Markets Daily: It's tech earnings and Fed day

Federal Reserve officials are expected to leave interest rates steady today, giving themselves more time to lower inflation and to assess ho

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Markets Snapshot Nasdaq 100 Futures 21,662.25 +0.37% Nikkei 225 39,414.78 +1.02% US 10-Year Treasury Yield 4.526% -0.006 ASML Holding NV 702.9 +8.71% LVMH 708.7 -5.58% Market data as of 06:11 am EST. View or Create your Watchlist Market data may be delayed depending on provider agreements.

Five things you need to know

Federal Reserve officials are expected to leave interest rates steady today, giving themselves more time to lower inflation and to assess how Donald Trump's policies will affect the economy. Rates are going down elsewhere: The Bank of Canada is set to cut by a quarter point as officials lay out their analysis of how US tariffs might derail a soft landing for the economy. Traders see the ECB cutting tomorrow. Tech stocks look set to rise again, further paring Monday's big drop that was triggered by DeepSeek's lower-cost AI assistant. Nasdaq futures got a boost when Dutch chip-equipment maker ASML reported better-than-expected bookings thanks to AI demand. Earnings are flooding in, with Microsoft, Tesla and Meta reporting after the close. In Europe, LVMH's fourth-quarter sales of fashion and leather goods fell, casting doubt on the prospects for a quick recovery in luxury demand. Microsoft and OpenAI are investigating whether data output from OpenAI technology was obtained in an unauthorized manner by a group tied to Chinese AI startup DeepSeek, people familiar with the matter said.

It's all about Fed and tech earnings today

After the brief tech-stock freakout, it's back to regular programming for investors: The Fed and earnings are taking center stage. In the bond market, traders are ratcheting up bullish Treasury bets in hopes that Fed Chair Jerome Powell will signal a cut in March is firmly on the table. Traders have a lot riding on Powell's press conference remarks. Expectations for further easing climbed during Monday's tech-driven rout in stocks, and two-year Treasury yields recently fell to the lowest in more than a month.   JPMorgan's latest client survey shows the biggest net long position in US government debt in almost 15 years. In another sign that long positions are building, open interest in futures — or the amount of new risk held by traders — is increasing in 10-year Treasury contracts.  Policy makers are likely to keep rates steady, given the sturdy US economy and worries over sticky inflation. DoubleLine Capital's Jeffrey Gundlach described today's decision as the most predictable "no change" in recent years. The Fed has cut at three straight meetings since September, lowering the benchmark rate by a full percentage point. Their target range is now 4.25% to 4.5%.  The big question mark for the direction of rates, of course, remains President Donald Trump's tariff plans and their impact on the economy. Meanwhile, the stakes are even higher now for the earnings from Microsoft, Meta and Tesla, thanks to DeepSeek.  They face more scrutiny for spending hundreds of billions of dollars on AI research, given that profits are still largely elusive. The ramifications are also immense for a stock market that has rallied almost solely on the promise of AI. In the past year alone, the Magnificent Seven stocks have added more than $5 trillion in combined value as they rallied 66%. The rest of the US stock market gained $8 trillion, by comparison.  "Between Microsoft, Meta and Tesla you'll get some real perspective about the AI outlook and how much of a revelation DeepSeek has created that you can do these cheaper," said Michael O'Rourke, chief market strategist at JonesTrading. "What type of threat is that to the massive investment that has gone into the AI space?"—Phil Serafino, Edward Bolingbroke and Jeran Wittenstein

On the move

F5 Inc. shares jump 15% in premarket trading. The communications-equipment company raised its growth forecast on a stronger-than-anticipated recovery in enterprise IT spending. American Axle falls 5.2% and Dowlais gains 12%. The US maker of drivetrain components agreed to combine with UK peer Dowlais in a transatlantic automotive deal.   Qorvo shares slip 5%. The semiconductor device company expects revenue next fiscal year to be "roughly flat," falling short of Wall Street estimates of about 4% growth.  NEXTracker surges 21%. The solar equipment maker boosted its earnings guidance for the year. Other solar stocks gained, with Array Technologies rising 5.7% and SolarEdge Technologies up about 3.6%.  —Subrat Patnaik

Tesla's turbocharged run

Tesla shares have nearly doubled in value since the last earnings report — a setup that usually spells precariously high expectations.  But it's a special case among the Magnificent Seven. First, Tesla is a carmaker rather than pure tech. And its main business has become a sideshow to Elon Musk's political prominence.  The stock has been turbocharged by Trump's victory, as investors bet the closeness between the CEO and the president will pave the way to higher profits — ignoring risks from a possible roll-back of EV incentives. The flip side is Tesla is now vulnerable to the twists and turns of a potentially volatile relationship. It's almost as if the company's ability to profitably build and sell the cars no longer counts. Trading in the options market suggests investors are preparing for a 7% move in either direction off Tesla's fourth-quarter earnings report. That would be the stock's smallest post-results swing since October 2022. "The market is behaving as if Tesla's results don't matter, and that may catch investors flat-footed in case of a large shock," said David Wagner, portfolio manager at Aptus Capital Advisors. "The electric car business is still about $200 billion in market value, but it is still the funding mechanism for a lot of the actual sideshows." —Esha Dey

Word from Wall Street "The things that worked the best in a period of declining and ultra-low rates will not necessarily be the things that work best in a period of stable and generally higher rates, and people have to accept that." Howard Marks  Co-founder, Oaktree Capital Group LLC Click here to read more from Marks

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