General Market News

Tech sector selloffs intensified as chipmakers and mega-caps tumbled, with AMD plunging 17% and Palantir dropping 12%. The software sector has lost nearly $1 trillion in value over one week as investors reassess AI development's impact. Alphabet's plan to double capital spending to as much as $185 billion also unsettled markets, raising concerns about massive AI investments paying off.

• AMD fell 17% and Palantir declined 12%, with volatility spreading to Asian markets where South Korea's Kospi dropped nearly 4%
• Alphabet announced capital expenditure of $175-$185 billion for 2026, roughly double prior year levels, causing its stock to fall 2% after hours
• The software sector has lost almost $1 trillion in market value in just one week as anxiety grows over AI's disruptive threat to existing businesses

Kevin Warsh, President Trump's nominee for Federal Reserve Chair, faces scrutiny over whether he will implement the rule-based, limited-intervention monetary policy he has advocated for 15 years, or take a more pragmatic approach. His nomination tests long-standing conservative ideas about constraining the Fed's expansive role in the economy, including its $6 trillion balance sheet. Warsh has recently suggested flexibility on rate cuts despite above-target inflation, raising questions about his commitment to strict policy rules.

• Warsh has called policy rules 'aspirational' rather than binding, and recently cited productivity gains as justification for rate cuts even with inflation above the Fed's 2% target, aligning with Trump's preferences
• Colleagues describe Warsh as 'rules with discretion' - hawkish on inflation but pragmatic about markets and politics, not 'hidebound' to strict monetary frameworks despite his Hoover Institution affiliation
• Warsh aims to shrink the Fed's balance sheet from over $6 trillion to around $3 trillion, but acknowledges changes 'will take time' and cannot happen overnight, with success dependent on building market trust in Fed independence

Major U.S. tech stocks plunged after Alphabet announced capital expenditures of $175-$185 billion for the year, significantly exceeding Wall Street estimates and heightening concerns about unsustainable AI investment levels. The sell-off spread globally, with Asian equipment providers dropping sharply and precious metals tumbling, as investors who had increased tech exposure ahead of earnings season faced substantial losses.

• Alphabet's capex guidance of $175-$185 billion shocked analysts and triggered a broad tech sell-off despite solid quarterly results
• Asian markets suffered steep losses with South Korea's index down 3.5% and Taiwan off 1%, while silver plummeted 14% and gold fell below $5,000 per ounce
• The ECB and Bank of England are expected to hold rates steady, with the ECB concerned about euro strength potentially causing inflation to undershoot targets

The U.S. Federal Reserve announced it will keep large bank capital buffers unchanged during the 2026 stress testing cycle and will not revise stress capital buffers until 2027. This pause allows the Fed to review potential deficiencies in its stress test models and incorporate planned changes aimed at increasing transparency in the annual exercise.

• Fed Vice Chair for Supervision Michelle Bowman stated capital buffer revisions will be delayed until 2027 to allow time to identify model deficiencies
• The Fed proposed changes in October to make its stress testing models and scenarios open to public feedback for greater transparency
• Large banks will maintain their current capital requirements through the 2026 testing cycle while the Fed evaluates its methodology

Tech stocks are experiencing a significant sell-off as investors rotate into defensive sectors and value stocks, a shift market experts are calling 'healthy' for the broader market. The S&P 500's tech sector is the worst performer year-to-date, down 4%, while energy and consumer staples have risen double digits. Concerns about AI's disruptive potential and rich tech valuations, combined with accelerating earnings growth outside the Magnificent Seven, are driving the rotation away from Big Tech's longstanding market dominance.

• Bank of America clients have invested more in consumer staples stocks in the past month than any four-week period since 2008, while selling tech stocks in four of the past five weeks
• The Magnificent Seven now account for a record 27.8% of S&P 500 earnings, but 90% of S&P 500 companies beat Q4 earnings estimates, suggesting growth is broadening beyond Big Tech
• JPMorgan strategists view the rotation as addressing concentration risk concerns, with defensive sectors like consumer staples and industrials positioned to benefit from current market dynamics and Washington policy initiatives

Hedge funds have generated $24 billion in profits by short-selling software stocks in 2026, and are increasing these bets as the sector experiences a brutal sell-off. The software industry has lost $1 trillion in market value this year, with the iShares Expanded Tech-Software Sector ETF down 30% from its September 2025 peak. Funds are targeting companies providing basic automation services that could be easily replaced by new AI tools.

• The iShares Expanded Tech-Software Sector ETF (IGV) has fallen 30% from its all-time high in September 2025, with major holdings like Salesforce and ServiceNow down 15% and 21% respectively
• TeraWulf has over 35% of its float sold short, while Dropbox and MongoDB have 19% and 17% short interest respectively, indicating concentrated bearish bets
• Analysts believe the software sector may be undergoing a 'structural change' driven by AI disruption, with hedge funds targeting companies whose automation services can be replicated by AI tools

AT&T announced a partnership with Amazon's AWS and Project Kuiper satellite network to provide fixed broadband services to business customers in underserved areas. The announcement caused significant selloffs in satellite communications competitors AST SpaceMobile and GlobalStar, with their stocks falling 13% and 6% respectively. The partnership appears focused on enterprise connectivity rather than consumer mobile phone satellite services.

• ASTS stock tumbled over 13% to 100.03 and GSAT stock fell more than 6% to 57.91 on the news, while AT&T stock rose 1% and Amazon stock dipped 2%
• Amazon's Project Kuiper, still in testing phase, plans to launch over 3,000 satellites to provide internet connectivity to 400-500 million households, competing with Elon Musk's Starlink
• The partnership will enable AT&T to deliver fixed broadband services to business customers using Project Kuiper's low-Earth-orbit satellite network and AWS cloud capabilities

The software sector experienced its worst selloff since 2022, falling nearly 4% on Tuesday and another 1% on Wednesday for a sixth consecutive session, but failed to attract typical dip-buying activity from bargain hunters. Unlike previous tech routs, investors and options traders showed little interest in purchasing beaten-down software stocks, maintaining a predominantly defensive stance. The absence of buyers marks a notable shift in market behavior for a sector that has historically drawn strong support during downturns.

• The S&P 500 software and services index fell nearly 4% on Tuesday and declined another 1% on Wednesday, marking the worst drawdown since the 2022 rate-driven selloff
• Options flow in software ETFs like IGV and ARKK remained 'overwhelmingly defensive' with traders pressing downside exposure rather than buying dips, according to Susquehanna Financial
• Microsoft was a notable exception attracting some buyers, but even there short interest increased by about 20% over the past week as shorts added positions into weakness rather than covering

The Bureau of Labor Statistics announced that the January jobs report, originally delayed by a brief government shutdown, will be released on February 11, five days later than scheduled. Other key economic reports including the consumer price index and JOLTS data are also experiencing delays.

• Economists surveyed by Dow Jones expect January nonfarm payrolls to show a gain of 60,000 jobs, following a 50,000 increase in December, with unemployment expected to hold steady at 4.4%
• The consumer price index for January will be released on February 13, two days later than originally scheduled
• The Job Openings and Labor Turnover Survey (JOLTS) will be released on Thursday instead of its originally scheduled Tuesday release

EchoStar stock has fallen roughly 12% in five days following Elon Musk's announcement that SpaceX will merge with his AI startup xAI, creating uncertainty for EchoStar investors who hold a 2-3% stake in SpaceX. The proposed merger aims for a $1.25 trillion valuation, potentially making EchoStar's stake worth up to $37.5 billion, but analysts warn this exposes EchoStar to unprofitable AI business risks rather than the satellite synergies investors expected.

• EchoStar acquired its SpaceX stake when the space company was valued around $400 billion; the SpaceX-xAI combined entity targets a $1.25 trillion valuation
• TD Cowen analysts maintained a buy rating but noted investors 'did not sign up' for exposure to the crowded and uncertain large language model market, where xAI faces established competitors like OpenAI and Alphabet
• Despite recent sell-off, EchoStar stock is up 70% since receiving its first SpaceX equity and surged 374% in 2025, with analysts previously upgrading on prospects for additional strategic deals

US stocks opened mixed on Wednesday, with the Dow Jones up 0.4% while the Nasdaq slipped 0.2% as investors rotated out of technology stocks. The tech sector faced continued pressure following concerns that AI automation tools from Anthropic could disrupt traditional software business models. Weak employment data showed US private employers added only 22,000 jobs in January, well below the 45,000 forecast.

• Technology stocks extended losses for a second session, with chipmakers like Broadcom and Micron declining alongside software stocks including Salesforce, Oracle, and CrowdStrike amid AI disruption concerns
• ADP employment report showed just 22,000 private-sector jobs added in January versus 45,000 expected, with professional and business services shedding 57,000 positions while education and health services added 74,000
• Investors await earnings from Alphabet (Wednesday) and Amazon (Thursday) for direction, while the official nonfarm payrolls report was delayed due to the recent government shutdown that ended Tuesday

US private employers added only 22,000 jobs in January 2026, significantly below the 45,000 forecast and December's revised 37,000 gain, according to ADP. The weak hiring reflects a fragile labor market characterized by cautious employer behavior, with job growth concentrated almost entirely in education and health services, which added 74,000 positions.

• Without education and health services' 74,000 job gains, overall employment would have been negative; professional and business services lost 57,000 jobs while manufacturing shed 8,000
• Wage growth moderated slightly, with job-switchers seeing 6.4% year-over-year raises (down from 6.6%) and job-stayers maintaining 4.5% growth
• The labor market remains in a 'low-hire, low-fire' environment; mid-sized firms drove all net gains while large employers cut 18,000 positions and small businesses showed no change

Private sector employers added only 22,000 jobs in January, significantly missing economist expectations of 48,000 jobs, according to ADP's latest payroll report. The disappointing figure continues a multi-year trend of declining job creation, with total private job additions falling to 398,000 in 2025 from 771,000 in 2024.

• January's 22,000 jobs added fell more than 50% below the 48,000 forecast by economists
• December's initially reported gain of 41,000 jobs was revised down to 37,000
• Despite three consecutive years of dramatic slowdown in job creation, wage growth has remained stable according to ADP's chief economist

US stock futures showed a mixed open on February 4, 2026, with the Nasdaq called 0.2% lower while the Dow Jones was up 0.2%, as investors assessed AI's disruptive impact across sectors. The tech-heavy Nasdaq had fallen 1.4% the previous day, dragged down by Anthropic's launch of an AI legal automation tool that triggered sharp selloffs in legal data, software, and technology stocks.

• Legal and software stocks plunged, with Thomson Reuters, LegalZoom, and others dropping 7-17%, while the US software index fell 4.6% in its sixth consecutive decline, returning to April 2025 levels
• Microsoft has declined 24% from its late October peak, and the nine worst-performing S&P 500 stocks year-to-date are all in software and related services, each down 25% or more
• AMD warned of weaker Q1 sales after the bell, adding pressure to AI-related stocks as markets shift from 'AI euphoria' toward concerns about disruption to existing business models

The S&P 500 Index gained 1.4% in January 2026, which historically signals strong annual returns according to the January Barometer. However, extreme optimism reflected in the Investors Intelligence poll (bulls minus bears above 40%) raises concerns, as similar conditions have produced mixed results historically. The article analyzes both market-wide and individual stock patterns to assess outlook for the remainder of 2026.

• Since 1950, positive January months for the SPX have led to average gains of 12.24% for the rest of the year with 87% positive outcomes, compared to just 2% average gains when January is negative
• Extreme optimism (bulls minus bears above 40%) has occurred only six times previously, resulting in average slight losses for the year with only 50% positive outcomes, presenting a potential warning signal
• Individual stocks like Digital Realty Trust (DLR) and D.R. Horton (DHI) showed 100% accurate January Barometers over the past decade, while Fair Isaac (FICO) fell 13.5% in January 2026 after posting 100% accuracy in predicting down years

Sen. Thom Tillis (R-NC) is blocking Federal Reserve Chair nominee Kevin Warsh's confirmation until the Department of Justice completes its investigation into current Fed Chair Jerome Powell over alleged cost overruns in Fed headquarters renovations. Tillis holds a pivotal position on the Senate Banking Committee that allows him to prevent any Fed nominee from reaching the Senate floor.

• Tillis stated he is willing to maintain the blockade for the remainder of this Congress (333 days) until the DOJ investigation concludes or Powell's process is resolved
• The DOJ opened an investigation into Powell last month regarding alleged cost overruns for Federal Reserve headquarters renovations, with a separate probe into Fed Governor Lisa Cook for alleged mortgage fraud
• The retiring senator said he would support Warsh's nomination once the matter is settled, criticizing the administration for not consulting properly before issuing subpoenas