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Russian (RU) Updated Wed, Feb 19, 2025, 1:06 PM 2 min read
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US stocks closed higher on Wednesday as investors weighed President Trump's latest 25% tariff salvo and digested the Federal Reserve minutes for insight into future policy.
The benchmark S&P 500 (^GSPC) moved up about 0.2%, hitting a fresh record high of 6,144.15, after notching a record on Tuesday as well. The Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) both rose about 0.1%.
Wednesday's minutes from the Fed's January meeting revealed most central bank officials supported holding policy at restrictive levels amid concerns about persistent inflation.
"Many participants noted that the Committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated, while several remarked that policy could be eased if labor market conditions deteriorated, economic activity faltered, or inflation returned to 2 percent more quickly than anticipated," the minutes read.
Participants observed the committee was "well positioned" to take time to assess the "evolving outlook for economic activity" and that further progress on inflation was needed before adjusting rates. The committee pointed to "upside risks to the inflation outlook," citing the possible effects of potential changes in trade and immigration policy.
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On the trade front, Trump's fast-moving policy overhaul has been top of mind for investors waiting to assess the impact of tariffs.
Another tariff threat came late on Tuesday, when the president said to expect additional duties on autos, chips, and pharmaceuticals. A flat tariff "in the neighborhood of 25%" would apply to all foreign automakers and start as soon as April 2, he said.
Last week, Trump announced global 25% tariffs on steel and aluminum imports, to take effect on March 12. He later ordered that federal agencies study reciprocal tariffs on trading partners.
Tariffs of 25% on Mexico and Canada are set to come next month, while 10% duties on China have already been implemented.
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A key market 'conviction' remains as Fed rate cut hopes have softened
Minutes from the Federal Reserve's January meeting were released on Wednesday, and revealed officials are closely tracking risks that could worsen inflation.
But largely markets took the release in stride, with stocks maintaining the small gains on the day and the ten-year Treasury yield hitting its lows of the day at 4.53% as the minutes reiterated the Fed could continue cutting interest rates later this year.
With markets still pricing an interest rate cut from the Fed at some point this year, BlackRock's lead portfolio manager of the the BlackRock Total Return Fund (MAHQX) David Rogal told Yahoo Finance that the key to stable markets remains investors believing the Fed's next move is more likely to be a interest rate cut than a hike.
"The conviction the market has around the Fed not hiking, I do think that's quite important for stability at the moment," Rogal said. "And if that were to change, I think that would be a very significant change for a lot of folks in terms of how they're thinking about things."
Short sellers lose $73 billion amid market rally to start 2025
It's been a tough start to 2025 for traders betting against stocks.
Short sellers, who bet on stock prices to fall, have lost $73 billion between US and Canadian markets to start 2025, according to data from S3 Partners provided to Yahoo Finance.
The S&P 500 (^GSPC) has risen about 4% this year, but many companies within the index have soared higher, some in part because of short squeezes. Super Micro Computer (SMCI), the top performer in the index this year, is now up more than 110% since the start of 2025. Short sellers have lost more than $2.2 billion as the stock has run up.
S3 Partners uses a model to characterize how "squeezable" a stock is, with a "squeeze score" reading over 70 indicating a stock is exposed to a short squeeze and a reading of 90 signaling the stock is "extremely susceptible" to a squeeze. Super Micro Computer's reading currently stands at 100.
While perhaps the most high-profile, Super Micro is far from the only stock that's seen large jumps due to short squeezes thus far this year. Hims & Hers Health (HIMS) also has a reading of 100 on S3's squeeze score, while Oklo (OKLO), a popular nuclear AI play, and BigBear.ai (BBAI) are both above 70. All three stocks have rallied 80% or more this year.
"As more stocks, more sectors and more countries around the world start to participate in this bull market, any of the short sellers who overstayed their welcome are getting blown up," Parets wrote. "This is a classic characteristic of healthy bull market environments."
Intel stock falls as analysts note barriers to potential deals with TSMC, Broadcom
Intel (INTC) stock fell more than 5% Wednesday, ending a massive upswing in which shares notched their biggest five-day gain in its history as a publicly traded company. The decline came as analysts expressed skepticism over recent reports of potential deals with TSMC (TSM) and Broadcom (AVGO) to break up the storied US chipmaker.
Shares of Intel had surged 16% Tuesday following a Wall Street Journal report over the weekend that its rival, Taiwan's contract chip manufacturer TSMC, has looked at controlling some or all of Intel's semiconductor factories, potentially as part of an investor consortium. The Journal, citing people familiar with the discussions, also reported that Broadcom (AVGO) is considering making a bid for Intel's product business, which designs semiconductors for computers and servers.
But Wall Street analysts have voiced concerns over a potential breakup of Intel. Read the full story here.
Fed officials: Rates can stay at 'restrictive level' as 'upside' inflation risks loom
The Federal Reserve held interest rates steady at its meeting in January. The minutes from that meeting, released on Wednesday, revealed most Fed officials supported holding policy at restrictive levels.
"Many participants noted that the Committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated, while several remarked that policy could be eased if labor market conditions deteriorated, economic activity faltered, or inflation returned to 2 percent more quickly than anticipated," the minutes read.
Participants observed the committee was "well positioned" to take time to assess the "evolving outlook for economic activity" and that further progress on inflation was needed before adjusting rates.
On the inflation front, "participants generally pointed to upside risks to the inflation outlook. In particular, participants cited the possible effects of potential changes in trade and immigration policy, the potential for geopolitical developments to disrupt supply chains, or stronger-than-expected household spending."
Last week, Trump announced global 25% tariffs on steel and aluminum imports, to take effect on March 12. He later ordered that federal agencies study reciprocal tariffs on trading partners.
More recently, Trump said to expect additional duties on autos, chips, and pharmaceuticals. A flat tariff "in the neighborhood of 25%" would apply to all foreign automakers and start as soon as April 2.
Tariffs of 25% on Mexico and Canada are set to come next month, while 10% duties on China have already been implemented.
Along with policy uncertainties, the minutes also highlighted recent economic unknowns, including "the values of the longer-run neutral policy rate, the economy’s potential growth rate, and the level of maximum employment." These uncertainties "would remain an important factor affecting their decisionmaking."
Trump’s social media posts about the stock market have 'disappeared': JPMorgan
There's something different about Trump 2.0. Yahoo Finance's Brian Sozzi reports:
President Donald Trump has long touted his love for the stock market and how strong stock prices reflect a robust US economy.
Yet in his second stay in the White House, he's been posting less about stocks.
JPMorgan strategist Antonin Delair studied 126 social media posts from Trump (mostly on Truth Social) since Election Day and found mentions of the stock market have mostly "disappeared." In his first term, Trump was "continuously" posting on positive US economic developments, such as lower unemployment, a higher stock market, or the creation of a new factory in a state, noted Delair.
This time around, the president is more keen to share hot takes on the debt ceiling, government spending/efficiency, or tariff benefits.
Out of 23,073 tweets in his first term, 156, or 57%, mentioned a strong stock market performance, per Delair. Since his reelection, Trump has mentioned the stock market only once on social media.
Delair's work aimed to assess the impact of Trump's posts on the foreign exchange market. Only a small fraction of these posts, or 10% of the total 126, have been FX market movers.
"Hawkish tariff posts can trigger a broad dollar rally, but the dovish ones (tariff delays, for instance) impact mostly the concerned currency," Delair said.
Tariffs could force Apple to raise prices: BofA
Apple (AAPL) may have no other choice but to raise prices if Trump follows through on his latest tariff threat.
According to a new note from Bank of America, expected tariffs from the Trump administration could hamper earnings growth and force the tech giant to increase costs across its various phones and products.
Last week, Trump ordered that federal agencies study reciprocal tariffs on trading partners, noting no company would be exempt.
BofA estimated that a 10% tariff on all Apple products imported into the US would have a negative earnings impact of 2% to 3%, depending on whether or not the company raises prices.
"In a scenario where Apple does not raise prices in the US, we see a $0.26 negative impact (-3.1%) to EPS in calendar 2026," Bank of America analyst Wamsi Mohan said. "If Apple raises prices by ~3% in the US, the earnings impact would be $0.21 (-2.4%), assuming 5% fewer units sold."
According to the firm, Apple would have to raise prices by about 9% to offset the impact of 10% tariffs.
India also poses a challenge given the reciprocal tariffs Trump could impose on the country would likely be higher than China's current 10% levy.
"Apple has been shifting manufacturing to India over the last few years and ~15% of iPhones are now produced there," Mohan said. "Currently, India imposes 16.5% to 22% tariffs on mobile phones and certain consumer electronics produced outside the country."
Apple shares have struggled so far this year, down over 2% and underperforming the benchmark S&P 500 (^GSPC) and some of its Magnificent Seven peers.
Still, the analyst maintained his Buy rating and price target of $265 a share.
Magnificent 7 have tough start to 2025
As we've been writing, the "Magnificent Seven" tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — have no longer been leading the market to start 2025.
And as Charles Schwab chief investment strategist Liz Ann Sonders pointed out on X this morning, most of their rankings in S&P 500 performance have tumbled year to date. In 2024, the Magnificent Seven had three of the top 30 performers in the S&P 500. This year, the cohort has just one company, Meta, in the top 200. As seen below, Amazon, Apple, Microsoft, Alphabet, and Tesla actually all rank in the bottom half of year-to-date performance among members of the S&P 500.
Apple debuts iPhone 16e for $599
Yahoo Finance's Dan Howley reports:
Apple (AAPL) revealed its iPhone 16e on Tuesday, a budget-friendly iPhone that includes the company's Apple Intelligence platform and its first in-house designed modem.
The iPhone 16e features a design that's more closely aligned with Apple’s mid-range and high-end iPhones than its previous entry-level phone, the iPhone SE, and comes complete with the company’s Face ID facial recognition technology and an upgraded camera system.
Available Feb. 28 for $599, the iPhone 16e includes the same A18 chip used in the $799 iPhone 16 and $899 iPhone 16 Plus, as well as a single 48-megapixel camera around back. Apple says the camera will also feature a built-in 2x telephoto zoom for close-up shots.
Apple's stock was largely flat on the news.
Super Micro stock surges, recovers losses from Hindenburg report
Super Micro Computer stock (SMCI) spiked 6% Wednesday, extending a weeklong surge that has seen the stock fully recover its losses from a scathing report that accused the server maker of accounting violations last summer.
Super Micro shares gained more than 16% Tuesday, reaching their highest level since Aug. 26, the day before short-selling firm Hindenburg Research published the report, which, in addition to accusations of accounting “manipulation,” alleged that the company had violated export controls and that its executives had not properly disclosed its relationships with suppliers.
Super Micro makes computer server products for data centers using Nvidia's (NVDA) AI chips and has a major deal with Elon Musk’s mammoth xAI data center in Tennessee. The stock has been on a tear in 2025, up 83% year to date, making it the top-performing member of the S&P 500.
But even with its recent upswing, Super Micro shares remain far below their record closing price of $114 last March, just before the server maker was added to the S&P 500.
Hims & Hers shares soar 20% on at-home lab testing facility acquisition
Hims & Hers (HIMS) stock rallied as much as 20% early Wednesday morning after the health and wellness platform said it plans to introduce at-home lab testing through its platform.
The company will provide the new service through its acquisition of at-home lab testing facility Trybe Labs. The acquisition will allow Hims & Hers to support at-home blood draws and comprehensive blood testing.
Shares of Hims & Hers, which were heavily shorted, have been on a wild ride this year. The stock is now up more than 180% since the start of 2025.
Alibaba said to be among potential investors in DeepSeek
DeepSeek, the operator of an upstart Chinese AI chatbot, may be seeking funding from Alibaba (BABA, 9988.HK) and Chinese-state affiliated funds, according to a report from the Information.
The Information noted that Alibaba declined to comment on the report but added that if DeepSeek accepts its funding, that could mark a shift in the Chinese startup's business model.
It could lead DeepSeek to "pivot away from a primary focus on research toward building a business that generates meaningful revenue and eventually profits, according to people with knowledge of those discussions," the Information said.
Alibaba's stock, which has rallied nearly 50% this year in part due to AI excitement, was little changed just after the open.
Stocks open lower
Stocks opened lower on Wednesday as markets digested Trump's latest tariff threat and awaited Fed minutes, due later this afternoon.
The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) each slipped roughly 2%, while the Dow Jones Industrial Average (^DJI) fell 0.3%.
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Electric vehicle maker Nikola files for bankruptcy
Nikola (NKLA) filed for bankruptcy Wednesday morning, ending a slow decline for the electric vehicle maker that was once a retail trader darling.
The filing ends several embattled years of struggles for the EV company that came public via a special purpose acquisition company in 2020. In its Chapter 11 bankruptcy filing, Nikola listed assets between $500 million and $1 billion and liabilities between $1 billion and $10 billion.
Etsy stock falls after holiday sales miss
Etsy (ETSY) shares slid roughly 6% in premarket trading after the online marketplace's holiday sales fell short of Wall Street estimates.
Fourth quarter revenue came in at $852.2 million, compared with the $862.8 million expected, as spending on gifts and hand-made goods faltered. It still grew 1.2% fr Q4 a year ago, thanks to strength in Etsy ads, the company said.
Another key metric — consolidated gross merchandise sales (GMS) — also missed the mark, coming in at $3.74 billion, versus the $3.88 billion expected. GMS indicates the total dollar value of everything sold on Etsy's platform.
The downbeat revenue figures eclipsed a profit beat, with earnings per share of $1.03 topping the $0.93 estimated by analysts.
Europe stocks retreat as earnings stutter, tariffs loom
The record-setting rally in European stocks hit a wall on Wednesday as disappointing earnings added to caution over Trump's plan for tariffs on cars, chips, and drugs.
The pan-European Stoxx 600 (^STOXX) index pulled back 0.5% after closing at an all-time high on Tuesday. Philips (PHG, PHIA.AS) shares fell over 10% in Amsterdam after the medical gear maker forecast a drop in sales thanks to weak Chinese spending.
In London, the FTSE 100 index (^FTSE) slid 0.4% as a surprise jump in inflation to its highest level in 10 months dented hopes for interest rate cuts.
Elsewhere, Germany's DAX (^GDAXI) sank 0.8%, while the CAC (^FCHI) in Paris retreated 0.7% as concerns about security and trade built amid tariff threats and a warming in US-Russia relations.
Trump plans 25% tariffs on autos from early April
President Trump has turned his tariff bazooka on imports of autos, chips, and pharmaceuticals, vowing late Tuesday to impose additional duties of at least 25%.
Automakers around the world — including the US — were already facing a risk that Trump's already announced tariffs on Mexico would hit their plants there. US-listed shares of Stellantis (STLA) slid over 2% in premarket trading on Wednesday, while Toyota (TM) shed 1%. Volkswagen's (VOW3.DE) pulled back over 2% in Europe.
Read more on the planned tariffs here.
Good morning. Here's what's happening today.
Asia stocks slump
Asian markets have slumped, reversing a five-day rally, under pressure from President Donald Trump's tariff threats and concerns over the sustainability of a $1 trillion rally in Chinese stocks.
HSBC beats market expectations on profit, announces share buyback
HSBC (HSBC) released reports from last quarter Wednesday, with the multinational banking corporation unveiling a 6.6% rise in annual profit — beating market expectations and falling interest rates.
Oil gains as US-Russia peace talks gain traction
Oil pushed upward Wednesday against the backdrop of the Ukraine-Russia war continuing to cause oil disruptions. Markets are poised for a quick response to the US-Russian peace talks in an evolving situation.
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