Apple Jumps on AI Optimism as Markets Brace for PCE Data and Looming U.S. Tariffs

Markets Hold Steady as Investors Await Key PCE Data

Global stocks stabilized Friday after a turbulent week driven by China’s new AI model and looming U.S. tariffs on Mexico and Canada. Apple’s strong sales forecast lifted sentiment, with European stocks up 0.4% and Wall Street futures rising up to 0.7%.

Tech stocks, which took a hit earlier in the week due to China’s DeepSeek AI launch, recovered as Microsoft and Meta defended their AI spending. Meanwhile, the U.S. dollar strengthened, gold hit record highs, and the Mexican peso and Canadian dollar remained pressured ahead of potential trade tensions.

Will PCE Show Inflation Is Cooling?

Markets are laser-focused on the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge. Forecasts suggest:

Headline PCE: +0.3% (MoM), +2.6% (YoY)

Core PCE (excludes food & energy): +0.2% (MoM), +2.8% (YoY)

A lower-than-expected reading could reinforce the recent cooling trend, while a stronger print may raise concerns about inflation persistence. Treasury yields edged higher as traders positioned ahead of the release.

Will U.S. Tariffs Shake Global Markets?

President Donald Trump confirmed 25% tariffs on Mexico and Canada will take effect on February 1. However, oil imports may be exempt depending on trade negotiations.

Mexico and Canada have pledged retaliation, which could push up prices for U.S. consumers. The news lifted the U.S. dollar but pressured the peso and Canadian dollar. Brent crude slipped 0.3% to $76.70 per barrel, while gold hit a record $2,800.99 before stabilizing.

Apple’s AI Strategy Sparks Investor Confidence

Apple shares jumped 3.14% after an optimistic sales forecast signaled a potential iPhone recovery. Despite iPhone sales slipping to $69.14 billion, CEO Tim Cook highlighted AI features boosting demand in key regions.

Sales in China dropped to $18.51 billion, missing forecasts, but Apple’s services revenue surged 13.9% to $26.34 billion, reinforcing its growing reliance on subscriptions. While Apple lags behind rivals in AI, analysts see long-term benefits from its strategy.

What’s Next for Investors?

Today’s PCE report will be a major market driver. If inflation data shows continued cooling, traders may grow more confident in a stable economic outlook. However, a hotter print could shift sentiment, strengthening the U.S. dollar and gold while weighing on risk assets.

Meanwhile, tariff concerns remain a wildcard. If tensions escalate, expect further volatility in currency and commodity markets.

For now, investors should stay cautious, focusing on inflation data and trade developments while watching AI-driven tech opportunities.

More Information in our Economic Calendar.