Big Tech Earnings Results Drive Sharp Market Divergence

On January 29, major indices experienced mixed trading as divergent big tech earnings results created competing pressures across equity markets. While the S&P 500 declined 0.41%, the Dow Jones Industrials fell 0.02%, and the Nasdaq 100 dropped 0.80%, the underlying story revealed a deeply split market where technology sector earnings performance determined individual winners and losers. March E-mini S&P futures were down 0.39%, while March E-mini Nasdaq futures fell 0.88%, reflecting cautious investor positioning as fourth-quarter big tech earnings delivered both surprises and disappointments.

The earnings season presented a bifurcated narrative: companies that exceeded expectations in their technology and cloud initiatives surged, while those reporting weakness in core growth metrics faced sharp selloffs. Meta Platforms emerged as the day’s tech standout, surging over 7% following its guidance of substantially stronger-than-anticipated revenue growth, while IBM climbed over 7% after delivering Q4 results that beat consensus forecasts. However, Microsoft’s more than 10% plunge illustrated the stakes of missing on guidance, as its cloud services revenue came in exactly at expectations rather than ahead, while operating expenses exceeded forecasts.

Tech Giants’ Quarterly Results Stir Market Volatility

The divergence in big tech earnings outcomes highlighted investors’ sensitivity to forward guidance and growth acceleration. Meta’s Q4 revenue of $59.89 billion topped the consensus of $58.42 billion, but the real catalyst was its Q1 revenue guidance of $53.5-$56.5 billion, well above expectations of $51.27 billion. This robust outlook reinvigorated technology sector sentiment despite broader equity market weakness.

Conversely, Microsoft’s disappointment illustrated how even strong absolute numbers can trigger significant selloffs when they fail to beat expectations. The company’s Q2 Azure and cloud services revenue growth of 38% year-over-year matched consensus precisely, providing no upside surprise that investors have grown accustomed to demanding from megacap technology stocks. Additionally, higher-than-expected expense growth created a double negative, driving the stock toward its worst single-day performance in months.

IBM’s Q4 results of $19.69 billion exceeded the consensus of $19.21 billion, demonstrating that earnings beats—not just meeting expectations—continued to command premium valuations as earnings season progressed. With 81% of the 106 S&P 500 companies that had reported through January 29 beating expectations, and broader S&P earnings growth forecast at +8.6% for Q4 (or +4.6% excluding the Magnificent Seven), big tech earnings remained a critical marker for the equity market’s health.

Energy Rally Fueled by Geopolitical Tensions and Oil Recovery

Oil markets surged dramatically on geopolitical developments, with WTI crude rising more than 4% to a 4.25-month high. President Trump’s Wednesday statement regarding Iran negotiations—warning that “time is running out” and referencing U.S. naval forces positioned to complete their mission “with speed and violence”—created immediate energy market reaction. This geopolitical premium lifted entire energy sectors, with APA Corporation and Occidental Petroleum rising over 4%, while ConocoPhillips, Diamondback Energy, Marathon Petroleum, Halliburton, and Valero Energy all advanced over 3%. Major integrated energy companies including Chevron, Exxon Mobil, and Phillips 66 gained more than 2%.

Meanwhile, precious metals experienced a dramatic bull run. Gold and silver climbed over 3% to new record highs, while copper surged more than 8% to an all-time high. These moves reflected growing concerns over dollar weakness and mounting uncertainty surrounding U.S. fiscal and trade policies, as investor capital rotated away from dollar-denominated assets into tangible commodities perceived as debasement hedges.

Bond Markets React to Inflation Concerns and Economic Data

Treasury markets faced significant selling pressure despite marginally weaker-than-expected employment data. The 10-year T-note yield climbed 2.2 basis points to 4.265%, driven primarily by rising inflation expectations as the 10-year breakeven inflation rate moved to a 4-month high of 2.378%. Supply pressures exacerbated declines, with the Treasury scheduled to auction $44 billion in 7-year notes later on January 29. March 10-year T-note futures fell 2 ticks against this backdrop.

U.S. weekly initial jobless claims declined 1,000 to 209,000, slightly higher than expectations of 205,000, suggesting modest labor market softening. However, continuing claims fell 38,000 to a 6-month low of 1.827 million, beating expectations of 1.850 million and showing underlying labor market resilience. European government bond yields moved modestly lower, with the 10-year German bund yield sliding to a 1-week low of 2.839%, down 0.6 basis points to 2.851%. The 10-year UK gilt yield declined 1.6 basis points to 4.527%.

Eurozone economic data showed divergent signals. The January economic confidence indicator surged 2.2 points to 99.4, the highest in three years and well above expectations of 97.1. However, December M3 money supply growth of 2.8% year-over-year disappointed relative to expectations of 3.0%. The swaps market was pricing zero probability of a European Central Bank rate hike at its February 5 policy meeting, underscoring expectations for policy caution.

Economic Backdrop: Jobs, Trade, and Policy Uncertainty

The economic data calendar delivered mixed signals that contributed to market uncertainty. The U.S. trade deficit for November widened to $56.8 billion, substantially exceeding expectations of $44.0 billion and marking the largest imbalance in four months. This deterioration raised fresh concerns about fiscal sustainability and trade dynamics.

Looking ahead, markets faced multiple policy uncertainties. President Trump’s threatened 100% tariffs on Canadian imports, alongside ongoing Greenland discussions and persistent risk of government shutdown over Department of Homeland Security/ICE funding, created acute policy tail risks. Senate Democrats had threatened to block a funding agreement following an ICE shooting incident in Minnesota, creating the possibility of a partial government shutdown when the current stopgap funding measure expired on February 1.

Coming economic releases warranted close attention. November factory orders were expected to rise 1.6% month-over-month. December producer prices were anticipated to ease toward 2.8% year-over-year from 3.0% in November, with the core reading expected to moderate to 2.9% from 3.0%. January’s MNI Chicago PMI was forecast to climb 0.8 points to 43.5. These data points would provide investors critical signals about inflation trajectory and manufacturing momentum.

Looking Ahead: Earnings Season and Market Catalysts

With big tech earnings setting the tone for broader market performance, attention turned to the week ahead where 102 S&P 500 companies were scheduled to report. Apple’s results, due after the market close on January 29, represented a critical bellwether for consumer technology strength. As Q4 earnings season reached full swing, the benchmark of 81% of reported companies beating expectations suggested the market’s earnings bar had been set appropriately—or that company guidance had become sufficiently conservative.

S&P 500 earnings growth was forecast at 8.6% for Q4 on an aggregate basis, though performance diverged sharply when excluding the Magnificent Seven megacap stocks, where growth slowed to 4.6%. This divergence underscored how concentrated returns had become and highlighted the stakes of big tech earnings performance for overall market direction. Equity options markets were pricing a mere 14% probability of a Federal Reserve rate cut at the March 17-18 policy meeting, implying investor expectations for policy stability in the near term.

Overseas equities moved incrementally higher. The Euro Stoxx 50 advanced 0.59%, China’s Shanghai Composite climbed to a 2-week high and closed up 0.16%, and Japan’s Nikkei Stock 225 closed with a modest 0.03% gain, suggesting global risk appetite remained intact despite domestic U.S. volatility surrounding big tech earnings and policy uncertainty.