Markets Edge Higher Amid AI Optimism, Tariff Uncertainty, and Steady Fed Signals

Index Update:  Chipmakers advanced in premarket trading, with a major processor company rising 1% on expectations of stronger earnings and continued sector demand. AMD gained another 1%, extending its prior 9% surge after Meta announced a multiyear deal to deploy 6 gigawatts of AMD GPUs for AI data centers. Software stocks such as Salesforce and IBM also held gains as investors reassessed concerns over legacy service models. Meanwhile, President Trump’s State of the Union remarks suggested that sweeping tariff hikes may not be an immediate priority following the Supreme Court’s decision to strike down IEEPA measures.

Market Movers:  On Tuesday, the top gainers were Rich Sparkle Holdings Limited (+52.93%), followed by Brand Engagement Network Inc. (+40.23%). On the contrary, Claritev Corporation (-41.58%), and DMC Global Inc. (-32.95%) declined the most the same day.

Commodities Update:  WTI crude rose toward USD 66 per barrel and Brent climbed to around USD 71.1 on Wednesday, rebounding after two sessions of losses as markets assessed supply risks ahead of renewed U.S.–Iran nuclear talks. Investors focused on tensions surrounding Iran’s nuclear program and the strategic Strait of Hormuz, through which about 20% of global oil flows, while also evaluating the potential demand impact of new U.S. tariffs, including a 10% global levy that may increase to 15%. Gold rebounded to around USD 5,180 per ounce, while silver surged over 3% to near USD 90, as trade tensions and geopolitical uncertainty lifted safe-haven demand. Markets reacted to the implementation of a 10% U.S. global tariff—potentially rising to 15%—and ongoing U.S.–Iran nuclear talks. However, gains in precious metals were tempered by reduced expectations of near-term Federal Reserve rate cuts, as policymakers signaled no immediate need to ease monetary policy amid steady labor conditions and persistent inflation.

Macro Updates:  U.S. Mortgage Activity Shows Modest Uptick Amid Falling Rates

U.S. mortgage applications edged up 0.4% in the third week of February, following a 2.8% increase in the prior week, despite 30-year fixed mortgage rates falling to 6.09%—their lowest level since September 2022. Refinancing activity rose around 4%, benefiting from lower borrowing costs, while purchase applications declined nearly 5% as limited housing supply and elevated home prices kept buyers cautious. Ongoing economic uncertainty and subdued consumer sentiment continued to temper overall housing demand.

Dollar Eases as Tariff Uncertainty Persists and Fed Outlook Remains Steady

The dollar index slipped below 97.8 on Wednesday, reversing part of its previous gains as President Trump reaffirmed his tariff stance without signaling policy changes during his State of the Union address. The U.S. has begun enforcing a temporary 10% global tariff, with plans to potentially raise it to 15% following the Supreme Court’s rejection of broader reciprocal measures. Meanwhile, Federal Reserve officials indicated that holding rates steady remains appropriate amid resilient labor conditions and ongoing inflation risks, even as markets continue to anticipate roughly three 25-basis-point rate cuts this year.

Bonds Commentary:  The 10-year U.S. Treasury yield held steady near 4.05% after earlier weakness, supported by expectations that the Federal Reserve will keep rates unchanged for an extended period. Fed officials signaled confidence in current policy amid a resilient labor market and persistent inflation, even as markets continue to anticipate around three 25-basis-point rate cuts this year. Meanwhile, investors monitored the rollout of a temporary 10% U.S. global tariff—potentially rising to 15%—and President Trump’s State of the Union remarks highlighting his administration’s economic policies.

Futures Update:  U.S. stock index futures traded modestly higher early Wednesday as investors awaited key quarterly earnings, particularly from AI leader Nvidia. Dow Jones Futures rose 0.1%, while S&P 500 and Nasdaq 100 Futures each gained 0.2%, reflecting cautious optimism ahead of major corporate results.

After the previous session’s sell-off, stocks staged a strong rebound on Tuesday. The major averages all ended the day significantly higher, led by gains in the tech-heavy Nasdaq. The S&P 500 climbed 52.32 points, or 0.77%, to close at 6,890.06. From a technical standpoint, the index held firm at key support levels and trended gradually higher throughout the session, indicating the possibility of a short-term upward move. Meanwhile, the 14-day Relative Strength Index (RSI) is approaching its midpoint, which may help fuel additional buying interest. Immediate support is located around 6,810, marking a potential bounce area, while resistance is positioned near 6,977.