WSJ What’s News - What’s News in Markets: AI Bloodbath, Trump and Schwab, UPS Doesn’t Deliver

Episode Date: February 1, 2025

What do investors make of President Trump’s social-media company Trump Media turning toward finance? And how well did markets survive DeepSeek’s AI shock? Plus, why UPS is pulling away from Amazon. Host Francesca Fontana discusses the biggest stock moves of the week and the news that drove them.Sign up for the WSJ's free Markets A.M. newsletter.Further Reading:  Chip Stocks Tumble After China’s DeepSeek AI Models Raise Doubts Over U.S. Tech Dominance  Trump Media Announces New Push Into Finance to Support the ‘Patriot Economy’ UPS Stock Plunges on Plan to Halve Amazon Deliveries  Learn more about your ad choices. Visit megaphone.fm/adchoices

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I'm Francesca Fontana for The Wall Street Journal, and this is What's News in Markets, our look at the biggest stock moves of the week and the news that drove them. Let's get to it. What a way to end January. So this week was wild. We had to juggle looming tariff threats, earnings season, an update from the Fed, and a huge panic around AI.

You know, I'm sure I'm not alone in feeling like a month has passed since Monday. So where do we start? Maybe let's start with the good. Earning season kept going strong this week, with data showing that nearly three-quarters of S&P 500 companies that have reported have beaten Wall Street's forecasts. The less good, we are back to wait and see when it comes to the Fed, which hit the pause button on interest rate cuts this week, which weighed on the stock market Wednesday. And of course, there was that giant sell-off in artificial intelligence stocks and beyond,

something called DeepSeek. Don't worry, we will come back to that. So overall, how'd stocks do? Looking at the major indexes, which did manage to pair some losses after Monday, the S&P 500 and NASDAQ each booked losses for the week, while the Dow had a modest weekly gain. And for the year so far, the Dow was up 4.7%, the S&P 500 has gained 2.7%,

and the NASDAQ has risen 1.6%. I think it's been a while since we last talked about DJT. That's the ticker for Trump Media, the president's company that's behind his Truth Social platform. But we're talking DJT today, because Trump's social media company is getting into finance. On Wednesday, Trump Media announced its plans to launch a new finance venture called TruthFi, starting by investing $250 million into crypto and other investments, and those funds will be kept by Charles Schwab. Now we've seen that the stock Trump Media has been volatile, and back around the election

we all got used to checking in on the so-called Trump trade. But aside from a big pop earlier this month before the inauguration, the stock has been more subdued since last November. Shares of Trump media jumped 6.8% on Wednesday, but on the week, the stock lost 2.6%. ["Sweet Home Alone"] Next up, let's talk about that AI bloodbath on Monday. So let's see how fast I can make this recap. As I talk about often on this podcast, AI has been booming.

Big tech is loving it and throwing money at it. And the big breakout stars include the chipmaker Nvidia and the company behind chat GPT, OpenAI. Then this week, traders have to deal with DeepSeek. DeepSeek is this Chinese startup similar to OpenAI, and its models are threateningly close to its U.S. rival. Only DeepSeek isn't throwing all that money at them. They're trading them on the cheap, without the most advanced chips. Cue total market meltdown.

One trillion dollars wiped out from the stock market on Monday. An Nvidia's market value fell more than $500 billion. And the fear was, what if all of this AI spending isn't as justified as everyone thought? When the average Joe, like yours truly, thinks about AI, we might think about all the problems it can solve and how fast it can solve them, and maybe less about how much energy the industry and all those data centers eat up. So along with sectors like tech getting pummeled, chipmaker stocks, Magnificent 7 members, the usual suspects,

power producer stocks like Vistra and Constellation Energy really got drained. Vistra dropped a whopping 28% on Monday, but quad back some ground to end the week down 12%. And Constellation Energy shares lost 21% on Monday and ended the week down 14%. Last but not least, UPS shares delivered a big loss on Thursday. Why? UPS warned investors that its 2025 revenue is expected to take a hit as the company starts phasing out more than half of its business with Amazon by June 2026. Amazon is its biggest customer, but as executives said this week, that doesn't mean it's the most profitable customer. The margins are tight and they're eating into profitability. Even so, investors seemed displeased with the revenue outlook given that UPS shares fell 14% on Thursday and ended the week down 14% as well.

And now you know what's news in markets this week. You can read about more stocks that moved on the week's news in The Score, my column in the Wall Street Journal's Exchange section. Today's show was produced by Anthony Bansi and Zoe Kolkin, with supervising producer Michael Kosmitis. I'm Francesca Fontana, have a great weekend and see you next Saturday!