By Mike Dolan
Feb 25 -
What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Tuesday saw software stocks stage something of a rally, weirdly driven by the thing that's beaten them down for the past month: a sweep of new plug-ins from AI lab Anthropic.
This time around, the market focused more on the partnerships between some of these companies and Anthropic, rather than the existential threat AI could pose.
I’ll get into that and more below.
But first, check out
my latest column on why AI isn't the only thing driving the global economy.
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ANOTHER DAY, ANOTHER AI MOOD SWING
Even though many software stocks caught a break yesterday, others affected by Anthropic's new tools were less fortunate. HR software firm Workday fell 10% overnight, with a downbeat revenue forecast aggravated by the fact that HR tasks were listed among the targets of Anthropic's new gizmo.
While the broader rebound may not address what the viral scare stories suggest will be a wipeout of white collar workers, it does suggest that perhaps many of these companies may survive and thrive with AI after all.
At the very least, it suggests a rethink about the extent of the selloff in many sectors in recent months, and maybe nodded a little to today's big event - Nvidia's results.
The world's most valuable company reports after the bell, and for all the ifs and buts about AI, there's no doubt about the torrent of capex earmarked for chips, computing hardware, bricks-and-mortar data centers and the energy needed to drive it.
The chip giant is expected to forecast a 64% jump in first-quarter revenue to about $72 billion dollars. But, as ever, the bar to impress is rising all the time, and Nvidia is facing increasing competition from the likes of Alphabet and AMD.
Chinese demand may also be in focus given the recent ebb and flow of government restrictions on the sale of its top chips there.
Even though Nvidia shares are only up 2% for the year so far, options markets are braced for a post-earnings swing of plus/minus 5%. The scale of the firm these days means that's a swing of about $230 billion in market cap either way.
After the S&P 500's 0.77% jump on Tuesday, futures were up ahead of today's bell. Elsewhere, Asia's stocks motored higher on Wednesday amid a growing focus on what AI capex is doing for companies aiding the infrastructure buildout.
South Korea's Kospi benchmark, which has risen a staggering 45% already this year, rose 2%, while Japan's Nikkei gained 2.2%.
That Japanese stock move was aided by another fall in the yen to its lowest in two weeks after news that Japanese Prime Minister Sanae Takaichi's nominees to two Bank of Japan board positions were seen as 'reflationists' - something of a mirror of the Fed story stateside, perhaps.
Meantime, the yuan strengthened further to near three-year highs against the dollar as German Chancellor Friedrich Merz became the latest European leader to visit China this year. The offshore yuan has now risen 3% over the past month.
There were few market takeaways from President Trump's broad-brush State of the Union speech late Tuesday, but the AI theme made its way in as Trump told Big Tech companies they must build their own power plants for their data centers. Trump is clearly sensitive to the pressure on household electricity prices from the huge additional demand on the grid.
Trump also promised $1,000 contributions next year to Americans not covered by 401k retirement accounts - money likely to find its way directly to the stock market.
Chart of the day
With its earnings update due later on Wednesday, Nvidia revenue is expected to have jumped 68% to $66 billion, and analysts assume its first-quarter revenue forecast will show another 64% jump to $72 billion.
The company has surpassed sales expectations for the past 13 quarters, though the scale of those beats has shrunk, competition in AI chips is rising, and the bar to impress moves ever higher. After powering much of the U.S. stock market rally for the past three years, Nvidia's stock has risen about 2% so far in 2026.
Today's events to watch
* U.S. corporate earnings: NVIDIA, Lowe's, Salesforce, Zoom
* U.S. 5-year note auction
* Richmond Fed's Thomas Barkin, Kansas Fed's Jeffrey Schmid, and St. Louis Fed's Alberto Musalem all speak
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan)
