Stock Market Today: Stocks edge higher with Fed, Microsoft, Tesla in focus
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U.S equity future edged higher in early Wednesday trading, while the dollar extended gains and Treasury yields dipped, as investors looked for clarity on two key issues from today’s Federal Reserve rate decision and fourth quarter earnings updates from three megacap tech giants.
Stocks ended firmly higher on Tuesday, with Apple (AAPL) pacing gains for all three benchmarks, as investors clawed back some of the early week losses tied to the emergence of China’s DeepSeek AI agent.
The AI startup has claimed to have developed an AI-powered model at a fraction of the price needed from U.S. rivals such as Microsoft (MSFT) -backed OpenAI and Meta Platform’s (META) Llama 3.
Reports have emerged, however, the DeepSeek may have secretly used high-end Nvidia (NVDA) chips to train its large-language model, with Bloomberg also reporting the Microsoft is probing whether it improperly used OpenAI data.
Those questions, as well as many others linked to the demand forecasts of hyperscalers such as Microsoft and Meta, will be front-and-center when the pair published December quarter earnings after the bell.
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Similar questions, although likely skewed towards Elon Musk’s self-driving and robotics ambitions, will be put to the Tesla (TSLA) CEO when he speaks to investors after his company’s fourth quarter update after the close of trading.
“We will be looking to see if Microsoft’s earnings are holding up and the impact of its AI investments on operating income—and whether DeepSeek’s apparent success with generative AI trained on lower-cost infrastructure will pose a challenge for the hyperscalers that have tied themselves closely to Nvidia as well as spending big money on their own custom AI infrastructure,” said Forrester analyst Lee Sustar.
Some relief on the AI demand front was offered by Dutch chip equipment maker ASML Holding (ASML) , whose EUV lithography machines play a key role in complex designs, when it posted near-term books of 7.4 billion this morning, more than double analyst’s forecasts. The stock was last marked 10% higher in Amsterdam.
Related: Top analyst overhauls Nvidia stock price target as DeepSeek impact lingers
In the meantime, investors will also be focused on the Federal Reserve’s first policy meeting of the year, which concludes today in Washington.
Traders aren’t expecting any change to the Fed’s benchmark lending rate, but reporters are likely to press Chairman Jerome Powell on any changes in the central bank’s growth and inflation forecasts from President Donald Trump’s myriad policy initiatives.
Treasury bond yields slipped modestly lower in overnight trading ahead of today’s decision, expected at 2:00 pm Eastern time, with benchmark 10-year notes trading at 4.526% and 2-year notes changing at 4.197%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.2% higher at 108.078.
Heading into the start of the trading day on Wall Street, stocks look set for only modest opening bell gains with the S&P 500 called 4 points higher from last night’s close and the Nasdaq pegged for a gain of around 88 points.
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In overseas market’s ASML’s advance helped the Stoxx 600 hit a fresh record high, with the regional benchmark last seen 0.59% higher in Frankfurt trading while Britain’s FTSE 100 gained 0.24% in London amid a key economic speech from finance minister Rachel Reeves.
Overnight in Asia, Lunar New Year celebrations kept key markets in China and around the region closed, although the MSCI ex-Japan index crept 0.11% higher. In Tokyo, the Nikkei 225 rose 1.02% on the session in a follow-on move to last night’s rally on Wall Street.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
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