Stock Market Today: Dow 50,000 and the Tech Shakeout as S&P 500 Rebounds While Nasdaq Lags

Stock Market Today – Dow 50,000 with a new leadership core

Index tape – Dow and cyclicals rip higher while Nasdaq stays capped

The cash tape is brutally clear: the Dow Jones Industrial Average has blown through 50,000 for the first time after a roughly 2.5% weekly gain, while the S&P 500 ended the week essentially flat and the Nasdaq Composite dropped around 1.8%, still pinned below its 50-day moving average. Under the surface, the picture is far healthier than the headline Nasdaq print suggests. The small-cap Russell 2000 climbed about 2.2%, helped by a 3.6% surge off its own 50-day, and the Invesco S&P 500 Equal Weight ETF RSP printed a new high with a 2.1% weekly gain, signalling that breadth is improving and the rally is rotating rather than dying. The volatility gauge S&P 500 VIX slid toward the high-teens, reflecting aggressive dip-buying after the tech washout.

From an allocation point of view this setup says: overweight the Dow complex and equal-weight S&P, keep core S&P 500 exposure as a neutral anchor, and treat the Nasdaq as a trade rather than a blind long until it decisively reclaims the 50-day and starts leading again.

Sector rotation – software and crypto punished while old-economy winners finally outperform

The week was defined by a violent sector rotation, not an index-level breakdown. High-multiple software and crypto-linked names were hit hardest: the S&P 500 software and services cohort dropped roughly 15% in just over a week, IGV plunged 8.7%, while high-beta innovation funds like ARK Innovation ARKK and ARK Genomics ARKG lost around 6% and 5.4% respectively. At the same time, cyclicals and defensives that had lagged the AI mania finally got their turn. Metals and miners via XME advanced about 3.2%, airlines through JETS soared roughly 11.5%, homebuilders in XHB jumped 8.2%, and energy via XLE added 4.3%. Healthcare (XLV) gained close to 2%, industrials (XLI) almost 5%, and financials (XLF) about 1.5%, with regional banks in KRE up around 7% as the market leaned toward a soft-landing narrative rather than a hard recession trade.

This is classic late-cycle rotation inside an ongoing bull market: profits are coming off crowded AI and speculative pockets and moving into cash-generative cyclicals, banks, industrials, travel and staples. The message is to raise exposure to XLI, XLE, XLF, XHB, XME and pare exposure to IGV, ARKK-style high beta and any software name whose valuation still assumes flawless AI upside.

AI and software shakeout – Microsoft, Amazon and the software complex take a reality check

The pressure point is the AI narrative itself, especially where expectations ran far ahead of the cash flows. Microsoft shares have been hit with an unusual downgrade: Stifel cut the stock to Hold and slashed the target from $540 to $392, warning that fiscal-2027 consensus is too aggressive given real-world Azure capacity constraints, heavy AI capex and intensifying competition from Google Cloud and Anthropic. Their capex forecast for Microsoft’s fiscal 2027 has been lifted toward roughly $200 billion, versus Street expectations closer to $160 billion, forcing a reset in gross-margin assumptions from the high-60s toward the low-60s and implying a period where operating leverage stalls despite solid revenue growth.

Amazon has become the second big symbol of this reset. Roughly $240 billion in market cap has been wiped from Amazon (NASDAQ:AMZN) as the stock plunged about 10% in a single session on the back of a planned ~$200 billion AI-infrastructure spend. AWS is still growing at about 24% year-on-year, but Azure and Google Cloud are accelerating faster into generative-AI workloads, and Amazon lacks both a flagship frontier-model lab and a truly equivalent OpenAI-style anchor partnership. Analysts now openly talk about the need for an incremental $50 billion commitment just to stay competitive at the model layer, on top of the existing capex surge. That is a headwind for free cash flow and the multiple in the near term, even if the long-term franchise remains elite.

Beyond these two giants, the entire software space is being asked a tough question: who actually monetises AI, and who simply spends on it? Earnings disappointments across key software names and the 15% one-week drawdown in the software index are the market’s way of marking down anyone with vague AI stories and thin proof of durable incremental demand. The right stance is to be highly selective: core, fortress-balance-sheet platforms like Microsoft stay at Hold, with no need to panic if already owned but no urgency to chase, while richly valued, lower-quality software names with slowing growth deserve a Sell tag until they prove they can convert AI into high-margin revenue instead of just capex.

AI infrastructure – Nvidia, AMD, Taiwan Semi and storage quietly seize the high ground

In sharp contrast, the companies that build the AI infrastructure rather than just talk about it came out of this week stronger. Nvidia (NASDAQ:NVDA) erased much of its drawdown with a roughly 7.9% jump in a single session to about $185, helping the VanEck Semiconductor ETF SMH finish the week down less than half a percent despite the wider tech selloff. The buying was not narrative-driven; data-center GPU demand is described as “through the roof,” order books remain deep, and the margin profile on the current H-class and next-gen B-class accelerators keeps getting better, not worse.

Advanced Micro Devices (NASDAQ:AMD) sold off into and after earnings but the underlying story remains aggressively positive. Management reiterated expectations for around 60% compound growth in data-center revenue and roughly 35% total sales CAGR over the next several years, which Wall Street translates into EPS power north of $20 by 2030. Truist now models profits compounding at roughly 45% per year and values the stock on the basis of 2030 earnings at about 11x, which is cheap for that kind of growth trajectory. The Q4 “noise” – including a one-off China-related SKU helping the beat – does not change the structural fact that AMD’s MI-series accelerators and 5th-gen EPYC CPUs are finally getting scaled deployments at hyperscalers. That is a Buy on weakness profile with a multi-year time horizon.

At the foundry and storage level, Taiwan Semiconductor (NYSE:TSM) and Western-style storage names are now direct beneficiaries of Google, Amazon and Microsoft’s AI arms race. TSM shares ripped higher to the mid-$340s after rebounding from the 10-week line, clearing the bulk of a short consolidation above a prior base just as January sales numbers approach. Management has already guided to strong double-digit growth in advanced nodes driven by AI ASICs and data-center CPUs from Nvidia, AMD, Broadcom, Apple and others. On the storage side, leading HDD and NAND producers are openly targeting exabyte growth above 25% per year through 2030 with a mix heavy in high-capacity drives for AI data lakes and training sets, implying revenue growth above 20% and the potential for gross margin above 50% as the mix shifts to premium drives.

The verdict across AI infrastructure is straightforward: NVDA, AMD and TSM, along with the top storage vendor, remain Buys on any broad market pullback, because their capex plans are being paid for by hyperscaler customers whose own stocks are now getting punished for that same spending.

Mega-cap winners and laggards – Apple steadies, Tesla remains optionality, Palantir and Trade Desk diverge

Outside the AI-infra core, performance among big U.S. names is splitting. Apple (NASDAQ:AAPL) has quietly put in a solid week, jumping 7.2% to $278.12, blasting back above its 50-day and pushing just beyond a short-term high at 277.84, with an official cup-base buy point up at 288.62 still in play. Services are doing the heavy lifting: App Store headline growth is mid-single digits but underlying segments like Music, iCloud, payments and licensing are running double-digit increases, and the latest quarter delivered around 14% Services growth with an 18% EPS increase – the third straight quarter of accelerating earnings. Top-tier analysts now carry price targets around $289–$330 and still rate the stock Outperform based on the durability of high-margin Services and the coming AI-layer integration into the device base. At current levels Apple is a Hold/Accumulate – not distressed, not cheap, but still a core name justified by the earnings trend.

Tesla (NASDAQ:TSLA) is turning into a leveraged bet on autonomy rather than just a car company. Shares bounced roughly 3.5% to the low-$400s as Wolfe Research laid out a robotaxi scenario with up to $250 billion in revenue by 2035 under assumptions of 30% AV penetration, 50% share for Tesla and $1 per mile pricing. Discounted back, that set-up implies on the order of $900 billion in equity value from the robotaxi business alone, or more than $250 per share of optionality, before even counting Optimus or energy storage. At the same time, the near-term numbers remain pressured: margins are squeezed by pricing dynamics and higher input costs, the FSD monetisation model is still evolving, and the stock will need a flawless execution path on unsupervised FSD and robotaxis to justify the implied upside. For now Tesla is a high-beta Hold – suitable only if the portfolio can tolerate volatility and binary AI execution risk, not a safe core holding.

Among AI-exposed software names, the divergence is also sharp. Palantir Technologies (NYSE:PLTR) has printed accelerating revenue, especially in U.S. commercial, and expanding operating margins, but even after dropping roughly 27% year-to-date the stock still trades at around 30x forward revenue, multiples higher than any other large-cap software peer. That valuation makes the stock hypersensitive to any cooling of AI enthusiasm or slight slowdown in deal flow. Jefferies continues to rate it Underperform with a target around $70, explicitly arguing that the downside in the multiple outweighs the upside in fundamentals. That is a Sell or avoid for strictly risk-reward reasons, regardless of the genuine product strength.

On the other hand, The Trade Desk (NASDAQ:TTD) has quietly become exactly the kind of AI-era adtech recovery play that the market likes when the price is right. Revenue growth has slowed into the high-teens as more clients build in-house tools and Amazon strengthens its retail ad franchise, and the stock is down almost 80% from peak. Even so, the company is still growing well above GDP, runs a highly scalable platform, and now trades under 15x forward earnings – a multiple usually reserved for ex-growth or shrinking names. If that kind of earnings power is sustained, the risk-reward at these levels is attractive. The Trade Desk deserves a Speculative Buy label for investors willing to sit through volatility as the ad market shifts further toward connected TV and AI-driven targeting.

Banks, industrials and travel – Boeing, JPMorgan and cyclicals become the quiet compounders

The Dow’s breakout to 50,000 owes a lot to exactly the sort of names that were ignored when the AI complex was driving all the returns. Boeing (NYSE:BA) climbed roughly 4% on the week to 243.03, pushing back above a 242.69 breakout level and leaving investors watching a potential high-handle opportunity around the late-January pivot at 254.35. Behind the price, commercial backlog reconstruction and defence and services visibility are steadily improving, even as the market still prices in execution and regulatory risk on the narrow-body side. The reward-to-risk profile at current levels is attractive; Boeing belongs in the Buy on dips bucket as long as the stock holds above its key support area.

JPMorgan Chase (NYSE:JPM) gained about 5.4% to 322.40, with Friday’s move above the 50-day signalling an early entry in an emerging base. The stock has not only reclaimed prior breakout levels but is also getting direct benefit from a steeper curve scenario as the Fed pauses further cuts until mid-year. Balance sheet strength, fee diversification and conservative credit underwriting mean JPM remains the premier large-bank exposure. At current valuations versus tangible book and earnings power, JPM is a straightforward Buy when the tape gives you any weakness.

On the broader cyclical front, industrial ETFs like XLI and travel plays via JETS are clearly being used as rotation vehicles. JETS’ 11.5% weekly surge tells you the market is refocusing on forward bookings, falling fuel costs and the reopening of corporate and long-haul capacity rather than obsessing over every macro scare. This is exactly the price-action you want to see in a soft-landing environment: economically sensitive but cash-flow-rich names starting to outperform the crowded tech trade. The direction is Bullish across quality industrials and travel, as long as labour-market and demand data do not collapse in the coming macro prints.

Macro calendar – jobs, CPI and retail sales decide whether this is rotation or something worse

The next few sessions are macro-heavy, and they will decide whether this week’s rebound extends or fails. The delayed January nonfarm payrolls report lands mid-week and is currently expected to show around 70,000 jobs added after a softer-than-hoped December, with the unemployment rate still low but edging higher. A material downside miss would re-ignite hard-landing fears, flatten the curve and hit banks and cyclicals; a stable print keeps the soft-landing/slow-cooling narrative intact and supports the current rotation.

Friday’s January CPI release is even more critical. Headline inflation has been drifting lower, core readings have come in under expectations recently, and the Fed is openly saying that risks around inflation and employment are more balanced. Futures markets are still pricing roughly two additional quarter-point cuts by year-end and no move before June, with the added twist that Kevin Warsh, nominated by President Trump, could be sitting in the Chair by the time those decisions are made. An upside inflation surprise would push back cut expectations, put fresh pressure on high-duration growth equities (especially long-duration software), and further support financials and value. A downside surprise would spark another leg of multiple expansion in quality growth, though given how much AI names have already run, the benefit may skew toward reasonably priced compounders like AAPL and the banks rather than the most speculative AI stories.

On top of that, the December retail sales report – delayed by the earlier shutdown – will confirm whether the U.S. consumer truly powered through the holiday season. Strong sales would reinforce the narrative that corporate earnings in consumer and travel names like Coca-Cola (NYSE:KO), McDonald’s (NYSE:MCD), Ford (NYSE:F), Marriott (NASDAQ:MAR) and Airbnb (NASDAQ:ABNB) have another leg of growth ahead rather than rolling over.

Earnings radar – Cisco, Coca-Cola, McDonald’s and AI-sensitive names set the tone

Earnings season is moving into a quality-but-less-hyped phase. Cisco Systems (NASDAQ:CSCO) is central because it sits at the intersection of AI-driven data-center build-outs and traditional networking refresh cycles. Management has previously highlighted “massive opportunity” in AI infrastructure; the upcoming print will show whether those words translate into backlog and actual revenue. If CSCO can pair flat-to-modest core growth with visible AI orders, the stock is a Buy as an under-owned infrastructure way to play AI without extreme valuation risk.

Coca-Cola (NYSE:KO) is trading near all-time highs into its report after delivering better-than-expected profits and steady volume growth. Margins remain robust despite cost inflation, and the global brand portfolio provides a steady free-cash-flow engine. At this stage KO is a Hold for defensive income – safe, but not a bargain.

McDonald’s (NYSE:MCD) will give another look at consumer behaviour across income segments. The chain has been attracting higher-income customers even as lower-income traffic is pressured, and the market wants to see whether menu mix and pricing can protect margins without killing volumes. If comp trends hold and unit growth continues, MCD remains an attractive Hold/Accumulate as a global consumer-staples hybrid with a real estate kicker.

Beyond those, investors should watch reports from Shopify (NYSE:SHOP), AppLovin (NASDAQ:APP), Datadog (NASDAQ:DDOG), Cloudflare (NYSE:NET), and Robinhood (NASDAQ:HOOD), as they sit directly in the cross-fire between AI optimism, software valuation compression and risk appetite in retail trading and e-commerce. Names that can show clean revenue acceleration and disciplined cost control will be rewarded; any whiff of deceleration will be punished in the current mood.

Crypto, gold and commodities – violent de-risking followed by equally violent short-covering

Bitcoin’s price action this week is the purest sentiment barometer. The token plunged as much as 16.5% on the week, briefly threatening $60,000 in a move described as its steepest single-day fall on record, before snapping back more than 10% on Friday to roughly $70,000. That kind of range in a week confirms that leverage and speculative positioning were stretched. The move also coincided with a brutal shakeout across precious metals: gold and silver sold off sharply after hitting fresh records, then staged powerful intraday rebounds as dip-buyers stepped in around $4,900–$5,000 in gold and traders re-framed the pullback as profit-taking in an ongoing bull trend.

Oil stayed quieter but still drifted lower, with U.S. crude settling near $63.50 a barrel, reflecting persistent worries about global growth and supply dynamics. The takeaway for equities is that cross-asset risk sentiment has shifted from euphoria to more cautious optimism. Crypto miners and high-beta commodity equities remain Avoid at this stage; integrated energy majors with strong balance sheets, high free-cash-flow yields and buyback programs remain Buys on weakness.

Global backdrop – Japan’s ‘Takaichi trade’ and record FTSE 100 highs confirm the equity bid is global

The U.S. is not the only market printing all-time highs. Japan’s Nikkei 225 has surged to around 54,800 as investors embrace the so-called “Takaichi trade”. Prime Minister Sanae Takaichi’s decisive electoral win, billed as the strongest for the LDP since the mid-1990s, gives her a mandate to push reflationary policies and targeted investment in defence, AI and semiconductors. Japanese equities are rallying on the growth impulse, while Japanese government bonds and the yen are selling off on fears of larger deficits. This is a textbook pro-risk, pro-equity, weaker-currency setup, and it reinforces the global rotation into cyclicals and AI-adjacent industrial themes.

In the UK, the FTSE 100 has also notched fresh record closes, around the 10,300–10,350 zone, despite local worries around AI spending and commodity volatility. Investors are buying banks, miners and energy names on both sides of the Atlantic, which confirms that the rotation out of U.S. mega-cap tech is not simply a domestic positioning story; it is a worldwide re-rating of value, income and cyclicals versus long-duration growth.

For a global equity portfolio this argues for modest overweight in Japan and UK large caps alongside U.S. cyclicals, funded by trimming overweight U.S. mega-cap growth and speculative software.

Positioning summary – where the risk/reward is best after Dow 50k and the tech shakeout

Putting all of this together, the picture is not of a market on the verge of collapse but of a bull phase that is finally broadening and forcing discipline in the most crowded trades. The Dow at 50,000 is not a sell signal by itself; it is a sign that banks like JPM, industrials like Boeing, travel, energy and homebuilders are finally getting valued properly. Those are Buys or Accumulates as long as macro data stay in soft-landing territory.

The S&P 500 as an index is a Hold, useful as a benchmark while the real alpha comes from sector rotation. The Nasdaq is a Hold with a bias to reduce in names where multiples still assume AI perfection – particularly undifferentiated software and AI “tourists” – and a Buy on weakness only in the genuine AI infrastructure leaders like NVDA, AMD, TSM and the key storage supplier where capacity and pricing power are visible and backed by actual orders rather than hope.

Within single names, Apple and JPMorgan sit in the core Buy/Hold camp, Microsoft and Amazon in the Hold, valuation-sensitive bucket, Tesla and The Trade Desk in the high-beta Buy only for risk-tolerant capital space, and Palantir, leveraged crypto plays and frothy software names in the Sell or avoid group until earnings and valuations realign.

The next catalyst is the macro trio of jobs, CPI and retail sales. If those land in line with a slow-cooling economy and inflation still edging down, the current regime – Dow and cyclicals outperforming, AI infra beating AI narratives, speculative corners getting disciplined – is likely to continue.

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