Stock markets staged a recovery Tuesday as Wall Street shook off recent worries about artificial intelligence threatening jobs and businesses, while investors processed President Donald Trump’s unexpected tariff adjustments and awaited earnings from tech powerhouse Nvidia.
The market turnaround suggests recent panic over AI’s potential to disrupt industries may have been excessive, according to financial analysts reporting from Orlando, Florida.
Market watchers noted that while U.S. stock markets have underperformed compared to international counterparts, the narrative suggesting investors should abandon American assets may be misguided. Data indicates foreign investment in U.S. markets has reached record levels.
Asian markets led the charge with Taiwan and South Korea each climbing 2.5% to reach new highs, while Brazil’s Bovespa index also hit fresh peaks, approaching the 200,000-point milestone. Wall Street’s recovery was robust, with the S&P 500’s technical support level holding steady.
Technology stocks drove much of the gains, with nine out of eleven S&P 500 sectors posting increases. The Philadelphia semiconductor index closed at a record high, while major tech names saw significant jumps: AMD rose 9%, Intel gained 6%, Salesforce climbed 4%, and IBM advanced 2.7%. Consumer discretionary, industrial, and utility stocks also performed well, though healthcare and energy sectors declined.
The positive sentiment around AI technology improved after Anthropic, an artificial intelligence company, unveiled new business tools targeting sectors like investment banking and human resources. Companies that had been hammered by previous AI announcements recovered some ground, with Thomson Reuters surging 11.5% in its biggest single-day gain since 2008. However, the broader S&P 500 software and services index, which has dropped over 20% in recent weeks, managed only a modest 1% rebound.
Trump’s tariff policy created confusion throughout the trading session. Following last Friday’s Supreme Court decision blocking most of his proposed tariffs, the president signed an executive order implementing temporary 10% global tariffs. By Saturday, Trump announced plans to increase the rate to 15%, only to scale it back to 10% on Monday, while still considering the higher rate.
The policy uncertainty has left international officials scrambling, with representatives from Europe, Japan, and Britain expressing hope that trade agreements negotiated last year will remain intact. Trump may provide additional clarity during Tuesday evening’s State of the Union address to Congress.
Currency markets saw notable movement, with China’s yuan posting its strongest performance against the dollar this year. The Chinese currency extended its winning streak to eight consecutive trading sessions, marking its longest rally since April 2024. The last time the yuan rose for nine straight days was in September 2010, following the reopening of Chinese markets after the Lunar New Year holiday.
In other market movements, the dollar weakened against the Chinese yuan to nearly year-low levels, while the Japanese yen declined significantly among major currencies after comments from Prime Minister Takaichi. Bitcoin dropped below $63,000 before recovering later in the session.
Bond markets showed mixed results, with Treasury yields rising at the short end following a weak two-year note auction. The yield curve between two-year and ten-year bonds flattened for the tenth consecutive day, a pattern not observed in more than a decade. Meanwhile, Spain’s 30-year bond offering attracted record investor demand.
Commodity markets were mixed, with oil prices falling 1% on hopes for a U.S.-Iran diplomatic agreement, while gold declined 2%.
Looking ahead, investors will focus on Nvidia’s fourth-quarter earnings report after market close, which many consider a crucial test for the AI sector amid growing competitive concerns. Other key events include inflation data from Australia and the eurozone, interest rate decisions from Thailand, and speeches from multiple Federal Reserve officials.
