US equity futures took a tumble on Wednesday, with lackluster earnings reports from heavyweights Alphabet and Advanced Micro Devices (AMD) leading the charge. The Dow Jones Industrial Average futures slipped by 0.1%, S&P 500 futures dipped 0.3%, and Nasdaq futures took a more pronounced hit, dropping 0.7%. Alphabet's shares were down 6.8% in pre-market trading, as the tech giant's fourth-quarter revenue fell short of analysts' forecasts. Meanwhile, AMD's stock nosedived 9% following disappointing data center sales for the fourth quarter, coupled with a cautionary note about potential revenue decline in the first quarter. On the employment front, the ADP Institute's Employment Report brought some unexpected news, revealing a jump in private payrolls to 183,000 in January, up from 122,000 in December, and surpassing the anticipated 150,000. Later in the day, all eyes will be on the Institute for Supply Management's Services Index, which is projected to inch up to 54.2 in January from 54.1 in December.

This morning, I embarked on a noble quest to weave together the deluge of information that poured in lately. Alas, I surrendered—whether due to laziness, a lack of intellectual prowess, or the sheer impossibility of the task. I lean towards the latter. So, let's cut to the chase and lay out the key news items that could sway the markets today, before diving into the details:

Yesterday, the US tech sector delivered a less-than-stellar performance. AMD and Alphabet both took an 8% hit after releasing their figures. In today's market, where reactions are often exaggerated, an 8% drop might just be the new 2%. Regardless, it's not a pretty picture.

Meanwhile, diplomacy under Trump continues to surprise. After floating ideas like absorbing Canada, purchasing Greenland, and acquiring Panama, the American president now has his sights set on the Gaza Strip. His plan? Relocate its inhabitants and transform it into a riviera. These comments were largely dismissed by investors.

Oil prices are caught in a tug-of-war between the United States and China, while Washington ramps up pressure on Iran. Meanwhile, gold is shining brightly as investors seek safe havens amid market jitters. Even when nerves were steadier, gold was holding its own. In a strategic move against China, the White House has scrapped the "de minimis" customs exemptions for low-value goods. Originally designed to ease trade, this policy has been a boon for Chinese sellers who cleverly sidestep taxes and, unfortunately, for drug traffickers. The US Postal Service has now decided to stop delivering packages from China and Hong Kong. This spells trouble for budget-friendly platforms like Temu (PDD Holdings) and Aliexpress (Alibaba). As for the illicit drug market, well, they're not exactly ringing the opening bell on Wall Street.

Let's dive into yesterday's session. U.S. stocks made a comeback, led by the dynamic duo of technology and oil. It's a nod to both the digital future and the fossil-fueled past. Among the standout performers was Palantir, which soared 24%, solidifying its reputation as a top player in AI operations. Meanwhile, Estée Lauder, PayPal, and Merck didn't fare as well, with declines of 16%, 13%, and 9% respectively, suggesting their star power might be dimming. On the corporate front, individual earnings reports took center stage, offering a mixed bag of results. Zooming out, investors found themselves caught in a whirlwind of geopolitical and economic factors. Donald Trump's apparent softening on extra tariffs with neighboring countries added a layer of intrigue, while the ongoing tensions with China kept everyone on edge. Meanwhile, fresh macroeconomic data hinted at a possible rate cut in the U.S. later this year, adding another twist to the market's narrative.

In Europe, the stock market mostly wore a shade of green, except for Zurich, which stumbled as UBS shares dropped 7%. Investors were unimpressed by UBS's modest share buyback plan and its cautious outlook. Meanwhile, Europe's modest technology sector enjoyed a boost, thanks to Infineon and Dassault Systèmes, which exceeded expectations—albeit low ones—with their strong results. Across the globe, Sino-American relations are poised to capture attention in the coming days. Donald Trump is scheduled for a phone chat with his "good friend" Xi Jinping. Despite the cordial facade, tensions are running high. The market is on edge, ready to cheer any sign of easing tensions, but equally prepared to frown at any hint of discord. It's a familiar dance we've seen before.

Today, the spotlight is on the PMI services indicators, which are set to be released for major economies. China's PMI numbers were unveiled last night, revealing a slowdown in growth. This suggests that Beijing's recent measures have yet to deliver a significant impact. Meanwhile, in the United States, all eyes are on the ADP employment report, especially after the JOLTS survey indicated a weakening labor market. We're currently in a peculiar phase where "bad news is good news" for employment statistics. A downturn in the job market could pave the way for the Federal Reserve to resume its monetary easing policy. After all, interest rate cuts are the coveted prize in the financial world.

As China's stock markets shake off their week-long Lunar New Year slumber, traders are greeted with a less-than-enthusiastic welcome. The Hang Seng dipped by 1%, and the CSI300 slid by 0.5%, proving that even after a holiday, the markets can still wake up on the wrong side of the bed. Meanwhile, Japan's market decided to take a nap, ending flat, while India couldn't quite make up its mind. Australia, however, managed to perk up with a 0.5% gain, and South Korea and Taiwan bounced back with over 1% increases. Hong Kong had already resumed trading earlier in the week. In a bid to keep the yuan steady, China's central bank continued its support by fixing its reference rate. In Europe, the Stoxx 600 index saw a slight increase of 0.1%, supported by Novo Nordisk's positive earnings report, which led to a 1.6% rise in its shares

Today's economic highlights:

On the calendar today: Japan's Jibun Bank services and composite PMI, China's Caixin composite PMI, France's industrial production, HCOB's composite and services PMI in Germany, France, the UK and the eurozone. We also have in the US the ADP employment change, trade balance and the S&P Global's composite and services PMI, as well as the ISM services index and DOE crude stocks. See the full calendar here.

  • Dollar: EUR 0.9598 GBP 0.7974
  • Gold: $2,869
  • Crude Oil (BRENT): $75.23
  • US 10-year bond: $4.5
  • BITCOIN: $98,000

In corporate news:

  • BlackRock plans to hire 1,200 people in India to strengthen its support centers and develop its artificial intelligence capabilities.
  • Royal Caribbean returns to investment grade at S&P.
  • General Motors to take control of Cruise's autonomous driving business.
  • Alphabet: Faced multiple challenges with its Q4 earnings, missing revenue estimates due to increased competition in digital advertising and a slowdown in cloud computing, alongside broader market impacts from disappointing earnings, leading to a significant drop in its share price.
  • Amd: Shares fell 9% due to underwhelming AI chip revenue and a forecasted decline in data center sales, despite reporting a Q4 revenue of $7.66 billion that beat estimates, driven by strong data-center demand and gaming revenue, but with mixed results in other segments.
  • Uber Technologies: Reported higher-than-expected revenue and earnings for Q4, driven by strong demand for rides and food delivery, although it faces increased costs and anticipates slower growth in gross billings and adjusted EBITDA for Q1 2025, alongside launching Waymo robotaxis in Austin.
  • Boston Scientific: Exceeded expectations in Q4 and FY 2024 with strong sales growth and earnings driven by demand for cardiovascular devices, leading to raised profit forecasts for 2025 and robust Q1 projections, alongside an executive selling shares worth $1.76 million.
  • Apple: China's State Administration for Market Regulation is scrutinizing Apple's App Store policies, particularly the up to 30% commission on in-app purchases and restrictions on external payment platforms, potentially leading to an antitrust investigation.
  • Fmc Corporation: Reported higher-than-expected Q4 adjusted earnings of $1.79 per share and revenue of $1.22 billion, but its revenue forecast and Q1 earnings outlook were below expectations, leading to a 20% drop in its shares.
  • Match Group: Has appointed Spencer Rascoff as its new CEO, succeeding Bernard Kim, while reporting a Q4 revenue of $860M that beat estimates, but also issuing a dour annual revenue forecast amid slowing user engagement.
  • Capri Holdings: Reported a quarterly net loss of $547 million due to a $602 million impairment charge, missed third-quarter profit estimates, and forecasted lower-than-expected revenues for fiscal years 2025 and 2026, while also entering an amended credit agreement with JPMorgan Chase.
  • Harley-Davidson: Anticipates a weak financial outlook for 2025, projecting flat to a 5% decline in motorcycle revenue due to decreased consumer spending, lower demand for leisure vehicles, inflation, rising interest rates, challenges in attracting younger riders, and ongoing supply chain issues, as evidenced by their Q4 2022 earnings report which showed a loss and revenue fall.
  • Dayforce: Reported a higher adjusted profit and revenue for Q4, with earnings and revenue rising to $465.2 million and an EPS of $0.60, beating estimates, but forecasts a lower-than-expected revenue for Q1 2023 due to weak demand in HR and payroll services.

Today's main earnings reports : Costco Wholesale, Walt Disney, Arm Holdings, Uber Technologies, Boston Scientific, Fiserv, MicroStrategy, Emerson Electric Co, Johnson Controls, Ford Motor, Cognizant, Yum! Brands…

    Analyst Recommendations:

    • Alphabet Inc.: Punto Research downgrades to hold from buy with a target price reduced from USD 241.58 to USD 203.84.
    • Arista Networks Inc: Zacks upgrades to outperform from neutral with a target price reduced from USD 143 to USD 128.
    • Aspen Technology: Loop Capital Markets downgrades to hold from buy with a target price raised from USD 260 to USD 265.
    • Cardinal Health, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 140 to USD 150.
    • Fmc Corporation: RBC Capital downgrades to sector perform from outperform with a price target reduced from USD 78 to USD 47.
    • Hilton Worldwide Holdings Inc.: Mizuho Securities downgrades to neutral from outperform with a price target raised from USD 243 to USD 263.
    • Mattel, Inc.: Jefferies upgrades to buy from hold with a target price raised from USD 20 to USD 28.
    • Mgic Investment Corp: Compass Point Research & Trading downgrades to neutral from buy with a target price raised from USD 24 to USD 27.
    • Nxp Semiconductors N.v.: Citi upgrades to neutral from sell with a price target raised from USD 200 to USD 210.
    • Silicon Laboratories Inc.: Benchmark Co., LLC upgrades to buy from hold with a target price of USD 160.
    • Snap Inc.: Wells Fargo downgrades to equalweight from overweight with a price target reduced from USD 15 to USD 11. 
    • United Parcel Service, Inc.: Zacks downgrades to underperform from neutral with a price target reduced from USD 151 to USD 95.
    • Amd: Evercore ISI maintains its outperform recommendation and reduces the target price from 198 to USD 147.
    • Dxc Technology Company: Deutsche Bank maintains its hold recommendation with a price target raised from 19 to USD 23.
    • Edison International: Jefferies maintains its buy recommendation and reduces the target price from USD 93 to USD 69.
    • Elf Beauty: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 167 to USD 131.
    • Fair Isaac Corporation: Wolfe Research maintains its outperform rating and reduces the target price from USD 2600 to USD 2050.
    • Fox Corporation: Barclays maintains its equalweight recommendation and raises the target price from 39 to USD 50.
    • Molson Coors Beverage Company: Citi upgrades to neutral from sell with a price target raised from USD 47 to USD 57.
    • Palantir Technologies Inc.: Citigroup remains neutral recommendation with a price target raised from USD 42 to USD 110.
    • Roblox Corporation: Wedbush maintains its outperform rating and raises the target price from USD 67.50 to USD 83.
    • Royal Caribbean Group: Wolfe Research maintains its outperform recommendation and raises the target price from USD 250 to USD 303.
    • Spotify Technology S.a.: Barclays maintains its overweight recommendation and raises the target price from USD 475 to USD 710.