The U.S. stock market is under considerable pressure this morning, as traders react to some breaking technology-related news. Specifically, a China-based startup firm, DeepSeek, has introduced an AI (artificial intelligence) technology that could pose considerable competition for U.S. companies. In addition, investors are gearing up for a busy week, with the focus turning to the corporate profit outlook, the Federal Reserve, and the nation’s battle with inflation. As we were writing this piece, the S&P 500 Index futures were down about 130 points (-2.10%), with the technology-heavy NASDAQ indicating even larger losses.
In economic news, there are numerous important items due out this week. However, the main event will take place on Wednesday afternoon when the FOMC (Federal Open Market Committee) wraps up its two-day policy meeting. The gathering will conclude with an interest-rate announcement, followed by some prepared remarks from Fed Chairman Jerome Powell. Few investors think that interest rates will be lowered at this meeting, although some may be hoping for further reductions in the months ahead. As a result, any guidance the Fed might provide at this point could have an impact on the stock market. Looking to Friday, the PCE (Personal Consumption Expenditures) Price Index is expected to show that prices rose 2.6% in December, year over year, which would be slightly higher than the 2.4% figure logged in November. This report will be closely followed by the Federal Reserve, which still aims to bring inflation down to its 2% target, although this goal has proven difficult.
Meanwhile, the fourth-quarter earnings season ramps up this week, with a number of leading technology corporations on deck. On Wednesday, we will receive reports from Tesla (TSLA), Meta Platforms (META), and Microsoft (MSFT). On Thursday, Apple (AAPL) will weigh in with its numbers. These companies are among those sitting at the forefront of the AI (artificial Intelligence) revolution, and as a result investors will be paying close attention to these reports. Many corporations have been making massive investments into AI technology and data centers, and traders would like to see tangible results, especially with news of a less-expensive technology emerging from China.
Technically, the stock market has staged a sizable rally over the past few sessions, but may now be pulling back. In the current market environment, it will be crucial that corporations can deliver solid profits and issue encouraging guidance. – Adam Rosner
At the time of this article’s writing, the author had a position in Apple.
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