February 6, 2025: Markets Rise as Tech Giants Lead—AI Momentum Overcomes Earnings Mixed Bag
The S&P 500 climbed 0.39% to 6,077.91 as Nvidia's 5.2% surge propelled AI stocks higher, despite after-hours semiconductor weakness. Today's session highlights the growing divergence between AI leaders and traditional tech players—here's what it means for your portfolio.
Core Analysis
Key Developments:
- S&P 500 (+0.39%) and NASDAQ (+0.19%) advanced despite mixed tech earnings, with the broad market showing resilience in the face of semiconductor sector concerns
- Nvidia (+5.2%) led AI stocks higher while Qualcomm (-4.6%) and Arm (-6.3%) declined post-earnings, illustrating the growing divide in tech sector performance
- TSX maintained strength above 25,380, buoyed by the announcement that U.S. tariffs on Canadian goods would be paused for at least 30 days
Sector Breakdown:
- Technology: Clear bifurcation between AI leaders and traditional semiconductor stocks, with AI-focused companies continuing their momentum
- Energy: Sector demonstrated resilience despite WTI crude trading near $71.20, supported by strong corporate performances
- Financials: Steady performance amid Treasury yields holding near 4.436%, with major banks maintaining stable trading patterns
Strategic Playbook
Short-Term (Traders):
- Consider pair trades: Long AI leaders (e.g., Nvidia) vs. short traditional semiconductors
- Watch for earnings-driven volatility in upcoming tech reports, particularly Amazon, Pinterest, and Cloudflare
- Monitor semiconductor sector weakness for potential spread effects
Long-Term (Investors):
- Maintain core AI exposure while diversifying into value sectors for portfolio balance
- Consider Canadian exposure following positive trade developments and strong TSX performance
- Keep powder dry for potential opportunities in oversold semiconductor names
Forward Outlook
Catalysts:
- Q4 Productivity Report expected to provide insights into economic efficiency
- Initial Jobless Claims data to gauge labor market health
- Key earnings: Amazon, Eli Lilly, Roblox to offer broader market direction
Risk Radar:
- Semiconductor sector weakness could spread to broader tech ecosystem
- EV sector concerns following Ford's projected $5-5.5B unit loss for 2025
- Potential volatility around upcoming economic data releases