Stock market today: S&P 500 rises as Dow, Nasdaq fall with Fed's rate path in focus

Updated Tue, Feb 18, 2025, 11:56 AM 1 min read

^GSPC ^DJI ^IXIC

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  Musk's move to take on Social Security tests the 'third rail of American politics'

  Yahoo Finance's Ben Werschkul reports:

  Elon Musk's DOGE and its White House compatriots are now taking on the Social Security Administration after gaining access to the most sensitive data held by the $1.3 trillion organization.

  The move apparently led to a leadership shakeup this past weekend as the woman who had been the acting head of America's social safety net was replaced.

  The rapid-fire developments raised immediate alarm bells across Washington about the program's short-term stability and the Musk team's access to Social Security numbers, medical histories, and earnings histories of every American.

  "This is a fishing expedition," Nancy Altman, president of Social Security Works and a critic of Musk's move, charged in an interview Tuesday morning.

  Read more here.

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  The 2025 stock market rally isn't just about the 'Magnificent 7'

  A common trend of 2025 is playing out on Tuesday. The S&P 500 is outperforming the "Magnificent Seven" tech stocks.

  Nearly half of the companies in the S&P 500 (^GSPC) are outperforming the index to start the year, a stark reversal from the last two years of narrow market leadership where investors struggled to find winning stocks outside of large-cap technology.

  About a month and a half into 2025, 46% of companies in the S&P 500 are outperforming the index itself, above the roughly 30% seen in each of the last two years, which had been the lowest percentage of outperformers since the late 1990s.

  Just two of the stocks outperforming the S&P 500 come from the "Magnificent Seven" tech cohort with Meta's (META) more than 23% rise and Nvidia's (NVDA) nearly 6% pop outpacing the roughly 4% return for the benchmark index this year.

  Read more here.

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  Strong dollar is a problem for Big Tech

  The US dollar (DX=F, DX-Y.NYB) has surged over the past six months — and its rapid rise has impacted a slew of corporate earnings so far this season.

  Companies ranging from Big Tech behemoths to consumer-facing brands have mentioned foreign-exchange headwinds in both their fourth quarter results and forward-looking guidance, a trend that analysts previously warned could occur.

  Historically, a strong dollar adversely impacts companies that do most of their business overseas. That's because it leads to slower revenue and earnings growth over time, due to unfavorable foreign-exchange conversions.

  To that point, megacap tech generates a significant amount of revenue overseas. Apple (AAPL) reported roughly 58% of overall revenue from international sales in its most recent quarter. And the percentage of overseas sales from other Magnificent Seven players — like Alphabet (GOOG, GOOGL), Microsoft (MSFT), Tesla (TSLA), and Meta (META) — came in at roughly 50% or higher for all of 2024.

  Virtually all of those companies issued warnings linked to the dollar's strength in their respective earnings releases and calls. Even Amazon (AMZN), which generated just over 23% of revenue overseas in its latest quarter, reported an approximate $900 million headwind from foreign exchange. That was "about $700 million higher than what we had anticipated," the company said in an earnings release.

  As a result, the e-commerce giant said first quarter revenue should only grow between 5% and 9% — potentially, the slowest revenue growth quarter in its history.

  Read more here.

• Super Micro stock spikes, continuing rally as company looks to avoid Nasdaq delisting

  Super Micro Computer (SMCI) stock jumped more than 13% late Tuesday morning.

  The surge extends the AI server maker's weeklong rally, with shares having gained nearly 30% over the past five days.

  Super Micro last week provided a business update about how it's working to avoid delisting by the Nasdaq. The firm has faced a series of controversies over the past year after a Hindenburg Research report accused Super Micro of accounting violations.

  The server maker last week said it's on track to submit its delayed SEC filings by the Nasdaq's Feb. 25 deadline. CEO Charles Liang also provided a bullish longer-term outlook for the company, which sells data center server products using Nvidia's AI chips.

  "I believe we have potential to reach $40 billion for fiscal year '26," Liang said on a call with investors late last Tuesday.

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  Investors bullish on stocks with cash levels at 15-year lows: BofA

  Investors continue to be bullish on stocks.

  According to Bank of America's latest fund manager survey released on Tuesday, cash levels have fallen to 15-year lows as traders double down on equities.

  "Long Magnificent 7" remains the most crowded trade, according to 56% of respondents, followed by the US dollar and crypto.

  But Big Tech hasn't entirely been the bright star kicking off 2025.

  So far this year, Meta (META) is the only one of the Magnificent Seven tech stocks to outperform the benchmark S&P 500 (^GSPC) after rising for 20 straight days. It's currently on track to break that streak, though, with shares down nearly 3% in early trade on Tuesday.

  And as Yahoo Finance's Josh Schafer pointed out, the number of companies outpacing the index's roughly 4% gain has soared to start the year.

  Looking at the cross-asset performance in 2025, investors in the BofA survey now view global equities as the best-performing asset (34% versus 21% in January), overtaking US equities (18% versus 27%). Gold sits in the middle at 22%, with the safe-haven asset currently trading near record highs.

  Still, certain risks remain. Some 42% of survey respondents categorized a global trade war as the No. 1 risk for assets this year. Separately, nearly 40% said a recessionary trade war is the biggest "tail risk," ahead of inflation that leads to Fed rate hikes and the potential of an AI bubble.

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  Homebuilder confidence falls to lowest in 5 months

  Builders are feeling less optimistic about the housing market as they navigate concerns over tariffs, elevated mortgage rates, and high housing costs.

  The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index came in at 42 in February, a five-point drop from January and the lowest level in five months.

  A reading under 50 indicates that more builders view conditions as poor than good.

  “While builders hold out hope for pro-development policies, particularly for regulatory reform, policy uncertainty, and cost factors created a reset for 2025 expectations in the most recent [Housing Market Index],” NAHB chairman Carl Harris said in a statement alongside the data release on Tuesday.

  The uncertainty comes as builders continue to grapple with elevated mortgage rates. Data from Freddie Mac shows that the 30-year fixed mortgage rate is hovering around 7%, further dampening demand.

  The NAHB survey found 26% of builders cut home prices in February, down from 30% in January and the lowest share since May 2024. Meanwhile, 59% of builders used sales incentives in February, a slight decrease from 61% in January.

  “Incentive use may also be weakening as a sales strategy as elevated interest rates reduce the pool of eligible homebuyers,” NAHB’s chief economist Robert Dietz said.

• Intel jumps as rivals explore deals to carve up the chipmaker

  Yahoo Finance's Laura Bratton writes:

  Intel's (INTC) stock jumped 9.6% early Tuesday following a report that rivals Broadcom (AVGO) and TSMC (TSM) are exploring potential deals with the chipmaker that would split it into two.

  The Wall Street Journal reported late Saturday that Broadcom is considering making a bid for Intel’s product business, which designs semiconductors for computers and servers.

  The report, which cited people familiar with the matter, said that TSMC has looked at controlling some or all of Intel's factories, potentially as part of an investor consortium.

  The companies have not submitted deals to Intel, and the talks are preliminary and informal, according to the report.

  Broadcom shares traded flattish Monday, while US-listed TSMC shares were up slightly less than 1%.

  Read more here.

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  Chip stocks, tech lead at the open

  The S&P 500 (^GSPC) was up more than 0.1% on Tuesday amid a tech-led rally in stocks. Chip stocks were leading the charge, with Nvidia (NVDA) shares up more than 3%, while Micron (MU) rose more than 5% and Intel (INTC) popped nearly 8%.

  Super Micro Computer (SMCI), a popular play in the AI semiconductor space, was up almost 12%.

• Fed speakers lay the ground for January minutes

  While traders took a Presidents' Day break, Fed speakers lined up to reiterate they need to hold off on rate cuts in light of sticky inflation — though there was a glimmer of hope on offer.

  The chorus of comments is setting the stage for Wednesday's release of minutes from the Fed's January meeting, which will be closely watched by rate-betting investors.

  Patience is the keyword as policymakers wait for price pressures to ease, Philadelphia Fed president Patrick Harker said on Monday.

  Meanwhile, Michelle Bowman opposed any easing until a better picture emerges of Trump's tariffs.

  "It will be very important to have a better sense of these policies, how they will be implemented, and establish greater confidence about how the economy will respond" before cutting rates further, the Fed governor said.

  Next up, Christopher Waller suggested that Trump's tariffs will have just a modest impact on inflation. That means the Fed can try to set those aside when setting rates, the central bank governor argued.

  Waller also suggested that policymakers can resume cuts "at some point this year" if the current inflation bump fades, further striking a note of optimism.

  More Fedspeak is due on Tuesday from officials Mary Daly and Michael Barr.

• Europe stocks hit pause as US and Russia start Ukraine talks

  Stocks in Europe held steady on Tuesday as the US and Russia started discussing an end to the war in Ukraine, after rallying on Monday amid a run-up in defense names.

  Presidents Trump and Putin have sent teams to the talks in Saudi Arabia, but Ukraine and Europe have been sidelined. Leaders in the region held an emergency summit in Paris instead, where they agreed to increase defense spending.

  The pan-European Stoxx 600 (^STOXX) index edged up around 0.1% as defense stocks Rheinmetall (RHM.DE) and Dassault (DSY.PA) rose to fresh all-time highs.

  Among individual benchmarks, Germany's DAX (^GDAXI) and the CAC (^FCHI) in Paris traded broadly flat. London's FTSE 100 index (^FTSE) tipped roughly 0.2% higher.

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  Good morning. Here's what's happening today.

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  BofA survey: Trade war is biggest risk to markets now

  We all like to delay pain and generally think bad outcomes won't happen to us.

  But if you are an investor, it's worth paying closer attention to what is happening on the Trump tariff front. We are already in a light trade war, and all signs point to it escalating. That stands to impact how stock valuations are viewed across the board.

  Bank of America's latest fund manager survey this morning underscores the point.

  A global trade war is the number one biggest risk to markets, according to 42% of fund managers surveyed. That's up from 30% in January.