expectations for 2025 (from 4 to 2 cuts)
• Treasury yield movements (currently at 4.52%)