It has been a very volatile week for stock markets: Investors have been following a busy agenda, from China's DeepSeek attack to crypto movements, from the Fed's interest rate decision to the balance sheets of technology giants.
The sell-off seen in the stock market, especially in technology stocks, at the beginning of the week quickly gave way to the balance sheets of the Magnificent Seven. Four members of the group announced their results this week.
The Fed's interest rate decision was also on the agenda. The Fed released interest rates but gave mixed signals for the future. In addition, Fed Chair Jerome Powell's statements regarding crypto provided support to crypto assets that have been on a volatile course.
This week, important announcements and new partnerships by companies dominated the US agenda. DeepSeek left its mark on this week. China's artificial intelligence model, which it claims is cheaper and more efficient than its US competitors, has raised doubts about the high valuations of companies such as Nvidia (NVDA), the poster child of artificial intelligence, whose chips are considered essential for technology. However, OpenAI has accused DeepSeek of using “distillation” techniques to train its AI models on OpenAI’s output. This is a potential violation of OpenAI’s terms of service.
The Magnificent Seven’s earnings have begun. Meta Platforms (META) reported strong fourth-quarter results that beat analyst expectations. Microsoft’s (MSFT) weak performance in cloud computing overshadowed its revenue and profits that were in line with expectations, while Tesla (TSLA) missed revenue and profit estimates with a decline in the automotive segment but was supported by its promise of affordable vehicles and fully autonomous driving technology. Finally, Apple (AAPL) received support from rising revenue and profit indicators despite reporting that iPhone sales fell short of expectations.
TikTok has accelerated in the US. A group of US investors, backed by YouTube star Jimmy Donaldson (also known as MrBeast), has raised over $20 billion to bid for TikTok. The group, led by tech entrepreneur Jesse Tinsley, is joined by Roblox (RBLX) CEO David Baszucki and Anchorage Digital CEO Nathan McCauley as investors. President Donald Trump also said Microsoft is in talks to buy TikTok’s US operations.
Apple is teaming up with Elon Musk’s SpaceX and T-Mobile US (TMUS) to bring Starlink satellite messaging to iPhones. Apple integrated the Starlink satellite network into its latest iPhone software update, iOS 18.3, which was released on Monday. T-Mobile has launched a limited beta test that will allow some iPhone users to try out the Starlink service.
SoftBank Group is reportedly in talks for a potential investment of $15 billion to $25 billion in OpenAI. The move would make SoftBank the largest investor, surpassing Microsoft, which invested about $14 billion in the ChatGPT creator.
Alibaba’s (BABA) cloud unit has launched a new family of AI models, Qwen2.5-VL, that can analyze files, understand videos, count objects in images and control a computer.
Fed Chair Jerome Powell said banks can serve crypto clients as long as they can manage risk, amid claims that the crypto industry is being disconnected from financial institutions. Applications for crypto-asset-based exchange-traded funds (ETFs) have surged. The U.S. Securities and Exchange Commission (SEC) has accepted Canary Capital’s Litecoin ETF proposal, opening it up to public feedback as it moves closer to a possible U.S. listing. Cboe BZX Exchange has also filed on behalf of four major investment firms for its Solana ETF, which remains unclear whether it will be classified as a commodity or security.
Clean-energy electric vehicle charging technology company Nuvve (NVVE) said it will start buying Bitcoin by putting aside about a third of its spare cash. Jim Cramer told his viewers to buy Bitcoin instead of MicroStrategy in the latest episode of CNBC's Mad Money program, which he hosts. Cramer said on Mad Money, "If you want to own Bitcoin, own Bitcoin. I own Bitcoin, you should own Bitcoin, Bitcoin is a great thing to have in your portfolio, but not MicroStrategy."
The Fed kept the policy rate steady at 4.25 - 4.50%, in line with expectations. Thus, the Fed gave itself time to reduce inflation by keeping borrowing costs high for a while. Among the stocks recommended by analysts this week, financial companies and consumer products stood out. This week's analyst recommendations include stocks that Bank of America likes for 2025 and Goldman Sachs' favorites for the balance sheet season.
BofA’s “BUY” stocks for 2025: McCormick (MKC), Danaher (DHR), Ross Stores (ROST), United Airlines (UAL), Chevron (CVX), Wells Fargo (WFC), Eastman Chemical (EMN), Booz Allen Hamilton (BAH), Amazon (AMZN), and Nvidia. Goldman Sachs shared its favorite stock picks for the earnings season: Uber Technologies (UBER), Bill.com (BILL), and IBM (IBM).
The European Central Bank (ECB) lowered interest rates from 3% to 2.75%, in line with market expectations. The latest rate cut was the fifth since June. This move comes at a critical time for the region’s economy. Recent data shows that the eurozone did not grow in the fourth quarter. The economic contraction, especially in France and Germany, is among the main reasons for the weak performance.
However, the lower borrowing costs that come with the interest rate cut could help both consumers and businesses increase their spending and investment. In financial markets, the interest rate cut has pushed the STOXX 600 index to a new high. Falling interest rates make bonds less attractive, while increasing the potential returns of stocks. On the other hand, the interest rate cut is putting pressure on the euro. Following the decision, we saw the euro lose value against other currencies. ECB President Christine Lagarde said, “The economy stagnated in the fourth quarter. It is likely to remain weak in the near future.”
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