CNBC Daily Open: Consecutive stock gains signal calm, but heed Fed officials

If investors were to judge the stability of the economy by looking at the stock market, its two-day winning streak might lead investors to think that it’s business as usual.

The market’s response to corporate earnings would also support that thesis. Investors are selling off companies that didn’t meet their expectations, such as Google-parent Alphabet and Advanced Micro Devices, and flocking to firms that they think will do even better in the future, like Palantir. (Whether that’s a fair, or even realistic, belief is up for debate – but it’s certainly not out of the ordinary.)

But U.S. Federal Reserve policymakers are being unusually open about their concerns over the potential impact of tariffs. If investors listen to them, they will perhaps find that the calm in markets is deceptive.

Fed policymakers open up
In recent days, multiple Fed policymakers, such as Chicago Fed President Austan Goolsbee and Boston Fed President Susan Collins, have not only noted the uncertainty surrounding U.S. President Donald Trump’s tariffs, but have also highlighted the potential impact on inflation. That’s a break from Fed officials’ typical stance of not commenting on fiscal policy, suggesting that tariffs could have serious effects on the U.S. economy.

Stocks are up amid week’s turmoil
U.S. stocks climbed on Wednesday for back-to-back gains. The S&P 500 rose 0.39%, the Dow Jones Industrial Average was up 0.71% and the Nasdaq Composite advanced 0.19%. Sharp drops in Google and AMD were offset by a 5.2% jump in Nvidia. Asia-Pacific markets mostly rose Thursday. India’s Nifty 50 index, however, dipped around 0.4% ahead of the central bank’s interest rate decision on Friday, when it’s expected to cut rates.

Google Gemini 2.0
Google on Wednesday released Gemini 2.0, its latest artificial intelligence model suite, to the public. It’s part of Google’s strategy of investing heavily into AI agents — which can complete complex multistep tasks on a user’s behalf, rather than a user having to walk them through every individual step. Meta, Amazon, Microsoft, OpenAI and Anthropic are also moving toward agentic AI as companies try to gain an edge over competitors.

Huawei’s jump in annual revenue
Huawei’s revenue came in at more than 860 billion yuan ($118.27 billion) for 2024, Chairman Howard Liang said Wednesday, according to local state media. That’s a 22% year-on-year jump from 2023 and the fastest growth since 2016, according to CNBC calculations of public numbers. Huawei’s smartphone shipments in mainland China surged by 37% last year, superseding Apple in market share, according to Canalys data. 

Qualcomm sees growth in automotives
Qualcomm reported on Wednesday fiscal first-quarter revenue of $11.67 billion, beating expectations and up 18% from $9.92 billion a year ago. Net income increased 15% to $3.18 billion from $2.77 billion a year earlier. However, its shares fell more than 4.6% in extended trading. Investors were concerned that revenue from Qualcomm’s licensing business would remain flat, Reuters said.

[PRO] Palantir’s valuation unrealistic?
Palantir shares surged 24% on Tuesday to a record high after reporting stronger-than-expected fourth quarter results and guidance. Even though the stock gave up some of those gains on Wednesday, the software company’s valuation appears way out of market fundamentals. CNBC Pro’s John Melloy and Christopher Hayes explain why.

India likely to cut benchmark rates for the first time in nearly five years as economy slows, inflation eases

As inflation in India eases, the Reserve Bank of India has room to cut interest rates to stimulate a slowing economy. Economists expect the country’s central bank to lower its repo rate by 25 basis points to 6.25% on Friday, when its policy meeting concludes. If the RBI does lower rates, it will be the first cut in nearly five years. Investors will also scrutinize the statement of the new RBI Governor Sanjay Malhotra to assess the direction of the bank’s monetary policy.