US stock markets rose Monday, mainly thanks to the good performance of shares of technology companies. The S&P 500 rose by 0.55% and the Nasdaq—by 1.24%. The shares in Nvidia, AMD, and Micron Technology rose after Microsoft announced a major investment in artificial intelligence (AI). Shares of auto companies also rose, in part on the perception that there is a view that the incoming Trump administration may soften its stance on customs tariffs, but the Dow Jones edged down 0.06%

US stocks fell Tuesday, mainly due to inflation concerns among investors, with the S&P 500 losing 1.11% and the Nasdaq—1.89%. Recent reports have shown more job openings and strong growth in the services sector, suggesting that inflation may persist longer. This has fueled fears that the Federal Reserve will not cut refinancing rates in the near future. Rising US Treasury bond yields have also weighed on stocks, especially tech companies’ stocks.

On Monday, the yield on 30-year US Treasury bonds reached the highest level in the last one year—4.86%. This was due to lower demand at Treasury auctions and higher inflation expected in the US, and this will hurt the bond market. The yield on the 10-year Treasury bonds also rose—to 4.64%—, the highest since May 2023, and it is expected to increase to up to 5% in the future. Most investors expect the government bond yields to continue rising in 2025.

The Nvidia shares hit an all-time high of $153.13 after company CEO Jensen Huang's speech on Tuesday. During the day, the price of the company's shares increased by 2%. Huang unveiled new products, including a $3,000 AI-powered PC, new gaming graphics cards, and updates in autonomous technology and robotics. Also, he hinted at major advances expected in AI. Analysts believe that Nvidia's market value could increase by 35% to up to $5 trillion in the next 12-18 months..

In addition, Huang noted that the development of quantum computers that can provide practical and useful results may take 15-30 years. After that, the price of shares of companies related to quantum computing fell sharply. Shares of IonQ, which had risen more than 300% in the past year, fell 10% after Huang's comments. Shares of Quantum Computing Inc., D-Wave, and Rigetti also fell more than 14% in premarket trading.

Shares of Aurora Innovation rose more than 35% after the company announced a new deal with Nvidia and Continental to develop self-driving trucks. Aurora will partner with Nvidia to develop the software needed for these trucks, and Continental will help prepare the hardware needed to build them starting in 2027. Aurora CEO Chris Urmson said the thousands of driverless trucks on the road will transform the transportation industry. In addition to this deal, Nvidia announced that it will work with Toyota and Uber to provide self-driving technology for their cars.

The US National Highway Traffic Safety Administration is investigating the Tesla cars’ new Actually Smart Summon feature, as it may cause accidents. This feature enables owners to remotely move their car using the app, but there have been reports of crashes where the system failed to see objects such as parked cars. Tesla shares fell 3% after the announcement on the aforesaid investigation. Tesla has big plans for self-driving cars in the future, but these safety issues could affect their progress.

Eurozone inflation rose to 2.4% in December 2024, up from 2.2% in November, due to higher energy prices and increased costs of services such as health care and transport. This increase, however, is not expected to prevent the European Central Bank (ECB) from continuing to cut interest rates. The ECB still expects inflation to fall to its 2% target by the second half of 2025 as economic growth remains weak and job growth is slowing down. The ECB is still expected to cut interest rates, likely on January 30, 2025.

The number of people filing for unemployment benefits in the US fell to 211,000, the lowest level in eight months, and a sign of a strong labor market. The unemployment rate in December is expected to remain at the level of 4.2 percent. This flexibility in the labor market helps keep the economy on a healthy path and makes it less likely that the Federal Reserve will aggressively cut interest rates.

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