Wall Street contended with a potent mix of geopolitical risk this week and central bank drama this week. The Department of Justice (DoJ) opened a criminal investigation into Fed Chair Jerome Powell over the central bank's renovation, and the financial sector struggled after President Donald Trump called for a 10% cap on credit card rates for one year. The Dow Jones Industrial Average (DJI) and S&P 500 (SPX) still enjoyed record closes, with Alphabet (GOOGL) crossing the $4 trillion market cap -- joining only Nvidia (NVDA) -- emblematic of tech's resilience.
The cancellation of all meetings with Iran amid the country's protests hurt the major benchmarks, though, while the Nasdaq Composite (IXIC) gapping lower after Chinese customs authorities advised customs agents to not let Nvidia's (NVDA) H200 chips into the country. Inflation, job, and retail sales data went largely unnoticed amid the flood of headlines, with bank earnings and chip sector strength helping stocks forward, with a trade deal between the U.S. and Taiwan, and unfruitful talks with Denmark over Greenland also in focus. As of Friday afternoon, all three indexes were pacing for weekly losses.
All Chips, All the Time
One of the biggest stories this week was Taiwan Semiconductor Manufacturing's (TSM) record quarterly report, which inspired a chip sector frenzy. NVDA has remained a favorite with options bulls, too, while Micron Technology (MU) stock surged after one of its director snapped up $7.8 million in shares. Tech stocks Super Micro Computer (SMCI) Akamai Technologies (AKAM) staged opposite moves after analyst updates, while HP (HPQ) shares hit a five-year low in response to a Barclays downgrade. Elsewhere, Microsoft (MSFT) stock looks ready for its next surge.
Deals Abound
Investors parsed through quite a few deals as well, with Walmart (WMT) stock breaking records amid a new partnership with Alphabet (GOOGL), and Allegiant Travel (ALGT) announcing it will buy rival Sun Country Airlines (SNCY) in a deal valued $1.5 billion. Netflix (NFLX) stock dropped after an all-cash offer to buy Warner Bros. Discovery (WBD), and AST SpaceMobile (ASTS) secured a prime contract position on the Missile Defense Agency SHIELD program.
Earnings Season Ramps Up Amid Holiday-Shortened Week
A holiday-shortened week is ahead, with markets closed on Monday to observe Martin Luther King Jr. Day. Traders will return to plenty of economic data, though, including the S&P flash U.S. services and manufacturing purchasing managers' indexes (PMI). More quarterly earnings are on tap, with 3M (MMM), Intel (INTC), Netflix (NFLX), Procter & Gamble (PG), and United Airlines (UAL) set to announce results. Before then, dial into the best and worst stocks to own during the week of MLK Day, and figure out why more short covering could be ahead.
