U.S.-China Tariffs Spark Global Economic Concerns; Palantir Soars on Strong Q4 Results; Merck Slides Amid Lowered Guidance | MarketReader Minute
Trade tensions escalate as U.S. tariffs on China spark retaliation, raising fears of a prolonged trade war and impacting global economic growth ahead of key labor market data releases. While Japan's bond yields hit 14-year high amid shifting safe-haven demand.
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Tuesday, February 4
Some of the largest macro moves in the market today: Oil (WTI) -1.6%. Gold +0.7%. Noteworthy US mega-cap moves today: Exxon Mobil Corp (XOM) -0.7%.
Recent developments in global markets are heavily influenced by ongoing trade tensions, particularly between the United States and China. Following President Trump's announcement of a 10% tariff on Chinese imports effective February 4th, China retaliated with its own tariffs on U.S. goods, including coal and liquefied natural gas, set to begin shortly after. This escalation has heightened fears of an extended trade war that could impact economic growth globally.
In addition to these geopolitical factors, key economic data releases are anticipated today which may further influence market sentiment. The JOLTS Job Openings report is expected at 15:00 GMT; economists predict job openings will decrease slightly from November's figures. This information could provide insights into labor demand trends ahead of Friday’s Nonfarm Payrolls release.
Market reactions have been mixed as investors digest both the implications of new tariffs and upcoming economic indicators while also responding cautiously due to uncertainty surrounding future Federal Reserve monetary policy adjustments amidst fluctuating inflation expectations linked directly to these trade dynamics.

iShares 20+ Year Treasury Bond ETF (TLT) [-1.1%]
The iShares 20+ Year Treasury Bond ETF (TLT) has experienced a notable decline of approximately 1.1% since Monday, currently priced at $88. Social media discussions reveal heightened bearish sentiment, as TLT's short interest has reached an all-time high. Over the past five years, TLT has dropped significantly, with a 40% decline noted. The ETF is also highlighted for its monthly dividend payout of $31 per share. Market sentiment has been further influenced by a recent decline of about 0.3% in the US 30Y Treasury Bond, coinciding with President Trump's decision to postpone tariffs on imports from Canada and Mexico. This shift has decreased demand for safe-haven assets, including TLT, amid escalating trade tensions stemming from China's new tariffs on U.S. goods. Additionally, the US 5Y Treasury Bond has also dropped, reflecting broader market sentiment affecting longer-term bonds like TLT.
Bitcoin (BTC/USD) [-2.0%]
Bitcoin's price has dropped significantly, currently reflecting a daily return of -2.0%. This follows a notable rebound in the cryptocurrency market, where Bitcoin had briefly surpassed $100,000 after falling below $92,000. The recent price movements coincide with President Trump's temporary pause on tariffs against Canada and Mexico, which has eased some trade tensions. El Salvador has increased its Bitcoin holdings, adding 11 BTC to its Strategic Bitcoin Reserve, now totaling 6,067 BTC. Concurrently, Bitcoin's hash rate has reached an all-time high of 833 EH/s, indicating improved network security. Ethereum has also seen a decline of approximately 2.49%, mirroring Bitcoin's recent performance and reflecting broader market sentiment within the cryptocurrency sector.


PLTR | +23.3% | +53.6B
Palantir Technologies Inc | Application Software
Palantir Technologies Inc. reported fourth-quarter results that surpassed analyst expectations, generating revenue of $827.52 million, a 36% increase year-over-year, exceeding the consensus estimate of $775.91 million. Adjusted earnings per share rose to $0.14, beating expectations of $0.11. U.S. commercial revenue surged 64% year-over-year to $214 million, with total customer count increasing by 43%. The company provided first-quarter guidance of $858 million to $862 million, above the analyst forecast of $799.35 million, and anticipates full-year 2025 revenue between $3.74 billion and $3.76 billion, exceeding the estimated $3.52 billion. Following these results, multiple analysts raised their price targets significantly, with Bank of America adjusting its target from 90 to 125. Shares surged over 22% in after-hours trading, reaching highs above 103.41 and a market capitalization surpassing $200 billion.
MRK | -7.8% | -18.3B
Merck & Co Inc | Pharmaceuticals
Merck & Co Inc reported its fourth-quarter earnings, disclosing adjusted EPS of $1.72, which was below the consensus estimate of $1.81. The company's revenue reached $15.6 billion, surpassing expectations of $15.47 billion. However, Merck's guidance for 2025 sales was lowered to between $64.1 billion and $65.6 billion, falling short of the anticipated $67.36 billion. Additionally, the company announced a temporary pause in shipments of its HPV vaccine Gardasil to China, contributing to concerns about future sales. Key product sales also declined, with Gardasil experiencing a 17% drop and Januvia/Janumet sales decreasing by 38%. Following these developments, Merck's stock price fell significantly, dropping approximately 8% in pre-market trading.
PEP | -2.4% | -4.8B
PepsiCo Inc | Soft Drinks & Non-alcoholic Beverages
PepsiCo Inc reported its fourth-quarter results, revealing a core EPS of 1.96, surpassing the estimate of 1.94. However, net revenue fell short at 27.78 billion, compared to the expected 27.89 billion, reflecting a slight year-over-year decline. Revenue from Frito-Lay North America and Quaker Foods North America each dropped by 2.1%. The company trimmed its full-year outlook, projecting low-single-digit organic revenue growth. Despite these challenges, PepsiCo announced a 5% increase in its annualized dividend to 5.69 per share, effective with the June payout. Following the earnings announcement, shares declined by approximately 1.25% in premarket trading, with further discussions on social media highlighting the missed revenue estimates and subdued performance trends in North America amid ongoing impacts from a product recall in the Quaker Foods division.
ILMN | -4.5% | -901.9M
Illumina Inc | Life Sciences Tools & Services
Illumina Inc's shares are under pressure, trading lower after being added to China's unreliable entities list. This decision raises concerns about potential sanctions and tariffs affecting U.S. companies operating in China. The geopolitical situation marks a significant escalation in trade tensions, with Illumina identified as an early casualty. Social media discussions reflect substantial concern regarding the operational challenges Illumina may face due to its status in China. Additionally, the company is expected to announce its Q4 FY2024 earnings on February 6, 2025, with an EPS estimate of $0.92 and revenue estimate of $1.1 billion, following a previous EPS of $0.14.
PYPL | -7.2% | -6.2B
PayPal Holdings Inc | Transaction & Payment Processing Services
PayPal Holdings Inc reported its fourth-quarter earnings, revealing adjusted earnings per share of 1.19, exceeding the consensus estimate of 1.12. Revenue reached 8.37 billion, surpassing expectations of 8.26 billion. However, total payment volume was slightly below forecast at 437.8 billion, compared to the expected 438.64 billion, and adjusted operating margins contracted to 18%, down from 18.3% year-over-year. The company announced a new $15 billion stock repurchase program and provided guidance for 2025, projecting adjusted EPS between 4.95 and 5.10, above analysts' expectations of 4.90. Following the earnings announcement, PayPal shares declined significantly in premarket trading, reflecting mixed market reactions despite the positive earnings results.
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