• House Republicans advanced President Trump’s $4.5 trillion tax-cut plan, signaling potential economic shifts ahead.

• U.S. stocks have been shaky lately, with the Dow Jones falling but the Nasdaq and S&P 500 edging higher.

• European stocks hit a record high, buoyed by a draft U.S.-Ukraine minerals deal and strong corporate earnings.

• Nvidia’s shares surged 3.7% after hours, reflecting investor optimism in AI despite skepticism over slow payoffs.

• Spot gold prices continue to climb

• However, treasury yields fell for the sixth straight day, hinting at market uncertainty over tariffs and future Federal Reserve moves.

• Moreover, cryptocurrencies have been losing value over the past week, in huge sell off.

Contrasting fortunes for global markets

In a day of contrasting fortunes for global markets, Wall Street stumbled while European stocks soared to unprecedented heights, reflecting the complex interplay of geopolitical developments, corporate earnings, and shifting investor sentiment. The Dow Jones Industrial Average dipped 0.43%, while the Nasdaq Composite and S&P 500 eked out modest gains. Across the Atlantic, the pan-European STOXX 600 index climbed 0.99%, closing at a record high, as optimism over a draft U.S.-Ukraine critical minerals deal and robust corporate performance lifted spirits.

The mixed performance in the U.S. came amid fresh tariff threats and a narrow House vote advancing President Donald Trump’s $4.5 trillion tax-cut plan, which now heads to the Senate. The proposal, seen as a boon for corporate America, has sparked both hope and skepticism. “It’s mainly good for corporate U.S.,” said Lars Skovgaard, senior investment strategist at Danske Bank. “There’s expected to be less regulation and tax cuts. I would expect it to happen, and then it will be positive for markets if they do so.” The real question is how will hardworking Americans benefit?

Nvidia’s AI gamble pays off—for now

One of the day’s standout performers was Nvidia, the artificial intelligence chip maker, whose shares rose 3.7% in extended trading following its earnings report. The company has become a bellwether for the AI sector, which has seen billions poured into infrastructure despite slow returns. However, investor skepticism lingers, particularly as China’s DeepSeek makes strides in AI breakthroughs, raising questions about the long-term competitive landscape.

Nvidia’s success underscores the broader tech sector’s resilience, even as other economic indicators hint at challenges ahead. U.S. housing data released Wednesday showed a sharp decline in new home sales in January, as persistently high mortgage rates continue to deter potential buyers. This dampening of consumer demand adds to concerns about the broader economic outlook, even as markets remain buoyed by corporate earnings and policy shifts.

European optimism fuels record highs

European markets, meanwhile, rode a wave of optimism to record highs. Reports of a draft U.S.-Ukraine deal on critical minerals, coupled with strong corporate earnings, sent the STOXX 600 and FTSEurofirst 300 indices soaring. “(The plan) moved through just a little bit quicker than people were expecting,” said Tony Sycamore, a market analyst at IG.

The deal, which aims to secure access to essential minerals for technology and defense, highlights the growing importance of resource diplomacy in an increasingly fragmented global economy. It also reflects the Biden administration’s efforts to strengthen ties with Ukraine amid ongoing geopolitical tensions with Russia.

In the bond market, benchmark U.S. Treasury yields fell for the sixth consecutive day, reflecting investor caution amid new tariff uncertainties and shifting expectations for Federal Reserve policy. The yield on the 10-year note dropped to 4.252%, while the 30-year bond yield fell to 4.5121%. The 2-year note yield, closely tied to Fed rate expectations, also declined, signaling a market bracing for potential easing.

Fed funds futures now indicate a 55-basis-point easing priced in by year-end, suggesting at least two quarter-point rate cuts. This shift reflects growing confidence that the Fed may act to support the economy, even as inflation remains a concern.

Elsewhere, emerging market stocks rose 1.15%, while Asia-Pacific shares outside Japan gained 1.18%. Japan’s Nikkei, however, fell 0.25%, reflecting regional disparities in market sentiment.

Oil prices, meanwhile, touched a two-month low, weighed down by a surprise build-up in U.S. stockpiles and the potential for a Ukraine-Russia peace deal. U.S. crude settled at 68.62 per barrel, down .4572.53 per barrel.

The passage of Trump’s tax-cut plan in the House offers a glimmer of hope for corporate America, but its ultimate impact remains uncertain, especially since many of the promises from the Trump campaign were not included in the deal for working Americans. As the Senate takes up the proposal, the stakes are high—not just for markets, but for an economy still grappling with the scars of recent years.

Sources include:

Reuters.com

Finance.yahoo.com

Reuters.com