Stock gains signal calm, but listen to 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.

Second day of gains for U.S. stocks
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. Europe’s Stoxx 600 index added 0.47% amid a mixed day for its regional bourses. Banco Santander topped Stoxx 600 gains, up 8.3%, after the Spanish lender reported record quarterly profit.

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.

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. Automotives are the chipmaker’s fastest-growing business — Qualcomm reported $961 million in quarterly sales for them, growing 61% on an annual basis. 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.

Disney+ loses subscribers
Disney posted fiscal first-quarter earnings Wednesday that beat on the top and bottom lines. The entertainment conglomerate’s net income jumped nearly 23% to $2.64 billion from $2.15 billion during the same quarter last year, while revenue rose 4.8% from a year earlier. Disney+, the company’s streaming platform, was profitable during the quarter, but experienced a 1% drop in subscribers. Shares fell 2.4%.

[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.

Trump’s trade war could have a clear winner: The UK

After hitting Mexico, Canada and China with tariffs — though those on the former two countries have been paused — Trump told reporters on Sunday that tariffs on the EU “will definitely happen.” However, Trump said a deal “could be worked out” with the U.K., a nation with which U.S. trade is more balanced. As the British economy struggles, several analysts told CNBC the economy could get a boost from Trump’s trade war.