Markets rise in choppy session as traders digest earnings reports

Dow finished up 168, advancers over decliners better than 4-1 & NAZ closed up 49.  The MLP index rose 1+ to the 283s & the REIT index rebounded 6+ to the 404s.  Junk bond funds inched higher & Treasuries were purchased, driving yields lower.  Oil finished slightly higher in the 72s & gold remained hot, up 50 to a record of 2843 (more on both below).

Dow Jones Industrials

Shares of United Parcel Service (UPS) plunged after the company issued weak revenue guidance for the year & said it planned to cut deliveries for Amazon (AMZN), its largest customer, by more than ½.  The shipping giant said in its 4th-qtr earnings report  that it “reached an agreement in principle with its largest customer to lower its volume by more than 50% by the second half of 2026.”  At the same time, UPS said it’s reconfiguring its US network & launching multi-year efficiency initiatives that it expects will result in savings of approximately $1B.  CEO Carol Tome said that AMZN is UPS' largest customer, but it's not the company's most profitable customer.  “Its margin is very dilutive to the U.S. domestic business,” she added.  “We are making business and operational changes that, along with the foundational changes we’ve already made, will put us further down the path to become a more profitable, agile and differentiated UPS that is growing in the best parts of the market,” Tome continued.  UPS forecast 2025 revenue of $89B, down from revenue of $91B in 2024.  That's well below estimates for 2025 revenue of $94.9B.  For the 4th qtr, UPS missed on revenue, reporting $25.3B versus $25.4B expected.   UPS has, for its part, taken more aggressive cost-control measures, including catering to more profitable delivery customers.  Tome highlighted healthcare, small business, intl & business-to-business, or B2B, as “the best parts of the market” that it’s leaned into more heavily.  In recent qtrs, UPS has benefited from an influx of volume from bargain retailers Temu & Shein, which have rapidly gained popularity in the US.  Last Jan, UPS laid off 12K employees as part of a bid to realize $1B in cost savings.  The stock tumbled 18.88 (14%).

UPS shares tank 15% after weak guidance, plan to slash Amazon deliveries by more than half

Mortgage rates fell slightly this week, remaining stubbornly high while would-be buyers & sellers continue to wait for steeper declines.  Freddie Mac's latest Primary Mortgage Market Survey showed that the average rate on the benchmark 30-year fixed mortgage ticked down to 6.95% from last week's reading of 6.96%.  The average rate on a 30-year loan was 6.63% a year ago.  "The 30-year fixed-rate has hovered between 6% and 7% for most of the last two and a half years. That trend continued this week, with the average rate remaining essentially flat at 6.95%," said Sam Khater, Freddie Mac's chief economist.  "Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines."  The average rate on the 15-year fixed mortgage fell to 6.12% from 6.16% last week.  One year ago, the rate on the 15-year fixed note averaged 5.94%.

Mortgage rates tick lower, hover near 7%

IBM (IBM), a Dow stock, surged 12% on the back of strong 4th-qtr results that showed artificial intelligence growth boosting its software business.  The move put the stock in its best day since Jul 2000, when shares popped 13%.  The company reported adjusted EPS of $3.92 adjusted on $17.55B in revenue.  The forecast had expected EPS to come in at $3.75 & revenues to reach $17.54B.  IBM reported a 1% rise in revenues overall, while its software unit grew 10% on a year-over-year basis amid growing demand for artificial intelligence & its operating system known as Red Hat Linux.  CEO Arvind Krishna also said that the company posted $5B in bookings for its generative AI segment.  “We closed the year with double-digit revenue growth in Software for the quarter, led by further acceleration in Red Hat,” he said.  “Clients globally continue to turn to IBM to transform with AI.”  JPMorgan analyst Brian Essex maintained his neutral rating on IBM but said the firm remains “encouraged” by its software strength & growth trajectory.  Goldman Sachs analyst James Schneider reiterated his buy rating, saying that software strength should benefit IBM's turnaround plan.  The stock jumped 29.69 (13%).

IBM rallies 12%, heads for best day since 2000 on strong earnings
 

Gold prices rose to hit a lifetime high, sparked by safe-haven demand due to US tariff threats, while the focus was also on a crucial inflation report for clues on the Federal Reserve's policy path.  Spot gold was up 1.3% at $2794 per ounce, hitting its record high level at $2798 earlier in the session.  US gold futures settled 1.8% higher at $2845.  There is keener uncertainty & anxiety about the Trump administration's new policies on trade & foreign policy & fresh technical buying coming in as prices are trending higher.  Earlier this week, the White House said Pres Trump planned to hit Mexico & Canada with steep tariffs on Sat & was also considering some on China.  The $ fell 0.2%, making gold less expensive for other currency holders, while 10-year Treasury yields fell to their lowest level in over a month.  Gold is shining as a safe haven asset, with investors seeking shelter to weather the storm of unpredictability.  The Fed held rates steady yesterday, in line with expectations, with Chair Jerome Powell saying.

Gold hits record high on safe-haven demand amid tariff threats

West Texas Intermediate (WTI) crude prices continued to decline for a 2nd straight session, trading around $72.20 a barrel.  Investors remained cautious as uncertainty looms over US trade policy, following conflicting statements from the White House regarding Pres Trump's proposed tariffs on Canada &d Mexico—2 of the US' main crude suppliers.  White House spokeswoman confirmed on Tues that Trump remains committed to imposing tariffs on Canada & Mexico as planned on Sat.  Yesterday, Trump's nominee for commerce secretary, Howard Lutnick, suggested that Canada & Mexico could avoid tariffs if they immediately tighten border controls on fentanyl & curb China's advances in artificial intelligence.  Lutnick advocated broad, blanket tariffs that target countries rather than specific products, reinforcing a more aggressive stance toward China.  Crude oil prices also remained under pressure after the Energy Information Administration (EIA) reported a 3.5M barrel increase in US stockpiles last week, the first build in stocks after 9 consecutive weeks of declines, which was in line with expectations for a 3.2M barrel increase.  Recent winter storms across the US have further dented oil demand.  On the supply side, Russian crude exports from western ports are expected to fall by 8% in Feb compared to Jan, as Moscow ramps up refining operations.  The decline comes amid fresh US sanctions, which have tightened restrictions on Russian crude exports.

WTI Drops To $72.00 As Traders Await Clarity On US Trade Policy

US stocks gained steam in the  as investors digested megacap tech earnings & looking for Big Tech stocks for more clues on their prospects.  After the Federal Reserve stood pat on interest rates  as expected, investors have turned to parsing earnings reports & the first wave of results from the tech companies  have driven broader stock market gains.