Markets Rally as AI, Tariff Shifts and Deals Drive Moves

US Equities Rebound on Tariff De-Escalation and Strong Growth

US stocks climbed as investors responded to a combination of easing trade tensions and firm economic data. The S&P 500 and Nasdaq 100 were each up about 0.7%, with gains led by chipmakers and other AI-linked technology names. The advance followed comments from President Donald Trump softening his tone on tariffs, which had rattled markets in prior sessions. Options activity tied to the Cboe Volatility Index surged, with call volumes near the highest levels since early spring as traders continued to hedge against possible swings linked to tariffs and Europe-related headlines.

Revised macro data added support to the risk-on move. Inflation-adjusted US GDP expanded at a 4.4% annualized pace, the fastest in two years, while weekly applications for unemployment benefits were little changed, suggesting labor conditions remain firm. Strategists at JPMorgan said they saw little evidence of foreign investors pulling back from US assets despite recent geopolitical noise, reinforcing the view that international capital flows remain anchored to American markets.

Elsewhere, natural gas futures experienced an extreme move, surging more than 70% over four sessions. Traders pointed to severe winter weather warnings that could sharply increase heating and electricity demand while also disrupting gas production and pipeline flows in key regions. Analysts said storage draws could be among the largest on record if cold conditions persist, adding another layer of volatility to energy markets.

AI Trade Regains Momentum Across Chips, Cloud and Data Centers

Technology and AI-related stocks were central to the day’s equity strength. Alphabet shares rose after Raymond James upgraded the stock to Strong Buy and lifted its price target to $400, citing the company’s integrated AI “stack,” which links generative models, search, advertising tools, Workspace apps and Waymo’s self-driving technology. NVIDIA gained following a Jefferies price target increase to $275, with the broker arguing the chipmaker remains attractively valued given its extended AI accelerator roadmap through 2028.

AI hardware and infrastructure suppliers also advanced. Arm Holdings climbed after Susquehanna raised its rating to positive, pointing to Arm’s development of an AI XPU custom chip and server CPU, as well as expectations for Nvidia-powered Windows on Arm computers. Hewlett Packard Enterprise moved higher after DB Life Insurance selected the company to build a private AI foundation, highlighting HPE’s role as a core provider of enterprise AI infrastructure. In construction, analysts noted that US heavy contractors such as MasTec, Dycom and Orion Group are positioned to benefit from a multi‑year wave of data-center and grid investments tied to AI and digital infrastructure demand.

Financial firms are also targeting AI as a driver. Jack Henry & Associates was highlighted in a separate analysis as a relatively low‑volatility way to gain exposure to digital transformation in banking, with its cloud-native platform and AI‑enabled fraud and risk tools seen as key to long‑term growth. Market commentary emphasized that many of these “pick‑and‑shovel” suppliers to the AI economy—spanning chips, networking, power and software—are attracting renewed interest after late‑2025 pullbacks.

Media and Streaming: Competing Bids and Regulatory Scrutiny

In media, deal activity and regulatory developments kept the sector in focus. Paramount Skydance Corp. extended the deadline on its $108.4 billion hostile takeover bid for Warner Bros. Discovery to February 20. Paramount reiterated its $30‑per‑share offer for the entire company and contrasted it with Netflix’s $27.75‑per‑share all‑cash bid, which is limited to Warner’s streaming and studio assets. Paramount argued that Netflix’s proposal carries execution risk, particularly around a planned spinoff of TV networks and the transfer of $17 billion in debt, and framed its own offer as offering greater certainty.

Netflix faces additional political scrutiny around its Warner Bros. Discovery ambitions. Co‑CEO Ted Sarandos plans to testify in February at a US Senate committee hearing examining the proposed $82.7 billion purchase of Warner’s streaming and studio operations. Bloomberg reported that Warner Bros.’ chief strategy officer Bruce Campbell also intends to appear. The hearing underscores lawmakers’ interest in the competitive and structural implications of large streaming mergers at a time when traditional studios and digital platforms are increasingly intertwined.

Tesla Headlines: Robotaxis, Insurance Tie‑ups and Executive Feuds

Tesla generated several distinct news threads. CEO Elon Musk said the company has started robotaxi rides in Austin without safety monitors in the car, building on a limited robo‑taxi service launched last June that used Model Y vehicles with human safety drivers. In a separate commentary, Musk reiterated that dedicated Cybercab production would start at “agonizingly slow” initial volumes but is expected to accelerate over time, with investors viewing autonomous services as an important future revenue stream.

Meanwhile, Lemonade announced a first‑of‑its‑kind collaboration with Tesla covering drivers using the automaker’s Full Self‑Driving (FSD) system. Lemonade’s new Autonomous Car insurance unit will offer a 50% lower per‑mile rate when FSD is engaged and will use the resulting data to compare accident risk between autonomous and human driving. Tesla’s own FSD safety report indicates that accidents are seven times less likely than the US human‑driver average when the system is active.

The company’s broader profile remained in the spotlight as well. A separate analysis noted that Tesla could benefit from a new trade agreement under which Canada will reduce tariffs on Chinese‑made EVs from 100% to 6.1%, with quotas on imports rising over time. Commentators said this could allow Tesla to resume exports from its Shanghai plant to Canada, including a Canada‑specific Model Y, after high tariffs curtailed such shipments in 2024. At the same time, OpenAI CEO Sam Altman criticized Tesla’s Autopilot safety record in an online exchange with Musk, referencing US investigations and lawsuits related to Autopilot‑linked crashes.

Financials: Trading Momentum, Policy Headlines and Capital Moves

Major US banks and financial stocks were active amid a mix of company‑specific and policy updates. Goldman Sachs drew attention after director David Viniar sold more than $65 million of stock following a roughly 36% six‑month share price rally. Regulatory filings showed Viniar still holds about $162.9 million in Goldman stock, and commentary framed the transaction as portfolio rebalancing rather than a strategic shift. JPMorgan Chase shares were in focus after President Trump filed a $5 billion lawsuit in state court alleging the bank “debanked” him for political reasons, while analysts at Evercore ISI reiterated a Buy rating on JPM following its latest quarterly results and highlighted strong customer growth across checking, cards and wealth management.

In Washington, Ascendiun CEO Paul Markovich, who leads the nonprofit parent of Blue Shield of California, told a House subcommittee that the US healthcare system is “too expensive” and “failing” many Americans, urging structural reforms and shared accountability among insurers, hospitals, physicians and drugmakers. Separately, wealth manager Cetera said it had acquired Darnall Sikes Wealth Partners, a $1.9 billion Lafayette, Louisiana–based advisory team, into its Avantax RIA channel, continuing a push to expand its fee‑based registered investment adviser footprint.