Technology stocks led markets lower on Wednesday morning as investors stayed cautious ahead of key Big Tech earnings reports and the Federal Reserve’s interest rate decision.
The Nasdaq Composite (^IXIC) fell over 0.7% after Tuesday’s rebound, while the S&P 500 (^GSPC) declined about 0.4%. The Dow Jones Industrial Average (^DJI) was mostly flat as traders awaited signals from Fed Chair Jerome Powell and major tech earnings reports.
Investors Look to Fed for Clues on Rate Cuts
The market is treading carefully as the Federal Reserve is widely expected to keep interest rates unchanged. However, investors will be paying close attention to Powell’s press conference for insights into two key questions:
- How many more rate cuts will the Fed signal for 2025?
- Has the Fed adjusted its outlook in response to President Trump’s new tariff policies?
ASML’s Surprise Boost Lifts Some Tech Stocks
Despite the broader decline in tech, shares of ASML (ASML) surged 5% after the semiconductor equipment maker reported an unexpected rise in AI chip tool bookings. Other chip-related stocks like Applied Materials (AMAT) also gained.
However, Nvidia (NVDA) did not benefit from the boost, with its shares dropping nearly 5% as its Tuesday recovery lost momentum.
DeepSeek’s AI Challenge and Big Tech’s Response
Markets are reassessing the impact of Chinese startup DeepSeek, whose recent AI breakthrough initially sparked concerns about Big Tech’s massive AI spending. Shares of Alibaba (BABA) climbed more than 4% after the company released a new AI model that it claims surpasses DeepSeek’s latest version of ChatGPT.
Adding to the intrigue, Microsoft-backed OpenAI (MSFT) accused DeepSeek of using its proprietary models to train its competing AI system, escalating tensions in the AI arms race.
Meta and Microsoft Earnings Take Center Stage
All eyes are now on the earnings guidance from Meta (META) and Microsoft (MSFT), both set to report results after the closing bell. Investors are looking for reassurance that their heavy AI investments will translate into long-term growth.
Meanwhile, Tesla (TSLA) is also set to report earnings, with Wall Street closely watching for any new catalysts to reinvigorate the stock.
Conclusion
As the AI sector navigates new challenges and the market awaits the Fed’s next move, investors remain on edge. With Big Tech earnings and macroeconomic policies in the spotlight, the coming days could bring significant shifts in sentiment across the stock market.
