By Richard Thompson

European stocks edged higher on Tuesday as corporate earnings and geopolitical developments remained in focus.

The pan-European Stoxx 600

closed 0.15% higher, pulling back from earlier highs and continuing the narrow trading range seen this week.

The U.K.’s biggest defense company BAE Systems closed up 4.7% after U.K. Prime Minister Keir Starmer pledged to spend an additional £13.4 billion every year from 2027 on defense.

In a Tuesday address to parliament, he added that the government plans to raise defense spending to 2.5% of GDP by 2027, noting “the biggest sustained increase in defense spending since the end of the Cold War.”

Matt Dorset, equity analyst at Quilter Cheviot, said BAE Systems was likely the biggest beneficiary of the news with 26% of its sales originating in the U.K. He also named Qinetiq, Babcock and Chemring as names to watch.

In other corporate news, Novo Nordisk gained 3%. On Monday, American telehealth firm Hims & Hers said in its earnings call that it may stop selling compounded semaglutide — an alternative to weight-loss drugs like Novo Nordisk’s Ozempic and Wegovy.

Medical devices manufacturer Smith & Nephew, meanwhile, gained 6% after the company reported a 4.7% year-on-year increase in revenue for 2024. It cited its “transformative 12-point plan” as driving the performance and said revenue growth for 2025 was expected to be around 5%.

Germany’s DAX index initially continued its upward trend on Tuesday following the result of the German federal election, though slipped in late deals to close 0.13% lower.

The conservative Christian Democratic Union and the allied Christian Social Union (CDU/CSU) secured the largest share of votes in the election on Sunday, with the alliance’s candidate Friedrich Merz set to take over from Olaf Scholz as chancellor of Europe’s largest economy.

Across the Atlantic, U.S. President Donald Trump on Monday said that tariffs on Canadian and Mexican goods “will go forward,” when a 30-day reprieve on the levies expires next week. The president also doubled down on his plans to impose so-called reciprocal tariffs on America’s trading partners.

Asia-Pacific markets traded lower overnight after Wall Street fell Monday, as Trump tariffs stoked a risk-off mood.

On Wall Street, the S&P 500 was trading in the red for a fourth day, taking a leg lower after the Conference Board’s consumer confidence survey came in much weaker than economists’ estimates.

By Richard Thompson

U.S. stocks opened the week higher but quickly turned red, struggling to recover some ground lost at the end of last week after weak economic data and looming tariff threats kept investors skittish.

A survey last week showed consumer are feeling more pessimistic, with inflation fears creeping up again amid President Donald Trump's constant threats of broad tariffs. Another economic report showed the services sector, which has been strong the past couple of years, fell into contractionary territory. All those worries pushed all three major U.S. stock indexes into the red last week, despite back-to-back record highs in the broad S&P 500 earlier in the week. The blue-chip Dow ended up posting the biggest weekly loss since October.

At 9:55 a.m. ET, the S&P 500 slipped 0.096%, or 5.76 points, to 6,007.37; the Dow inched up 0.097%, or 42.34 points, to 43,470.36 and the tech-heavy Nasdaq eased 0.43%, or 83.22 points, to 19,440.79. The benchmark 10-year Treasury yield fell to 4.418%.

Major events expected this week

Investors are likely biding time on Monday, setting up for a couple of major events this week. Among them, semiconductor darling Nvidia is due to report earnings after the market close on Wednesday. It'll be Nvidia's first earnings report since China's DeepSeek artificial intelligence model roiled the markets. Nvidia shares were last up 2%.

The DeepSeek AI model is supposed to rival its U.S. counterparts OpenAI and ChatGPT but built on a shoestring budget. That cast doubt on whether U.S. companies need to spend billions on AI and if they do, how they make back what they spent and more.

Aside from company news, investors also will focus on another inflation report due Friday. January's consumption expenditures index is due Friday morning and is the Federal Reserve's preferred inflation gauge to determine interest rate policy. Most economists have pared back expectations for rate cuts this year, with a growing number even saying the rate cutting cycle is over.

Corporate news

While investors wait for the main events later this week, they're looking at some of the morning's movers. They include:

- Domino’s Pizza shares fell nearly 6% after the pizza chain's earnings during the final few months of last year fell below analysts' forecasts.

- Microsoft stock dipped 1.42% after TD Cowen said in a report the software giant has begun canceling leases for a substantial amount of datacenter capacity in the U.S., which could reflect concerns about whether it’s building more AI computing than it will need over the long term. Earlier this year, Chinese upstart DeepSeek released a competitive open-source AI model at a fraction of the cost, which had for a time, many investors questioning whether U.S. companies' massive AI spending has been necessary. Microsoft denied any changes to its data center strategy, according to Jefferies analysts.

- Apple shares edged up fractionally after the company said it plans to spend more than $500 billion over the next four years to expand its manufacturing footprint in the U.S. Plans include hiring 20,000 workers and a new factory to produce servers supporting Apple Intelligence, the company’s generative-AI system.

Cryptocurrency

In a sign of easier regulation around cryptocurrency, Robinhood said the Securities and Exchange Commission dropped its investigation into the online trading platform's cryptocurrency unit with no intention of moving forward with an enforcement action.

However, Bitcoin was last down 1.2% at $95,144.04, still struggling to break out of a range with $100,000 holding at the top.