Stock traders took some risk off the table ahead of the Federal Reserve decision, with a trio of tech heavyweights kicking off the megacap earnings season just days after DeepSeek rattled markets.
The S&P 500 fell ahead of results from Meta Platforms Inc., Microsoft Corp. and Tesla Inc. A gauge of the “Magnificent Seven” megacaps dropped 1%, with Nvidia Corp. coming under renewed pressure. Apple Inc. slipped after an analyst downgrade. ASML Holding NV surged after booking orders worth twice as much as analysts expected. Treasuries and the dollar barely budged.
While profits from the Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — growth is projected to come in at the slowest pace in almost two years. Yes, it’s also Fed day. And officials are widely expected to pause their rate cuts, with traders looking for any signal from Chair Jerome Powell on which way inflation is going.
“A hawkish outcome that sends yields higher could cause a painful selloff in equities,” said Tom Essaye at The Sevens Report. “Today is also the first day of big tech earnings. Expectations are already optimistic for 2025 so any disappointment could pressure stocks in after-hours trading regardless of the initial reaction to the Fed announcement.”
Those briefings have headier stakes now, thanks to DeepSeek. The US tech behemoths are under increasing scrutiny for their spending on artificial intelligence and the meager returns they’re generating from the technology, as virtually all of Wall Street tries to understand how the Chinese AI upstart managed, seemingly overnight, to catch up at what appears to be a sliver of the cost.
Speaking of which, Microsoft Corp. and OpenAI are investigating whether data output from OpenAI’s technology was obtained in an unauthorized manner by a group linked to DeepSeek, according to people familiar with the matter. The Chinese startup is being quizzed by Ireland’s privacy watchdog amid concerns over the way it’s processing data related to citizens in the nation.
The S&P 500 fell 0.3%. The Nasdaq 100 dropped 0.3%. The Dow Jones Industrial Average rose 0.1%.
The yield on 10-year Treasuries as little changed at 4.53%. The loonie remained lower after the Bank of Canada cut rates, but dropped guidance on any further adjustments to borrowing costs.
