Last Week's Recap
The US Market - The S&P 500 backed off from a record high
U.S. stocks sold off on Friday in the wake of dour economic reports. And the holiday-shortened week closed in red, with the S&P 500 losing 1.66% and the Nasdaq falling 2.51%. The S&P 500 hit a record high on Wednesday and Friday’s loss was the worst day of the young year.
Consumer sentiment plunged in February for the second consecutive month, as measured by the University of Michigan's survey as fears of tariffs from the Trump administration and expectations for a rebound in inflation.
Prominent investor Steve Cohen shared some negative comments that proposed tariffs are dragging on the economy, as well as some of the government’s cost-cutting efforts.
Chinese stocks continued to be strong. Morgan Stanley strategists ended their bearish view on Chinese stocks, following Wall Street peers in predicting a more sustainable rally spurred by the country’s advances in artificial intelligence.
The US Sectors & Stocks - PLTR tumbled 15%
Only the healthcare and utilities sectors closed the week in green. In Friday's decline, the top 20 performers in the S&P 500 were all from defensive sectors. Investors often rotate into defensive sectors when economic growth concerns appear.
The communication service and the consumer cyclical sectors both fell more than 3% for the week. Many leading stocks such as TSLA、META、AMZN lost more than 5%. The consumer cyclical sector notched their worst weekly performance since 2023.
Berkshire Hathaway (BRK.B) sold more stocks in Q4 and grew a record cash pile even larger to $334 billion. Berkshire's operating earnings surged 71% to $14.53 billion, led by a whopping 302% jump in insurance underwriting from the year-earlier period to $3.409 billion. The conglomerate bought back no stock in Q4 and just $2.9 billion for 2024, the lowest since 2018.
Walmart (WMT) slumped nearly 10% after the company issued a weaker-than-expected forecast for FY26, citing "uncertainties" in the economy and consumer behavior. Despite its Q4FY25 sales and earnings both beating estimates. The Dow giant also raised its dividend by 13%, the biggest hike in over a decade.
Palantir (PLTR) dived 15% for the week, after its CEO Alex Karp released a new plan to sell up to $1.2 billion worth of shares. Moreover, the Trump administration has warned the U.S. Department of Defense about budget cuts. The data analytics company has a number of military contracts for the use of its artificial intelligence technology.
UnitedHealth (UNH) sank over 12%. The Wall Street Journal reported that the insurer is under investigation by the Justice Department. The DOJ is looking at UnitedHealth’s protocol for recording diagnoses that can lead to extra payments on Medicare Advantage plans, according to the report.
Apple (AAPL) introduced a lower-cost smartphone, the iPhone 16e, to boost sagging handset sales. Analysts say the new iPhone should help Apple better compete in more price-sensitive markets, such as China. But some expressed concern that it could cannibalize sales of higher-priced iPhone 16 models.
Hims & Hers Health Inc (HIMS) sank 26% on Friday, after Novo Nordisk, the Danish drug company, said the Food and Drug Administration determined that a shortage of Wegovy and Ozempic, the company's GLP-1 drugs, has been resolved. Hims & Hers sells compounded semaglutide, a version of the active ingredient in Wegovy and Ozempic.
Hong Kong Market - HSTECH reached its highest in three years
Hong Kong stocks led their world-beating rally, as more global investors joined the stock-buying stampede. The Hang Seng Index (HSI) soared as much as 4% to its highest since early 2022 on Friday. The gauge closed the week with a 3.8% gain.
Chinese tech stocks listed in Hong Kong advanced on Friday for their best weekly winning streak since 2020, as Alibaba's earnings surprises and optimism about the artificial intelligence sector. The Hang Seng Tech Index (HSTECH) soared by 6.53% on Friday, logging its best daily performance since October, reaching its highest in three years.
Alibaba (9988.HK) jumped by 14.56% on its third-quarter earnings strong, which showed an 8% increase in revenue, a 333% rise in net profit, and an 83% growth in operating profit. The company plans to invest more in cloud and AI infrastructure over the next three years than it has in the past decade.
Among Hang Seng constituents, China Unicom (0762.HK) . was the biggest gainer during the week, surging 31%, driven by strong performance in the telecommunications sector.
Singapore Market - STI closed at a record high level
Singapore's stock market closed the week at a record high level, amid regional gains and a flurry of earnings reports. The Straits Times Index (STI) rose 1.35% for the week.
A new S$5 billion “Equity Market Development Programme” will be launched by the Monetary Authority of Singapore, the central bank said. It will invest in selected actively managed funds that are focused on Singapore stocks or deploy a substantial portion of their assets into them.
Australian Market - ASX 200 closed at a five-week low
The Aussie sharemarket closed at a five-week low, as a sell-off in Australian banks. The ASX 200 fell 3% over the week. The ASX’s financials sector lost 7.5% for the week following below-expected earnings results from banks including ANZ and Westpac.
Commonwealth Bank shares closed at a five-week low, down 2.6% to $151.73, as a sell-off in US banks overnight added to pressure on the sector.
The Week Ahead
Macro Factors - Nvidia and PCE on focus
Investors are gearing up for two major events this week that could significantly impact markets. Nvidia (NVDA) is set to release its first earnings report since China’s DeepSeek AI breakthrough in January, which stirred uncertainty about the competitive landscape for artificial intelligence firms. Meanwhile, the latest personal consumption expenditures (PCE) index—a key inflation gauge closely watched by the Federal Reserve—will provide critical insight into the central bank’s next monetary policy moves.
The PCE price index is expected to have risen 2.5% in January on a year-over-year basis, down from 2.6%, according to FactSet. Core PCE, which strips out volatile food and energy prices, is set to have fallen to 2.6% on a yearly basis, from 2.8% previously.
With inflation still above the Fed's target and the labor market on solid footing, markets are betting that the Federal Reserve will not cut interest rates in the first half of 2025.
Earnings
Nvidia's (NVDA) earnings release after the bell on Wednesday is expected to headline the week ahead, with reports from Home Depot (HD), Lowe's (LOW), and Salesforce (CRM) also in focus.
The market's AI darling is set to report quarterly results after the bell on Wednesday. Analysts expect Nvidia to report adjusted earnings per share of $0.84, up 63% from the year prior. Meanwhile, revenue is projected to be $38.26 billion, up 73% from the same quarter last year.
Investors will be waiting to hear what Nvidia CEO Jensen Huang says about the environment for AI chip demand and whether he will address potential rising competition in the AI space from China's DeepSeek.
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