General Market News

Asian stocks rose Monday following Japanese Prime Minister Sanae Takaichi's decisive election victory, which gave her party a two-thirds majority in parliament's lower house. The mandate for expansionary fiscal measures and tax cuts pushed the Nikkei up nearly 4% to a new all-time high above 56,000. U.S. futures held steady after Friday's chipmaker-led rebound, with investors awaiting key economic data including January's delayed employment report.

• Takaichi's Liberal Democratic Party secured over two-thirds of parliament seats, clearing the way for increased spending and tax cuts that drove the Nikkei to surpass 56,000 for the first time
• U.S. chipmakers rallied sharply Friday with Nvidia, AMD and Broadcom all jumping over 7%, while the Russell 2000 gained 3.5% as investors rotated into smaller-cap stocks
• Investors are focused on upcoming U.S. economic data including retail sales and CPI to gauge whether the economy remains soft enough to support hopes for three rate cuts in 2026

S&P Global Ratings has sharply lowered its 2026 forecast for China's primary real estate sales to a 10-14% decline, worse than the 5-8% drop predicted just in October. The ratings agency warns that the property downturn is so entrenched that only government intervention can absorb excess inventory, as oversupply continues despite six consecutive years of unsold completed housing. The slump is particularly concerning as price declines have now spread to China's largest cities, undermining buyer confidence.

• China's property sales fell 12.6% in 2025 to 8.4 trillion yuan ($1.21 trillion), less than half the 18.3 trillion yuan peak in 2021, with the market having accounted for over a quarter of the economy
• Prices are expected to drop another 2-4% in 2026 following similar declines in 2025, with major cities like Beijing, Guangzhou, and Shenzhen reporting at least 3% price declines last year
• Four of the 10 Chinese developers rated by S&P could face downward rating pressure if sales fall 10 percentage points below the base case forecast for 2026-2027

U.S. markets face a critical week with Wednesday's jobs report and Friday's CPI data taking center stage as investors assess the Fed's rate path. Sector rotation continues as tech stocks declined 1.84% (Nasdaq) while the Dow hit a record high at 50,115.68, rising 2.50% on strength in industrials, energy, and financials. Major earnings from Coca-Cola, Cisco, Shopify, and Airbnb will provide key insights into consumer and tech sector health.

• Jobs data Wednesday forecasts +70K payrolls with 4.4% unemployment; Friday's CPI expected +0.3% monthly with core CPI at +0.3%, while annual CPI forecast to ease to +2.5% from +2.7%
• Software stocks have plunged nearly 25% over three months due to AI disruption concerns and surging capital expenditure, while 'old economy' sectors benefit from the strongest U.S. factory activity (ISM) since 2022
• Fed speakers throughout the week (Waller, Bostic, Logan, Hammack) will be parsed for signals on rate cuts, with markets sensitive to hawkish tones as officials signal rates may stay on hold longer

Goldman Sachs warns that the February 2026 stock market sell-off is likely to continue despite a brief Friday rally, with algorithmic funds poised to dump approximately $33 billion in equities if downtrends resume. The warning comes amid mounting concerns over record January layoffs driven by AI investments, trade war instability, and thin market liquidity that could amplify volatility.

• January 2026 saw 108,435 job cuts, up 118% from January 2025 and the highest since the 2009 Great Recession, driven by big tech companies straining capital reserves on AI investments
• Goldman Sachs identifies thin liquidity and dominant net short positions as factors likely to magnify volatility and cause outsized losses in the second week of February
• AI investments require trillions in revenue by 2030 to pay off, a target many experts consider impossible, while major tech companies including Meta (reportedly firing up to 30,000 workers) continue mass layoffs

Michael Burry attributed the February 2026 market sell-off to historic overvaluation, massive AI-related capital expenditures, and minimal AI revenue returns, dismissing claims that Anthropic AI news drove the downturn. Major tech stocks including Microsoft and Amazon fell sharply during the first week of February, with concerns mounting over the mismatch between heavy AI infrastructure spending and actual revenue generation. The market volatility reflects broader investor anxiety about sustainability of AI investments amid slowing growth and margin compression at major technology companies.

• Microsoft and Amazon stocks led 'Magnificent 7' declines, with Amazon falling 13.43% from $242.96 to $210.32 between February 2-9, despite mostly strong earnings results
• AI infrastructure concerns intensified as data center buildouts face electricity shortages, water supply issues, and estimates suggesting up to 50% of facilities could remain dormant due to mismatched capacity and demand
• Nvidia announced gaming chip production cuts due to global memory shortages, highlighting strain on the semiconductor supply chain that previously fueled its core business before the AI boom

U.S. Treasury yields rose at the start of the week as investors prepare for a heavy calendar of delayed economic data releases. The 10-year yield climbed over 2 basis points to 4.231%, while multiple reports postponed by the partial government shutdown are set to be released throughout the week.

• The delayed January jobs report, now scheduled for Wednesday, is expected to show 60,000 jobs added versus 50,000 in December, with unemployment forecast to hold at 4.4%
• Key data releases include December retail sales (Tuesday), January nonfarm payrolls (Wednesday), weekly jobless claims (Thursday), and January CPI (Friday)
• The 2-year yield rose 1 basis point to 4.874% and the 5-year note yield increased over 1 basis point to 3.514%

Japan's Prime Minister Sanae Takaichi and her Liberal Democratic Party won a supermajority in Sunday's election, giving her broad authority to pursue increased spending and tax relief policies. The Nikkei 225 climbed to record highs on Monday as the yen strengthened to 156.88 per dollar, reflecting renewed investor confidence. This positive momentum follows Friday's strong rebound in U.S. markets, where the Dow closed above 50,000 for the first time.

• Takaichi's LDP secured a two-thirds supermajority in the Lower House, enabling her to boost spending and suspend some food-related taxes
• The Nikkei 225 crossed 57,000 in early trading for the first time, while the yen strengthened against the dollar
• U.S. markets rallied Friday with the Dow breaking 50,000, the S&P 500 gaining 1.97% back into positive territory for 2026, and tech stocks leading despite Big Tech losing over $1 trillion collectively in the past week

President Trump predicted the Dow Jones Industrial Average will reach 100,000 by the end of his term in January 2029, following the index's historic close above 50,000 for the first time on Friday. Trump claimed he was 'right about everything' and credited his tariff policies for driving market gains and national security.

• The Dow closed past 50,000 on Friday, which Trump says is three years ahead of schedule based on what 'experts' predicted for the end of his term
• A study by the Kiel Institute for the World Economy found that about 96% of tariff costs have been absorbed by American consumers and businesses rather than foreign exporters
• Trump's comments come as the Supreme Court is expected to decide on a high-profile case challenging the constitutionality of his sweeping tariff powers

Japan's Prime Minister Sanae Takaichi and her Liberal Democratic Party won a decisive election victory on Sunday, securing a two-thirds supermajority in the Lower House. The result strengthened the yen to 156.88 per dollar and pushed Japanese stocks to record highs on Monday, as investors gained confidence in Takaichi's policy agenda including increased defense spending.

• Big Tech companies collectively lost over $1 trillion in market value over the past week, with Amazon alone shedding more than $300 billion in market capitalization
• U.S. markets rebounded strongly on Friday with the Dow closing above 50,000 for the first time, gaining 2.47%, while the S&P 500 rose 1.97% back into positive territory for 2026
• The U.S. and India released a framework for a trade deal, with Trump removing a 25% tariff on India for buying Russian oil, though India remains resistant to U.S. demands on import restrictions

Investors are rotating away from high-flying technology and AI-related stocks toward cheaper, smaller companies and economically sensitive sectors amid growing concerns about AI profitability and market volatility. The shift reflects increased risk aversion after years of mega-cap tech dominance, with the Russell 2000 surging 3.5% on Friday while some Magnificent Seven stocks lagged. Questions persist about AI hyperscalers' ability to generate returns on massive investments and potential disruption to legacy businesses.

• The Russell 2000 small-cap index outperformed with a 3.5% gain on Friday, while the iShares Expanded Tech-Software Sector ETF fell 9.1% for the week despite a late rally, and bitcoin dropped to a 16-month low of $60,017 before recovering to near $70,000.
• Economically sensitive sectors including energy, materials, staples, and industrials have posted double-digit gains year-to-date, significantly outpacing the S&P 500's 1.3% rise as investors move away from crowded mega-cap tech trades.
• Market strategists warn that doubts about AI hyperscalers' profit generation and the impact on businesses that AI may displace are driving investors to reassess risk exposure and seek defensive positions rather than buying previous dips.

The article predicts that the Federal Reserve poses a significant threat to the bull market rally under President Trump's second term, despite strong market performance with the Dow, S&P 500, and Nasdaq up 13%, 15%, and 18% respectively since his January 2025 inauguration. Historic divisions within the Federal Open Market Committee and upcoming leadership changes at the Fed could undermine investor confidence and halt market momentum.

• The FOMC has shown unprecedented division with dissenting votes in opposite directions at two of the last five meetings since October 2025, undermining trust in the central bank's cohesive monetary policy approach
• Jerome Powell's term as Fed Chair ends May 15, 2026, with Kevin Warsh nominated as replacement, raising concerns about his stated desire to reduce the Fed's $6.6 trillion balance sheet which could drive up long-term yields
• The S&P 500's Shiller Price-to-Earnings Ratio indicates the market is at its third-most expensive valuation since January 1871, leaving little margin for error amid Fed uncertainty

European stocks are showing resilience near record highs while U.S. markets suffer from an AI-led tech selloff, with the S&P 500 down almost 30 percent from October 2025 peaks. Major European earnings reports this week include UniCredit, Commerzbank, AstraZeneca, Philips, and L'Oreal amid continued M&A activity in the banking sector. The divergence suggests European markets may be less vulnerable to U.S. tech volatility than in the past.

• Stoxx 600 recorded its 7th positive week in eight and sits near record highs, contrasting sharply with the tech-driven decline in U.S. markets that Deutsche Bank is comparing to the 2000 dot-com bubble
• UniCredit remains active in European banking M&A with minority stakes in Commerzbank and Alpha Bank generating approximately 20 percent returns, though Commerzbank's CEO calls a merger 'not sensible' given valuations
• AstraZeneca is targeting China's weight-loss drug market while L'Oreal raised 3 billion euros for M&A financing and recently doubled its stake in Swiss dermatology firm Galderma

Bitcoin has erased all gains since Donald Trump's November 2024 election, falling below $61,000 on Thursday before rebounding Friday above $70,000. The decline is attributed to shrinking market liquidity and broader concerns about tech valuations and Federal Reserve policy, despite Trump's pro-crypto stance. Market depth has fallen from over $8 million to around $5 million since October, amplifying price volatility.

• Bitcoin's 1% market depth dropped from over $8 million to roughly $5 million after October 2025, causing sharper price swings as reduced liquidity makes even small trades trigger larger movements
• Trump's administration delivered on crypto industry priorities like SEC reform and stablecoin regulation, but has not launched the anticipated bitcoin buying spree for a strategic reserve, disappointing some investors
• Bitcoin experienced its largest crypto liquidation event in history in October after Trump announced tariffs on Chinese imports, with that lost liquidity yet to fully return to the market

Wall Street faces a critical test of its rate-cut expectations with two upcoming inflation reports: the January Consumer Price Index (CPI) on February 13 and the Producer Price Index (PPI) on February 27. Even if inflation doesn't accelerate, a stalling pace of improvement could force markets to reprice expectations for Federal Reserve rate cuts, impacting stocks, bonds, and the dollar.

• CPI measures consumer-facing prices while PPI captures producer costs, with the latter signaling potential future consumer price pressure; a firm core CPI combined with rising PPI would trigger hawkish repricing
• Markets remain vulnerable in rate-sensitive areas: 2-year and 10-year Treasury yields would move first, followed by impacts on the dollar, mega-cap growth stocks, homebuilders, and small caps
• The key risk isn't a surprise spike but rather stalling disinflation progress, which would undermine the market's assumption of predictable policy easing and force investors to reprice rate-cut timelines

Tech stocks experienced a significant sell-off this week driven by concerns over massive AI infrastructure spending by Big Tech companies and fears that new AI tools could disrupt the software industry. Companies like Alphabet, Amazon, Meta, and Microsoft announced plans to dramatically increase capital expenditures, with Amazon forecasting $200 billion for 2026—$50 billion above expectations—while the S&P Software & Services Index fell over 20% year-to-date. Some market experts view this correction as a healthy reset of overly optimistic AI expectations.

• Big Tech's AI spending is surging dramatically: Alphabet and Meta plan to double infrastructure spending year-over-year, while Amazon forecasts $200 billion for 2026 (50% increase) and Microsoft's capital spending rose over 60% last quarter
• Software stocks face existential concerns as Anthropic released AI tools for legal work, triggering fears that 'vibe coding' and automated AI assistants could upend the traditional software-as-a-service business model
• Market strategists view the correction positively, noting tech stocks now trade at only a 10% premium to the broader market (down from higher levels), relieving bubble concerns while AI infrastructure suppliers like Sandisk remain beneficiaries with shares up nearly 150% this year

Individual investors remain confident in their portfolios despite recent market volatility and a selloff in major tech stocks, according to Investopedia's sentiment survey. Geopolitical unrest has replaced tariffs and inflation as their top concern, though 40% express worry about market conditions. Investors continue holding AI and tech stocks even as most believe these sectors are overvalued.

• Three in five investors believe AI-related stocks are overvalued, with gold now ranking as the second most 'bubbly' asset amid its volatile price swings over recent weeks
• Despite bubble fears, individual investors continue to hold and favor the same stocks they view as overvalued, with portfolios resembling S&P 500 index funds and dominated by mega-cap tech companies
• The Nasdaq 100 topped investors' picks for best performance in 2026, followed by semiconductor stocks and the S&P 500, while Bitcoin ranked among their last choices

The Dow Jones Industrial Average closed above 50,000 points for the first time in history on Friday, rising 2.47% to finish at 50,115.67. The milestone came as stocks rallied following three days of losses, with chip stocks surging on expectations of increased AI data center spending by Amazon and Alphabet. President Trump celebrated the achievement on Truth Social.

• The Dow gained 1,206.95 points (2.47%), while the S&P 500 and Nasdaq rose 1.97% and 2.18% respectively, recovering from three consecutive days of losses amid AI concerns
• Chip stocks led the rally on expectations of increased spending on AI data centers, with the information technology sector index gaining more than 3.7%
• Investor sentiment improved after University of Michigan data showed median 1-year inflation expectations hit the lowest level since January 2025

The Dow Jones Industrial Average surpassed 50,000 for the first time on Friday, marking the latest milestone in its 130-year history. The index's composition has evolved significantly over the decades to reflect economic shifts, with technology stocks now comprising seven members compared to none in earlier eras. The journey from 1,000 in 1972 to 50,000 today illustrates both market growth and the transformation of the American economy.

• The Dow reached key milestones at accelerating intervals: 1,000 (1972), 5,000 (1995), 10,000 (1999), 20,000 (2017), 30,000 (2020), 40,000 (May 2024), and 50,000 (February 2025), with the most recent 10,000-point gain taking less than two years.
• Technology's growing dominance is reflected in recent additions like Nvidia (replaced Intel in late 2024), Amazon (added early 2024), and Salesforce (replaced Exxon in 2020), while industrial stalwarts like Bethlehem Steel, Eastman Kodak, and Sears have been removed.
• The index rallied over 1,100 points on Friday to break 50,000, overcoming recent concerns about Trump's tariff plans and corporate AI spending that had pressured technology stocks earlier in the week.

The Dow Jones Industrial Average crossed 50,000 for the first time on Friday, driven by tech gains, strong corporate earnings, and expectations of lower interest rates. The index closed at 50,015.67, up 2.3% on the day, with the S&P 500 and Nasdaq also posting 2% gains despite recent pressure on tech stocks and cryptocurrencies.

• President Trump claimed credit for the market rally, linking it to his tariff policies which have reached their highest effective level since 1935, though many investors have adopted a 'Trump Always Chickens Out' stance
• Nvidia led the Dow's 30 stocks with CEO Jensen Huang defending high AI spending levels as sustainable, while Amazon was the worst performer after announcing $200bn in AI and robotics spending for the year
• Markets have rallied for months as investors largely dismissed geopolitical tensions and grew optimistic about the economy, despite recent scrutiny of AI investment levels and cryptocurrency volatility

Goldman Sachs is deploying autonomous AI agents built with Anthropic's Claude model to automate accounting, compliance, and operational finance tasks. The initiative, developed over six months with embedded Anthropic engineers, targets labor-intensive processes like transaction reconciliation, trade accounting, and client vetting that have traditionally resisted automation due to strict regulatory requirements.

• Goldman Sachs has spent six months embedding Anthropic engineers to co-develop AI agents for complex, rule-based financial tasks beyond simple coding
• 45% of CFOs currently use AI tools in structured finance areas like working capital monitoring and compliance oversight, the highest penetration across finance domains
• Nearly 7% of CFOs have already deployed agentic AI in live workflows, while 70% express high interest in using it for financial planning and analysis