AI stock wobbled, and consumer confidence dipped
Nvidia was the main event this week, with markets looking to its earnings report as the final word on AI sentiment this quarter. The numbers were strong — earnings per share topped expectations and revenue soared by 78% year-over-year — yet the stock still fell. The AI boom isn’t slowing, but when a stock is priced for perfection, even great results can disappoint. This is a reminder that fundamentals eventually catch up.
On the macro front, U.S. economic data keeps missing forecasts. New home sales came in well below expectations. In fact, the Citi U.S. Economic Surprise Index fell into negative territory, meaning that economic data (on average) is now worse than expected. As a result, rate-cut expectations have climbed: markets are now pricing in 2.25 cuts in 2025, up from 1.5 cuts just a week ago. Meanwhile, the yield curve inverted again, with three-month yields now above 10-year yields, signalling renewed growth concerns. Despite this, the U.S. dollar strengthened as tariffs re-entered the conversation.
Not only are we now facing threats of tariffs in Canada next week, but trade tensions also escalated on a new front. The U.S. Commerce Department launched an investigation into copper imports, with officials warning that China’s control over the global market poses a national security risk. Howard Lutnick, the U.S. secretary of commerce, confirmed that no exemptions would be made, echoing past actions in steel and aluminum. The investigation will cover everything from mined copper to scrap metal, as the administration pushes for a revival of domestic production. Copper is very important for the manufacturing sector, so it will be interesting to monitor the outcome.
U.S. consumer sentiment is deteriorating. The latest Consumer Confidence Index reading fell sharply, mirroring last Friday’s University of Michigan survey and coming in below even the most pessimistic estimates. It appears political turmoil is starting to take its toll on sentiment. This frustration with politics is showing in corporate results too. Tesla’s European sales collapsed 45% in January, even as overall EV sales rose 37%, signalling that the brand’s struggles may be more than just cyclical.
Listen to our regular podcast for further insights.
