We say hello to February. In Friday’s session, the stocks turned over after President Donald Trump said tariffs on imports from China, Mexico, and Canada would begin Saturday. And, come Saturday, they went into effect, adding another thing for Wall Street to worry about after the final week of January was so jampacked with news that it seemed to go on forever. The DeepSeek-driven tech rout last Monday split the market in a rotation that saw the Nasdaq plummet and the Dow Jones Industrial Average finish modestly higher. .IXIC .DJI,.SPX mountain 2024-12-31 Performance since Dec. 31. 2024 The tug-of-war raged all week over whether the Chinese startup’s efficient, lower-cost artificial intelligence model would reduce the need for as many of Nvidia ‘s hard-to-get and expensive AI chips, which are the best in show. Throw in the Federal Reserve on Wednesday deciding to hold interest rates steady after three cuts last year, and the Nasdaq and Dow remained in their respective corners — dropping 1.6% and gaining nearly 0.3% for the week. The S & P 500 lost 1% last week. While the market was overbought for most of the week, according to the S & P 500 Short Range Oscillator , Friday’s selling broke the streak. Our bias in overbought markets is to trim stock exposure. We did that last week and communicated it in three trade alerts . For the entire month of January, stocks finished higher, with the Dow, S & P 500, and Nasdaq up 4.7%, 2.7%, and 1.6%, respectively, for the month. NVDA mountain 2025-01-24 Performance since Jan. 24 Nvidia was the stock story of the week. It was crushed Monday in the DeepSeek rout. It made some half-hearted attempts at bouncing but was one of our biggest losers of the week, down nearly 16%. On Thursday, Jim Cramer told Club members he would have trimmed Nvidia if not restricted. He said he still believes in Nvidia long-term but wondered whether the portfolio needed to lower its exposure a little bit since the jury is still out on the impact of DeepSeek. Providing some solace, Meta Platforms and Microsoft , alongside their earnings last week , indicated that their spending on capital expenditures won’t change. Both CEOs also spoke favorably about how DeepSeek might help wider adoption of AI. The next test is what Alphabet and Amazon have to say about their capex plans when those two Club names report earnings in the coming week. The future of AI data center play Eaton may also depend on where all the tech giants land on AI spending, but alongside its earnings report Friday , its CEO was adamant it’s not seeing any customers change their plans. Data center-related sales jumped 45% in the quarter. The stock was decimated Monday. We bought some shares early Tuesday around $303 each before the stock went on a four-session bounce to $327. Eaton stock ended an up-and-down session Friday slightly lower. During Friday’s Morning Meeting, Jim Cramer said Eaton is a “good Trump stock” because the company is engaged in megatrends
Dom. Feb 2nd, 2025
