Markets Rise in Relief Rally, but Alphabet Earnings Disappoint

The markets rose in a relief rally on Tuesday, as investors breathed a sigh of relief following U.S. President Donald Trump's decision to pause tariffs on Mexico and Canada. The S&P 500 rose 0.72%, the Dow Jones Industrial Average added 0.3%, and the Nasdaq Composite climbed 1.35%. Europe's Stoxx 600 index added 0.22%. However, the rally was short-lived, as investors turned their attention to corporate earnings and were met with disappointing results from Alphabet and AMD.

Alphabet's fourth-quarter results missed revenue expectations, with the tech giant's revenue coming in at $96.47 billion, compared with the expected $96.56 billion. CEO Sundar Pichai said in the earnings release that Google expects to invest "approximately $75 billion in capital expenditures in 2025," raising concerns about the company's spending on artificial intelligence (AI) and its competitiveness in the face of emerging threats from Chinese startups like DeepSeek.



AMD's data center sales also disappointed, with the company reporting fourth-quarter data center sales of $3.86 billion, which missed the FactSet estimate of $4.14 billion. Net income came in at $482 million, down from $667 million a year ago. Despite the disappointing results, AMD's overall sales and earnings beat Wall Street expectations.

The relief rally in markets was driven by two key factors: the pause in tariffs and the focus on earnings. However, the market reaction to Alphabet's and AMD's earnings reports was mixed, with both companies' shares slumping in extended trading. This suggests that while the relief rally was initially driven by geopolitical factors, corporate fundamentals remain critical to stock performance.



In conclusion, the relief rally in markets was driven by the pause in tariffs and the focus on earnings. However, the market reaction to Alphabet's and AMD's earnings reports was mixed, with both companies' shares slumping in extended trading. This suggests that while the relief rally was initially driven by geopolitical factors, corporate fundamentals remain critical to stock performance. Alphabet's earnings miss raises concerns about the company's spending on AI and its competitiveness in the face of emerging threats from Chinese startups like DeepSeek.