Stocks Rise on Signs US Economy Is Doing Just Fine: Markets Wrap

(Bloomberg) — Stocks rose on signs the main engine of the world’s largest economy remains solid, which bodes well for Corporate America.

While the S&P 500 saw a small gain due to a slide in its most-influential group — technology — about 80% of its companies advanced. Buoyed by data showing a surge in consumer spending, economically sensitive corners of Wall Street like small caps outperformed. The US equity benchmark’s equal-weighted version — one that gives Target Corp. as much clout as Nvidia Corp. — climbed 1%, fueling hopes the bull market would broaden out.

That would help reduce concerns around the “concentration risk” from the tech megacaps that have come to dominate benchmark indexes. Those jitters were on full display earlier this week when a artificial intelligence-model from Chinese startup DeepSeek added to doubts on whether valuations of the technology that has powered the torrid rally from the market lows would be tough to justify.

“This bull market is still ‘breathing,’ and we should expect more stock participation in the months ahead if the economy cooperates and rates quiet down,” said Callie Cox at Ritholtz Wealth Management. It’s not that the AI story is “doomed,” but “there are so many opportunities in unloved sectors that have been ignored for so long.”

While the bulk of the growth in S&P 500 earnings continues to come from the high-flying tech megacaps, growth is projected to come in at the slowest pace in almost two years. Robust results are a much-needed driver for US stocks after the S&P 500 traded sideways through much of January as Wall Street dialed back expectations for interest-rate cuts this year.

Upbeat outlooks from industry heavyweights like Tesla Inc., Meta Platforms Inc. and International Business Machines Corp. also buoyed trading. And investors are now eagerly awaiting Apple Inc.’s results due after the closing bell. While the majority of companies have so far exceeded expectations, disappointing forecasts have been met with selloffs, with Microsoft Corp. and United Parcel Service Inc. being the latest examples.

The S&P 500 added 0.2%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average rose 0.3%. A gauge of the “Magnificent Seven” megacaps fell 0.3%. The Russell 2000 of small firms gained 1.2%.

The yield on 10-year Treasuries was little changed at 4.52%. The Bloomberg Dollar Spot Index fell 0.2%. Gold hit all-time highs.

Corporate Highlights:

• The collision between an American Airlines Group Inc. regional jet and a military helicopter near Ronald Reagan airport in Washington left no survivors on board the two aircraft, authorities said, making it one of the most deadly US air disasters in decades.
• Southwest Airlines Co. warned that costs will climb faster than expected as it grapples with heavy labor expenses, undercutting gains from strong demand for leisure travel.
• United Parcel Service Inc. projected annual revenue well below expectations, telling investors that a long-awaited rebound in demand for its parcel services won’t arrive this year.
• The US Federal Trade Commission is probing whether Uber Technologies Inc. and Lyft Inc. illegally coordinated to limit driver pay in New York City, according to documents reviewed by Bloomberg News.
• Tesla Inc. plans to launch a long-promised robotaxi business and get back to growing vehicle sales after a year of decline in both deliveries and earnings.
• Microsoft Corp. said its cloud-computing business will continue to grow slowly in the current quarter as the company struggles to build enough data centers to handle demand for its artificial intelligence products.
• Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg exuded confidence in his company’s artificial intelligence strategy, saying 2025 will be a “really big year” in which its AI assistant will become the most widely used in the industry.
• International Business Machines Corp. projected strong revenue growth in the new fiscal year and a jump in AI-related bookings.
• Caterpillar Inc. warned that revenues will be “slightly lower” in 2025 as demand concerns weigh on the outlook of the heavy equipment maker.
• Mastercard Inc. reported earnings that beat estimates as the firm diversifies beyond its traditional payment network into anti-fraud services, data analysis and global money movement.
• Rogers Communications Inc. beat analysts’ fourth-quarter estimates as wireless service revenue gained and subscribers bought more expensive devices.
• Cigna Group reported its fourth quarter was hit by surprisingly high costs from plans employers use to cover catastrophic medical claims.

Key events this week:

• US personal income & spending, PCE inflation, employment cost index, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 1:01 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.3%
• The MSCI World Index rose 0.4%
• Bloomberg Magnificent 7 Total Return Index fell 0.3%
• The Russell 2000 Index rose 1.2%
• S&P 500 Equal Weighted Index rose 1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro was little changed at $1.0416
• The British pound was little changed at $1.2444
• The Japanese yen rose 0.6% to 154.34 per dollar

Cryptocurrencies

• Bitcoin rose 1.4% to $105,214.67
• Ether rose 4.1% to $3,269.85

Bonds

• The yield on 10-year Treasuries was little changed at 4.52%
• Germany’s 10-year yield declined six basis points to 2.52%
• Britain’s 10-year yield declined six basis points to 4.56%

Commodities

• West Texas Intermediate crude rose 0.1% to $72.70 a barrel
• Spot gold rose 1.3% to $2,796.03 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Margaryta Kirakosian, Allegra Catelli and Divya Patil.

©2025 Bloomberg L.P.