Stocks experienced a significant rebound on Tuesday after opening lower, primarily driven by a strong performance in the technology sector. The Nasdaq Composite, heavily influenced by tech stocks, closed up 2% at 19,733, while the S&P 500 increased by 0.9% to finish at 6,067. The Dow Jones Industrial Average also saw a rise, adding 0.3% to close at 44,850.
Technology Sector Recovery
This recovery followed a challenging Monday, during which several major tech stocks suffered considerable losses, particularly in light of recent developments in artificial intelligence from DeepSeek. Nvidia, known for its AI chips, was a standout performer, recovering from a staggering $600 billion loss in market value on Monday—the largest single-session loss for any U.S. stock.
On Tuesday, Nvidia shares surged by 8.8%, allowing the company to regain approximately $253 billion in market capitalization. Broadcom also saw a recovery, gaining 2.6% after an initial decline, as analysts suggested that the previous day’s sell-off was an overreaction to competitive pressures in the tech sector.
Challenges for Aerospace and Automotive Industries
In contrast, Lockheed Martin’s stock fell by 9.2% after the aerospace company reported fourth-quarter earnings that did not meet expectations. The company provided a mixed forecast for 2025, raising investor concerns. Despite this downturn, some analysts remain optimistic about Lockheed Martin’s future.
- An analyst from Truist Securities noted that the stock’s recent decline, down over 20% since late October, presents a “compelling entry point” for investors.
- He downplayed concerns regarding potential cost cuts recommended by the Department of Government Efficiency, asserting that defense spending is likely to continue increasing.
General Motors also faced difficulties, with its stock dropping 8.9% due to tariff concerns that overshadowed a strong fourth-quarter performance. Although GM beat earnings expectations for the tenth consecutive quarter, analysts expressed caution about the company’s future outlook.
An analyst from CFRA Research upgraded GM’s stock rating from Sell to Hold, acknowledging the automaker’s impressive earnings but warning that year-over-year comparisons could become more challenging in 2025. He highlighted that GM’s lack of hybrid vehicle offerings could impact its market share in the near to intermediate term.
Boeing’s Performance and Economic Indicators
Boeing’s stock rose by 1.6%, supported by a positive outlook for free cash flow, despite the company missing fourth-quarter earnings expectations. The aircraft manufacturer had prereleased its results the previous week, which helped lessen the impact of the earnings miss.
Investors were encouraged by the CEO’s forecast of positive free cash flow in the latter half of the year, indicating potential recovery for the company. Boeing’s performance is closely monitored by investors, especially as the aviation sector continues to recover post-pandemic.
Durable Goods Orders and Federal Reserve Outlook
In economic news, durable goods orders fell by 2.2% in December compared to the previous month, totaling $276.1 billion, according to the Census Bureau. Excluding transportation, new orders showed a slight increase of 0.3%. The decline in durable goods orders was attributed to a drop in volatile transportation bookings, but analysts noted that the underlying trend has recently improved.
This suggests better prospects for the struggling factory sector. As the market anticipates the Federal Reserve’s upcoming policy announcement, investors are focused on potential interest rate changes. The central bank is widely expected to maintain current interest rates, and Wall Street will be closely watching the Fed Chair’s press conference for insights into future monetary policy directions.
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