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Stocks Rebound and Market Outlook After AI and Economic Uncertainty

Stocks rebounded strongly this week after a turbulent period driven by ongoing AI investment concerns and economic uncertainty. The S&P 500 rose 1.97% on Friday, marking its best day since May, while the Nasdaq surged 2.18%, although many tech stocks still experienced significant losses, collectively shedding nearly $1 trillion in market value over the week. Major tech companies like Amazon, Microsoft, Meta, and Alphabet announced plans to spend around $650 billion on AI and data center expansion, which contributed to the recent sell-off, with Amazon's stock dropping 12% since Monday. Despite the tech sector's decline, industrial and energy stocks performed well, buoyed by expectations of high demand for data center services. Nvidia's shares soared nearly 8%, boosting its market valuation above $4.5 trillion, supported by CEO Jensen Huang's optimism about AI spending. Apple also gained 7%, largely unaffected by the AI sell-off, as it relies on cloud services from third-party providers. The Dow Jones Industrial Average hit an all-time high of 50,000 for the first time, sparking celebrations from President Trump, though market experts caution that the broader market still faces risks. The broader market, represented by the S&P 500, has gained less than 1% for the year. In the cryptocurrency space, Bitcoin experienced extreme volatility, swinging nearly $10,000 in a day, while gold prices rose above $5,000 an ounce as investors sought safe-haven assets amid market turbulence. The week also saw positive developments such as QuantumScape launching a new battery production line, and the Nikkei 225 in Japan surged following a presidential election. Market watchers are awaiting key economic reports, including the January jobs report and inflation data, which will influence Federal Reserve interest rate decisions. Meanwhile, global tensions, such as China's urging its banks to reduce US bond holdings and easing Middle Eastern oil tensions, continue to impact markets. Overall, while the Dow's milestone indicates strong market performance, experts warn that risks remain, and the market is not yet out of danger.

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