Nasdaq 100 and US Indices: Tech Stocks Rally as Alphabet’s Earnings Take Center Stage

S&P 500, Nasdaq Rise Mid-Session as Megacaps Rebound; Traders Watch Tariffs

The S&P 500 and Nasdaq advanced in midday trading as megacap stocks regained momentum despite ongoing volatility tied to China’s counter-tariffs. Investors weighed Beijing’s measured response to fresh U.S. trade restrictions, which signaled an attempt to keep negotiations open rather than escalate tensions further.

China imposed levies on select U.S. imports in response to President Trump’s 10% tariff, which took effect early Tuesday. However, the limited scope of Beijing’s actions suggests officials are leaving room for further talks. “The tariff gun is clearly loaded… but we now have some time in between the announcement and the implementation,” said Art Hogan, chief market strategist at B. Riley Wealth.

Markets also reacted to Federal Reserve officials’ warnings about potential inflation risks tied to ongoing trade policies, adding another layer of uncertainty to the economic outlook.

Are Tech Stocks Driving the Market Higher?

The technology sector outperformed, climbing 1.4% as Alphabet rose 1.8% ahead of its earnings report, while Nvidia gained 2.8%. Megacaps helped lift the Nasdaq as traders rotated back into high-growth stocks.

Palantir surged 25.8% after issuing a bullish revenue forecast, while PayPal sank 9.5% on a fourth-quarter margin decline. Illumina, meanwhile, tumbled 4.3% after being placed on China’s “unreliable entity list.”

Which Sectors Are Gaining, and Where Is Weakness Showing?

Energy led sector gains, rising 2.05% as oil prices provided support. Communication services and consumer discretionary stocks also advanced, climbing 1% and 0.96%, respectively.

On the downside, defensive sectors struggled. Utilities dropped 0.74%, while consumer staples slipped 0.56%. Healthcare was also weak, declining 0.58% as Merck fell nearly 10% after suspending Gardasil shipments to China due to slowing demand.

How Are Trade Tariffs and Economic Data Affecting the Market?

Traders remain cautious after Trump imposed additional 25% tariffs on Mexican and Canadian goods over the weekend. However, a last-minute agreement delaying the levies by 30 days helped ease immediate concerns.

Meanwhile, U.S. job openings dropped to 7.6 million in December, falling short of economists’ 8 million estimate. The data suggests a potential cooling in labor demand, which could influence the Fed’s next policy moves. Comments from Atlanta Fed President Raphael Bostic and other officials throughout the day may provide further insight into the central bank’s stance.

What’s Next for Markets in the Second Half of the Session?

With Alphabet’s earnings on deck and ongoing Fed commentary, markets may see further volatility into the close. Investors will also monitor any developments in U.S.-China trade discussions, as Beijing’s tempered response leaves open the possibility of further negotiations.

With key resistance levels in focus, traders are watching whether the S&P 500 can sustain its midday gains or if renewed tariff concerns will weigh on sentiment before the closing bell.

More Information in our Economic Calendar.