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

Tue, Feb 18, 2025, 8:59 AM 1 min read

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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 home buyers,” 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 (AVGO) 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.