Trading results for 25 February 2025

Hope and fear – these are the forces that are now pulling investors in opposite directions. It’s a familiar picture, nothing new here. Investors are hoping for strong financial results from the global leader in high-performance AI chips, Nvidia (NVDA, -2.80%), while fearing that the company might fail to meet expectations. They are also worried about inflation spiralling out of the Federal Reserve’s control, Trump wrecking the U.S. – or even the global – economy with his tariffs, and so on. As we can see, there are more fears than hopes, which is why the market is going down rather than up.

Tuesday marked the fourth consecutive day of decline. Over this period, the broad market index S&P 500 lost nearly 3%, while the tech-heavy NASDAQ Composite dropped over 5% compared to a week ago. The only index putting up some resistance to the ongoing wave of sell-offs was the Dow Jones (DJIA-30), which even managed to post slight gains.

Yesterday, retailers were the key growth drivers for the Dow, with Walmart (WMT, +4.29%) and Home Depot (HD, +2.84%) leading the way. Interestingly, Walmart was not the frontrunner in this duo. The catalyst for the surge in both stocks was Home Depot’s quarterly earnings report, released before the market opened, which exceeded analysts' and investors' expectations.

This sent HD shares higher and lifted WMT as well after its stock had dropped sharply following last Thursday’s earnings release. In short, this dynamic duo performed impressively yesterday, ultimately lifting the index into the green – the Dow Jones closed the day up 0.37%.

Things were far worse for the Dow’s younger counterparts: the S&P 500 and NASDAQ Composite both ended the session firmly in the red (-0.47% and -1.35%, respectively). They had no chance to find support in any positive news. The biggest losers of the day were stocks from the “Magnificent Seven,” dragged down by Nvidia.

However, the worst performer among them was Tesla (TSLA, -8.39%), whose stock broke a strong support level at $325, crashing down to the next marker at $300. The trigger for this sharp decline was data on electric vehicle sales from China’s BYD (unfortunately, its shares trade only on the Chinese and Hong Kong markets), which made it clear that Tesla is currently losing the local market battle to its competitors.

Tesla’s stock was not only the worst performer in the U.S. benchmarks but also in the ITS index family – both in the ITS World Index (ITSW) and the Islamic-compliant ITS Shariah Index (ITSS). While the latter, composed entirely of U.S. stocks, could not withstand the broader market downturn and lost 0.8% for the day, the globally diversified ITSW had a stronger footing. Thanks to its geographic diversification, ITSW not only held its ground but also managed to gain 0.54% by the close.

The best performer in ITSW on Tuesday was another Chinese automaker, Li Auto (LI, +13.20%), which saw its market cap jump by more than 13% in a single day. The catalyst for this surge was the unveiling of the company’s new fully electric SUV, the Li i8. Investors were so impressed that they rushed to snap up Li Auto shares.

Overall, despite some isolated successes (mainly in retail and Chinese stocks), the market remains highly unbalanced. Uncertainty dominates, and the majority of investors are waiting for clearer signals before making any bold moves.