Markets
Luke Kawa

US stocks retreat on tech- and tariff-fueled sell-off

Major indexes moved lower in a topsy-turvy session that saw the S&P 500 rebound from early losses only to stumble into the close. The benchmark US stock index fell 0.3%, the Russell 2000 gave back 0.5%, and the Nasdaq 100 slumped 0.6%.

Despite all the tariff headlines swirling, it was energy stocks and tech that performed the worst among S&P 500 sector ETFs.

Old-school US automakers tumbled on the imposition of tariffs, with those that sell a relatively elevated share of imported cars stateside (like General Motors) doing far worse than those with more final assembly completed domestically (like Ford). Some automakers with elevated domestic production and less exposure to imported parts, like Rivian and Tesla, even benefited from their rivals’ woes. And rental car companies Hertz and Avis boomed on the presumption that tariffs would hit auto production or raise prices (perhaps both!), lifting demand for rental cars that can be resold by these firms.

Airlines like American Airlines, Delta Air Lines, and United Airlines all hit the skids amid fresh data showing a precipitous drop-off in cross-border flight bookings between Canada and the US.

GameStop had its worst day since the June livestream hosted by Keith Gill (aka Roaring Kitty) after investors reacted poorly to its convertible note issuance, either facing massive dilution or a destruction in the option value that was assigned to its massive cash pile.

Meanwhile, Dollar Tree’s divestment of Family Dollar continues to be enthusiastically well received by traders, with the stock up double digits to be the S&P 500’s best performer on the day.

SoFi Technologies, a stock beloved by retail traders as of late, slumped.

AMD was a laggard in the semi space after Jefferies flagged a widening performance gap between it and Nvidia.

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markets
Luke Kawa

Microsoft unveils “community-first AI infrastructure plan” after Trump calls out data centers for high electricity bills

Microsoft is committing to paying up for its data center electricity needs so American households won’t have to face higher costs.

This announcement comes after President Donald Trump posted on Monday evening that his administration was working with leading tech companies to ensure that US households don’t “pick up the tab” for their data center-driven energy demands, which have helped propel electricity bills higher.

Microsoft, he said, would be the first to unveil steps in this direction.

Here’s its plan, from a post attributed to Microsoft Vice Chair and President Brad Smith:

Microsoft community first AI infrastructure plan
Source: Microsoft

From a markets and economics standpoint, the first part is the most interesting. Smith said that Microsoft will ask utilities and public commissions to charge Microsoft enough to cover both data center installation and usage, as well as support two-tier pricing systems (like what’s being proposed in Wisconsin) that will see “Very Large Customers” like data centers face higher costs.

The hyperscalers are walking a fine line of trying to aggressively pursue a build-out of a technology that they believe will be transformative and offer profits for years to come while avoiding public and political backlash due to how resource-intensive these capital outlays and operations are.

“Especially when tech companies are so profitable, we believe that it’s both unfair and politically unrealistic for our industry to ask the public to shoulder added electricity costs for AI,” Smith said. “Instead, we believe the long-term success of AI infrastructure requires that tech companies pay their own way for the electricity costs they create.”

Microsoft’s 12-month forward expected profit margin is above 38%, per analysts polled by Bloomberg, its highest projection on record.

President Trump calls for tech giants to “pay their own way” on energy, says Microsoft will make “major changes”

President Trump calls for tech giants to “pay their own way” on energy, says Microsoft will make “major changes”

Microsoft, he said, would be the first to unveil steps in this direction.

Here’s its plan, from a post attributed to Microsoft Vice Chair and President Brad Smith:

Microsoft community first AI infrastructure plan
Source: Microsoft

From a markets and economics standpoint, the first part is the most interesting. Smith said that Microsoft will ask utilities and public commissions to charge Microsoft enough to cover both data center installation and usage, as well as support two-tier pricing systems (like what’s being proposed in Wisconsin) that will see “Very Large Customers” like data centers face higher costs.

The hyperscalers are walking a fine line of trying to aggressively pursue a build-out of a technology that they believe will be transformative and offer profits for years to come while avoiding public and political backlash due to how resource-intensive these capital outlays and operations are.

“Especially when tech companies are so profitable, we believe that it’s both unfair and politically unrealistic for our industry to ask the public to shoulder added electricity costs for AI,” Smith said. “Instead, we believe the long-term success of AI infrastructure requires that tech companies pay their own way for the electricity costs they create.”

Microsoft’s 12-month forward expected profit margin is above 38%, per analysts polled by Bloomberg, its highest projection on record.

markets
Luke Kawa

Stocks rise after core inflation rises by less than feared in December

SPDR S&P 500 ETF erased premarket losses to jump higher after core CPI inflation rose 0.2% month on month in December, slightly less than analysts had forecast.

Economists anticipated that headline and core CPI inflation (the latter of which strips out food and energy prices) would be up 0.3% month on month. Headline CPI did indeed rise 0.3% for the month.

The pricing of event contracts for December CPI implied that traders expected headline inflation to be up 0.3% month on month, with higher odds of a reading coming in above than below.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

The November CPI report showed that core inflation had cooled by much more than expected, with the annual rate decelerating to a 4.5-year low. However, that reading was flattered by the Bureau of Labor Statistics’ decision to assume housing-centric components were flat in October.

Annual core CPI inflation held steady at 2.6% in December, having been projected to tick up to 2.7%.

Delta: Aerial Views Of Aircraft At Boston Logan International Airport

Delta tumbles after 2026 earnings guidance disappoints

The country’s largest airline forecast adjusted earnings of between $6.50 to $7.50 per share in 2026, while analysts were looking for $7.28.

Max Knoblauch2h
Luke Kawa, Claire Yubin Oh
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President Trump calls for tech giants to “pay their own way” on energy, says Microsoft will make “major changes”

Microsoft is hosting an event on AI opportunities and costs today.

US-POLITICS-TECHNOLOGY
markets
Luke Kawa

Nvidia rebuts claim that it’s requiring full up-front payment from Chinese buyers of its H200 AI chips

An Nvidia spokesperson offered a rebuttal to Reuters on Tuesday, saying the chip designer does not require full payment for H200 chips up front, as the outlet had written in a January 8 report.

President Trump had said on December 8 that Nvidia could ship H200s, its best chip from the Hopper generation, to China. Chinese regulators, however, would need to allow their companies to import these chips, at a time when the nation’s leadership is keenly interested in bolstering domestic alternatives.

Concerns over whether Chinese regulators would permit imports fueled Nvidia’s alleged payment strategy, per Reuters. But Nvidia has now told the outlet that it “would never require customers to pay for products they do not receive.”

Notably, the chip designer isn’t going on the record to contradict any of Reuters’ other recent reporting surrounding its H200 chips, which includes:

  • Demand for H200s is extremely hot, with Chinese companies having already placed orders for 2 million in 2026.

  • Nvidia is planning on selling these chips at around $27,000 apiece.

    • Put those two together and that’s a $54 billion revenue opportunity.

  • Nvidia plans to begin sending its H200 GPUs (which it holds in inventory) to China by mid-February.

  • The world’s most valuable company has asked TSMC to boost production of these chips.

Last week, Bloomberg reported that China plans to allow purchases of H200s “as soon as this quarter.”

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