Markets nosedive as AI fears rock Nvidia and tech stocks

Dow added 289 (above AM low), but advancers over decliners about 5-4 & NAZ had a sell-off of 612.  The MLP index sank 8+ to the 314s & the REIT index was up 4+ to the 408s on lower interest rates.  Junk bond funds were little changed & Treasuries continued to see heavy selling.  Oil declined 1+ to the high 72s & gold tumbled 35 to 2743 (more on both below).

Dow Jones Industrials

AT&T's (T) 4th-qtr wireless subscriber growth surpassed expectations, fueled by strong demand for its discounted premium plans combining 5G mobile with high-speed fiber data services.  The US telecom giant added 482K net monthly bill-paying wireless phone subscribers in the holiday qtr, outpacing estimated gains of 424K.  As the pool of potential new wireless customers shrinks in the US,  AT&T's strategy of bundling high-speed fiber internet with wireless phone services has helped drive growth for the company.  Its fiber business added 307K new customers in the 4th qtr, higher than 226K additions in the prior qtr, marking its best 4th-qtr fiber net additions.  The last 3 months of the year are typically strong for telecom operators, driven by factors such as Black Friday promotions, trade-in deals for new iPhone launches & the gift-giving season around Christmas, all of which contribute to higher subscriber additions.  AT&T expects annual adjusted EPS of $1.97 - $2.07 per share, excluding the contribution from its 70% stake in DirecTV, which the company is selling for $7.6B.  It was not immediately clear if the range could be compared with the estimate of $2.18 per share.  Last month it expected free cash flow to be more than $18B in 2027 & would reach more than 50M locations with fiber by 2029.  Excluding items, it reported EPS of 54¢, higher than the estimate of 50¢.  Total revenue rose 1% to $32.3B, compared with an estimate of $32.04B.  The stock gained 1.43 (6%).

AT&T’s bundled 5G, fiber plans boost holiday-quarter subscriptions

The US economy entered 2025 with a steady hand, according to the National Association of Business Economics (NABE), a group of the nation's leading economists, with the chance of a prolonged slowdown falling.  "The odds of a recession continue to diminish according to panelists, with the downside risks largely tied to uncertainty over the implementation and timing of policy proposals from the new administration" said Pres Emily Kolinski Morris, CBE, global chief economist, Ford (F), in the group's January Business Conditions Survey taken from Dec 30, 2024 - Jan 13, 2025.  Pres Trump, who took office a week ago, hit the ground running, rolling out a series of pro-business exec orders tied to making the US more open to cryptocurrency, easing energy restrictions & freezing the hiring of federal workers as his DOGE, Dept of Gov Efficiency arm, assesses areas to cut waste.  Additionally, he announced a $500B investment from OpenAI, Softbank & Oracle (ORCL) to expand artificial intelligence in the US.  He is also threatening tariffs against Canada, Mexico & China.  Still, inflation remains a headwind.  While 65% of NABE's economists see prices stable over the next 3 months, 35% expect price increases, an uptick from 28% polled in Oct.  The consumer price index last month rose 2.9% annually & 0.4% vs Nov.  Core CPI, which excludes volatile food & energy, rose 3.2% annually.  Inflation is well below its 9.1% peak in Jul 2022 but still above the Federal Reserve's preferred 2% goal.  Trump, during his remote appearance before the World Economic Forum marking his return to office, blamed the Biden administration for high inflation.  "Over the past four years, our government racked up $8 trillion in wasteful deficit spending and inflicted nation wrecking energy restrictions, crippling regulations and hidden taxes like never before. The result is the worst inflation crisis in modern history, and sky-high interest rates for our citizens and even throughout the world, food prices and the price of almost every other thing known to mankind went through the roof," Trump told attendees in Davos, Switzerland.  He also took a jab at Fed Chair Jerome Powell.

Odds of U.S. recession declining: NABE economists

Apple (AAPL), a Dow stock, introduced an software update for iPhones, iPads & Macs that turns Apple Intelligence on by default for users with supported devices.  The updates, iOS 18.3, iPadOS 18.3 & macOS Sequoia 15.3, also disable AI summaries for news apps, which have gained a reputation for twisting news push notifications to display inaccurate facts.  The release is a milestone in the rollout of Apple Intelligence, its suite of artificial intelligence features.  Apple Intelligence is a critical product for AAPL as it seeks to distinguish its products from competitors with an AI system integrated into iPhones & other products.  While Apple Intelligence is already featured in the company's marketing for the latest iPhones, the rollout has been deliberate & limited to allow it to test new features & make sure it has enough server capacity.  The entire Apple Intelligence suite is still officially in beta & it's only available in a handful of English-speaking countries.  With the latest updates, Apple Intelligence will be turned on by default when the latest software update is installed, expanding the number of users who are exposed to the software.  Apple Intelligence is marketed as being able to rewrite text, generate images & summarize long emails and message threads.  “For users new or upgrading to iOS 18.3, Apple Intelligence will be enabled automatically during iPhone onboarding,” AAPL said in the developer release notes for the update.  Users will have to navigate to the Apple Intelligence page in the Settings app to turn it off.  AAPL stock rose 7.23 (3%).

Apple turns its AI on by default in latest software update

Gold prices fell below $2770 after a weekend full of headlines & a busy week of central bank interest rate decisions coming up.  Over the weekend, markets understood why Pres Trump has been loosening up on the use of tariffs as a tool.  It appears that tariffs will be used as leverage, for example, for countries that refuse to accept deported US immigrants who are being taken back to their home countries.  Colombia felt the impact when Pres Trump ordered emergency tariffs of 25%, & increased to 50% within a week, because the country did not comply with Pres Trump's deportation demands.  However, the White House later confirmed that "Colombia has agreed to all of President Donald Trump's terms, including the unrestricted admission of all illegal immigrants from Colombia who are being returned from the US," & that Trump's proposed tariffs are "now on hold."  Later this week, the Federal Reserve (Fed) & the European Central Bank (ECB) will decide on their policy interest rates on Wed & Thurs, respectively.  Meanwhile, a Chinese open-source AI startup has spooked markets & called into question the high valuations of tech stocks like Nvidia (NVDA) down $24.04, which dragged NAZ much lower.

Gold Prices Fall As Tech Sector Rout Intensifies On Monday

Oil prices fell after the US dropped an initial threat of sanctions against Colombia, easing immediate concerns about oil supply disruptions, although a show of force by Pres Trump kept markets on edge.  Brent crude was down 60¢ (0.8%) at $77.90 a barrel & US West Texas Intermediate crude was down 57¢ (0.8%) at $74.09.  The US quickly dropped plans to impose sanctions & tariffs on Colombia after the South American country agreed to take in migrants deported from the US, the White House said.  Colombia shipped about 41% of its crude exports by sea to the US last year.  There's a general negative sentiment in the market.  Even if sanctions don't happen, it still creates a nervousness that Trump will bully whoever needs to be bullied to get what he wants.  Gains were capped by Trump's repeated calls on Fri for the Organization of the Petroleum Exporting Countries to cut oil prices to hurt Russia's oil-rich finances & help end the war in Ukraine.  "One way to stop it quickly is to stop OPEC from making so much money and lower oil prices ... The war will be over soon," Trump said.  Trump also threatened to hit Russia "and other participating countries" with taxes, tariffs & sanctions if a deal to end the war in Ukraine is not reached soon.  Russian Pres Vladimir Putin said on Fri that he & Trump should meet to discuss the Ukraine war & energy prices.  They're preparing for negotiations & that is creating volatility in the oil market.  The oil market may be slightly skewed to the downside, with Trump keen to increase US production & try to secure overseas markets for US crude.

Oil Prices Plunge As Trump Sanctions Threat Against Colombia Dropped

Markets have been rattled by claims by China's DeepSeek that its AI assistant uses cheaper chips & less data than leading models, but performs equally well.  A surge in DeepSeek's popularity has spurred investors to question bets that AI demand-driven growth will keep fueling gains for stocks.  In the background, trade war concerns revived during a face-off between Pres Trump & Colombia over the weekend.  Trump threatened to impose 25% tariffs on the country's goods in a row over deported migrants before putting the duties on pause after a deal was reached.