In Tuesday market trading, stocks looked like they would end the day sharply lower. Other than a sudden rally in the last 10 minutes of trade, the Dow Jones (DJI), Nasdaq (QQQ), and S&P 500 (SPY) wavered throughout the day. Geopolitics will increase uncertainties in the coming weeks. Trump’s ‘Don-roe Doctrine’ is in focus, relating to Venezuela and Iran. Traders reacted by buying energy companies, including ConocoPhillips (COP), Chevron (CVX), and ExxonMobil (XOM).
The financial institution and credit card sectors fell due to a Trump-related headwind. The President wanted credit card companies to cap interest rates at 10%. Investors reacted negatively to the proposed increase in regulation. Visa (V) and Mastercard (MA) fell by 4.46% and 3.76%, respectively. This erases the rally both companies enjoyed in December. Shares are trading at levels not seen since early December.
The mainstream media picked up comments Trump made about higher hydro prices. The president said that he “never want(ed) Americans to pay higher electricity bills because of Data Centers.”
The comment is ominous. Utilities, like chip producers, will prioritize sales to the highest bidder. If AI data centers are willing to pay a higher rate, it would increase electricity bills for homeowners.
Nvidia (NVDA) offers a solution. Its next-generation AI chip, Vera Rubin, uses less power while offering more compute. The bad news is that customers who bought last-generation chips will need to write off their investments sooner. Some firms, including those in the Magnificent 7, changed their depreciation rate to six years instead of three.
