Global markets opened the day digesting a dense set of corporate results, currency shifts and geopolitical developments without suffering major dislocation. The S&P 500 briefly cleared the 7,000-point mark on Wednesday and showed signs of testing that level again as the week progressed.
Corporate earnings from the largest U.S. technology companies provided a mixed backdrop. Meta's shares jumped as much as 10% in overnight trading after the company outlined an aggressive capital spending plan. The initial report described that plan as a 73% increase in capital expenditure this year. By contrast, Microsoft retreated more than 6% after cloud-computing results failed to meet investor expectations. Tesla's shares rose about 2% as the company signalled a shift in emphasis from slowing electric vehicle sales toward investments in artificial intelligence and robotaxi programs. Apple was scheduled to report after the markets closed on Thursday.
The Federal Reserve left interest rates unchanged at its most recent meeting. Fed Chair Jerome Powell said the economic outlook has been "clearly improving" and took a measured tone on both labor market pressures and inflation that remains above target. He suggested that any move to ease policy is unlikely to occur before mid-year, effectively passing the decision window to his successor as he nears the end of his term as chair in May. When pressed by reporters, Powell declined to answer most questions about his own future or about a criminal probe initiated by the Trump administration.
Long-term U.S. Treasury yields moved incrementally higher in the hours after the Fed decision, but market attention shifted rapidly toward commodities as geopolitical tensions intensified. Benchmark crude oil prices climbed by more than 1% on Thursday amid renewed U.S.-Iran friction. Reports said President Trump warned Iran of a "far worse" attack if Tehran did not reach a deal on its nuclear program, and Tehran responded that it would retaliate "like never before" to any U.S. action.
According to two U.S. sources cited in reporting, the Trump administration was weighing targeted strikes against Iranian leaders and security forces intended to catalyse new protests with the broader objective, as described by the sources, of creating conditions for "regime change". One of those sources added that no final decision on military action had been taken.
Precious metals rallied sharply alongside oil. Gold pushed toward $5,600 per ounce and silver approached $120 per ounce, with gold up by more than $1,000 so far in January. The increases in oil and gold were also supported by a notable weakening of the U.S. dollar this week. The dollar eased again on Thursday even after Treasury Secretary Scott Bessent reiterated the U.S. government's "strong dollar" policy in comments that left some ambiguity.
Chart of the day
Meta's overnight gain followed a 24% year-on-year revenue jump in the December quarter and a first-quarter outlook that beat forecasts, which together provided the company room to expand data centre investment. That data centre spending is expected to rise sharply this year in company projections, with one figure in reporting describing an 87% increase to $135 billion earmarked for data centre spending. By contrast, Microsoft's shares were hammered by only modest growth in its Azure cloud unit, raising questions about the near-term returns on its significant AI-related capital deployment.
Market implications and near-term focus
Investors are parsing the diverging earnings signals from the technology sector for implications on corporate capex cycles and the demand outlook for AI infrastructure. At the same time, the Fed's decision to hold rates shifts focus back onto macro drivers such as bond yields, commodity prices and currency moves. Energy and materials sectors - which are sensitive to oil and metal prices - have been direct beneficiaries of the recent moves, while technology valuations are being re-evaluated in light of disparate cloud and AI spending results.
Events to watch today
- U.S. November trade balance (8:30 AM EST)
- Revised Q3 labor productivity (8:30 AM EST)
- Weekly jobless claims (8:30 AM EST)
- November manufacturers' new orders (10:00 AM EST)
- U.S. 7-year note auction (12:00 PM EST)
- Chinese President Xi Jinping to hold a press conference with British Prime Minister Keir Starmer
- U.S. corporate earnings: Apple, Blackstone, Caterpillar, Comcast, Dow, Honeywell, Lockheed Martin, Mastercard, Visa
These economic releases and corporate results will provide additional context for policy interpretation and risk appetite across asset classes.
Investors and market participants should monitor incoming earnings detail for further clarity on AI-related capital programmes and cloud revenue trajectories, and they should watch geopolitical developments closely for their influence on oil markets and safe-haven flows into precious metals.