MARKET WRAP

Stocks brushed off the latest tariff headlines from China and closed higher across the board. The SPX gained +0.75% erasing yesterday’s move, while the QQQ, boosted by PLTR’s impressive +24% earnings move, finished up +1.2%. IWM rallied +1.4%, supported by treasury yields, with the 10-year now at 4.51%. TLT hit new 2025 highs, closing +0.3%. VIX closed at 17, down from 20 yesterday morning (more on VIX vs. SPX at the bottom of the email). After hours, GOOGL is down about -6.5% following earnings, while AMD is down -4% (still early on both). On today’s MRKT Call: trades in SPY and MRK, while Gene Munster joins the RiskReversal pod to talk all things tech and upcoming earnings. Enjoy!

MRKT MATRIX: February 4, 2025

Today’s Top Stories:

• S&P 500 rises as investors shake off Trump's trade battles, Nasdaq gains 1% led by Palantir (CNBC)

• China Hits Back Against Trump’s Tariffs With Targeted Actions (Bloomberg)

• House Republicans Are Split on How Deeply to Cut Federal Spending (WSJ)

• Trump Hints at Curbs on Musk’s Powers After Billionaire Shakes Up Washington (WSJ)

• GM cuts 50% of Cruise staff after ending robotaxi business (CNBC)

• Palantir soars 23% to record high as AI powers strong earnings and guidance (CNBC)

• Amazon, King of Online Retail, Can’t Seem to Make Its Physical Stores Work (WSJ)

• Big Tech’s Massive Spend Is Masking a Slowdown in Capex Growth (Bloomberg)

• The Super Bowl will stream for free on Tubi, a big move for Fox’s streaming strategy (CNBC)

• Warren Buffett’s Berkshire Hathaway scoops up more Sirius XM, boosting stake to 35% (CNBC)

Today’s MRKT Call is Presented by Robinhood

Market Volatility: How to Buy Protection

Dan and Guy kick off with a recap of the tariff story, analyzing how the market has managed to shake off the headlines and the key differences between the Canada/Mexico situation and China. Guy takes a closer look at Chinese stocks, with a focus on BABA. They then review the SPY and outline a potential hedge strategy. Next, they break down today’s major earnings moves before diving into healthcare stocks, highlighting a potential trade in MRK after its sharp decline. The show wraps up with a preview of GOOGL and AMD ahead of earnings, plus viewer questions, including DIS.

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Today’s RiskReversal Pod is Presented by RBC and Current

Alphabet & Amazon Earnings Preview

Dan Nathan is joined by Gene Munster, Managing Partner at Deepwater Asset Management. They discuss the rebranding of the podcast and focus on three main topics: the impact of newly announced tariffs by the Trump administration on tech stocks, major earnings reports from Alphabet and Amazon, and an assessment of recent trends and potential winners and losers in the tech sector. The conversation covers reactions to the equity market's downward volatility, implications of higher interest rates, and the specifics around tariffs affecting companies like Apple and Amazon. They also delve into the competitive landscape of generative AI and the challenges facing Google’s search business, as well as the evolving opportunities in frontier tech.

Check This Out

• Made in China, Sold on Amazon (Statista)

• American Sellers Lost Amazon to China (Marketplace Pulse)

• Ontario Cancels Starlink Deal, Bars US Firms From Government Contracts (Bloomberg)

• How technology works, and the ways it is impacting the world (Sharp Tech Podcast)

• Learn More: Deepwater Frontier Tech ETF

What’s Next?

Another day, another week, another instance of equities shaking off potentially bearish news. Both last weekend’s DeepSeek announcement and this weekend’s tariff headlines have resulted in similar market action, leaving the SPX roughly where it has been since mid-December. The index sits less than 2% from all-time highs once again, though as Guy pointed out in today’s MRKT Call, one could argue it has broken its uptrend.

As noted in yesterday’s email, VIX spikes and quick equity sell-offs can sometimes set the stage for new highs, forcing traders to chase stocks higher and creating short-term momentum. The past two weeks may have served that purpose, potentially positioning the market for a breakout. However, equities are likely to encounter overhead resistance in the SPX 6150-6175 range, making it a key level to watch if we grind higher.

If the VIX continues to decline from here, the shift from option buyers to sellers could dampen some of the market’s recent volatility, leading to a more predictable trading environment. The SPX has been oscillating around 6000 for a month and a half—sometimes violently—but has yet to establish a clear trend. Earnings season has produced stock-specific volatility but hasn’t provided a decisive market direction.

We get the Jobs Number this week, and more inflation data next week, but looking ahead, earnings season essentially ends with NVDA’s late-February earnings report, which could serve as the final sentiment check for this earnings season. If tariff concerns subside and treasury yields remain steady, the near-term path of least resistance leans higher, potentially turning into a slow grind above SPX 6100. A market rollover from current levels would likely stem from macroeconomic developments (e.g. rising treasury yields) or a shift in the mega-cap tech narrative following NVDA’s report.



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