General Market News

Electricity prices surged 6.9% year-over-year in 2025, more than double the 2.9% headline inflation rate, driven primarily by AI data center demand. Goldman Sachs projects prices will continue rising through the decade as data centers account for 40% of electricity demand growth while supply remains constrained. This will reduce disposable income, drag consumer spending by 0.2% through 2027, and slow economic growth by 0.1%.

• Household electricity prices expected to rise another 6% through 2027 before slowing to 3% in 2028, with regional variations across U.S. markets
• In the PJM grid covering 13 Mid-Atlantic and Midwest states, data centers are responsible for $23 billion in costs that get passed to consumers, termed a 'massive wealth transfer' by regulators
• Lower-income households will be disproportionately impacted as electricity accounts for a greater share of their budgets, while higher electricity costs will add 0.1% to core inflation through 2027

US stocks opened higher on Thursday with the Dow Jones up 300 points (0.6%), the S&P 500 gaining 0.3%, and the Nasdaq rising 0.4%. Investors digested strong January jobs data showing 130,000 new positions and unemployment falling to 4.3%, while awaiting Friday's inflation report that could influence Federal Reserve interest rate decisions.

• January nonfarm payrolls exceeded forecasts with 130,000 jobs added, significantly above December's revised figure, easing concerns about labor market weakness but complicating rate cut expectations
• Initial jobless claims fell to 227,000 for the week ending February 7, down 5,000 from the prior week, with the four-week moving average reaching its lowest level since October 2024
• Mixed corporate earnings drove selective stock movements, with McDonald's rising 1% after beating expectations, while markets await Friday's consumer price index report for fresh inflation insights

US initial jobless claims fell by 5,000 to 227,000 in the week ending February 7, slightly above the expected 225,000, indicating a resilient but gradually cooling labor market. The modest decline follows a weather-disrupted spike the previous week, while continuing claims rose to 1.86 million, suggesting underlying softness in employment conditions.

• The four-week moving average of initial claims rose by 7,000 to 219,500, indicating elevated layoffs compared to recent months, while the insured unemployment rate held steady at 1.2%
• January added 130,000 jobs with unemployment falling to 4.3%, but hiring was concentrated in healthcare while other sectors showed muted activity, reflecting a 'low hire, low fire' phase
• Continuing claims increased to 1.86 million from 1.84 million, providing a clearer picture of underlying labor conditions beyond short-term weather-related volatility

British American Tobacco's CEO said a potential U.S. import block on unauthorized disposable vapes could reduce the illegal e-cigarette market by roughly a third, though any impact likely won't materialize until 2027. BAT estimates unregulated devices currently account for about 70% of U.S. e-cigarette sales, hurting both its vape and traditional tobacco businesses.

• An ITC judge ruled in BAT's favor in a patent dispute last year and recommended a general exclusion order to block infringing disposable vapes, with a full ITC determination expected in March followed by a 60-day presidential review
• BAT's CEO said the import block could reduce unregulated vapes from 70% to below 50% of U.S. e-cigarette market share, but long supply chains and large inventories will delay effects until early 2027
• The FDA is reportedly considering a different regulatory approach to vapes, potentially including flavored products, after years of rejecting most nicotine product applications

Major Wall Street brokerages expect the Federal Reserve to begin cutting interest rates in mid-2026, with most forecasting the first cut in June following Fed Chair Jerome Powell's term ending in May. Strong U.S. jobs data showing unemployment at 4.3% has given the Fed room to maintain current rates while monitoring inflation, though forecasts vary widely from multiple cuts to potential rate hikes.

• Most brokerages (Goldman Sachs, Morgan Stanley, BofA) predict 50 basis points in cuts during 2026, with rates ending at 3.00-3.25%, while Citigroup is most dovish with 75 bps in cuts
• Four major banks (J.P.Morgan, HSBC, BNP Paribas, Standard Chartered) forecast no rate cuts in 2026, keeping rates at 3.50-3.75%, and J.P.Morgan even anticipates a rate hike in 2027
• Traders are pricing in over 94% probability of no rate change at the March policy meeting, with concerns that policy could become too loose under Powell's likely successor Kevin Warsh

Wall Street broker Clear Street slashed its U.S. IPO valuation target to $7.2 billion from an initial $11.8 billion, representing a 39% reduction. The New York-based company also reduced its share offering from 23.8 million to 13 million shares following investor pushback on the original valuation. The stock is expected to price on Thursday and list on Nasdaq under the symbol 'CLRS'.

• The valuation cut from $11.8 billion to $7.2 billion marks a significant 39% haircut, reportedly due to investor resistance to the initial pricing
• Clear Street reduced its share offering by 45%, from 23.8 million shares initially marketed to 13 million shares
• Goldman Sachs, BofA Securities, Morgan Stanley, UBS Investment Bank, and Clear Street itself are serving as lead book-running managers for the offering

While SpaceX IPO speculation generates excitement, tech companies are raising massive amounts of debt to fund AI infrastructure buildouts. UBS estimates tech and AI-related debt issuance could reach $990 billion in 2026, up from $710 billion in 2025, as major tech firms prioritize debt sales over equity offerings to finance their capital expenditure needs.

• Tech's four hyperscalers (Microsoft, Amazon, Google, Meta) are projected to spend close to $500 billion this year on AI-related capital expenditures and finance leases
• Oracle raised $25 billion and Alphabet sold over $30 billion in debt this year, with Alphabet's offerings priced at yields only narrowly higher than Treasury rates despite the risk
• Tech concentration in investment grade debt indexes is approaching 9% and could reach mid-to-high teens, raising concerns about market contagion if AI startups like OpenAI hit growth walls

Prediction markets like Polymarket and Kalshi saw $1.2bn in trading volume on Super Bowl Sunday, sparking debate over whether these platforms constitute gambling. Unlike traditional betting sites, they're regulated as financial derivatives and allow users as young as 18 to bet on everything from elections to foreign policy. Critics warn they carry similar risks to gambling while insider trading concerns and political influence remain largely unaddressed.

• Prediction markets are available in all US states to users 18+ and regulated as financial derivatives rather than gambling, avoiding restrictions that apply to conventional sports betting platforms
• Trump administration has taken a lenient stance on the industry, with Donald Trump Jr. serving as investor/adviser to Polymarket and paid adviser to Kalshi, while Trump Media plans to launch its own platform called Truth Predict
• Experts warn of gambling-related risks including financial harm and impulsive behavior, while insider trading concerns persist after suspicious bets timed around events like the Venezuela operation prompted calls for congressional regulation

U.S. stock markets retreated after January's unexpectedly strong jobs report showed 140,000 payroll additions (double the 70,000 forecast) and unemployment falling to 4.3%, dampening Federal Reserve rate cut expectations. Markets now price in only two rate cuts for the year, with the first not fully expected until July, as labor market stabilization allows the Fed to focus on inflation still well above target.

• January payroll gains of 140,000 nearly doubled the 70,000 forecast, while unemployment unexpectedly fell to 4.3% despite rising labor force participation and accelerating wage growth
• Rate futures now price only two cuts in 2026 with the first not fully expected until July, returning to expectations from when Fed Chair Powell previously indicated labor market stability
• Congressional Budget Office projects cumulative 10-year deficit $1.4 trillion (6%) higher than January 2025 estimates, with debt-to-GDP ratio forecast to exceed 1946 peak of 106% by 2030

President Trump's disruptive approach to global order is prompting 'middle powers' like Europe and Canada to pursue strategic autonomy through new trade deals and increased defense spending. Investors are responding by shifting toward non-U.S. equities, energy stocks, and currencies like the euro and Canadian dollar. Financial markets see emerging opportunities as these nations strengthen ties independent of American influence.

• European stocks are outperforming U.S. markets, with London's FTSE 100 up 5% in 2026 versus S&P 500's 1.4% rise, and over 73% of STOXX 600 companies beating Q4 earnings expectations
• Defense stocks have surged 200% since February 2022, while European energy stocks are near 2008 highs as nations focus on supply chain resilience and critical resource independence
• Major new trade agreements include EU deals with Mercosur and Indonesia, and a Canada-China pact, though analysts note U.S. trade remains difficult to replace and impact will take time

Chinese AI stocks rallied Thursday as several companies released upgraded models and policymakers called for broader AI adoption. Hong Kong-listed Zhipu AI surged 30% after launching its GLM-5 open-source model with enhanced coding capabilities. The rally reflects intensifying competition as Chinese developers race to match U.S. rivals with a flurry of new releases.

• Zhipu AI's GLM-5 model reportedly approaches Anthropic's Claude Opus 4.5 in coding benchmarks and surpasses Google's Gemini 3 Pro on some tests
• Multiple Chinese AI companies released upgrades this week, including DeepSeek's flagship model update, MiniMax's M2.5 model, and Ant Group's Ming-Flash-Omni 2.0 multimodal model
• Chinese Premier Li Qiang called Wednesday for AI implementation 'in diverse scenarios to unlock the potential of the technology', signaling government support for the sector

Chinese factories and ports are experiencing a surge in activity a year after Trump's tariffs, with container volumes at major ports up 40% year-over-year in early February 2026. The pre-Lunar New Year rush shows manufacturers operating near full capacity, particularly for U.S.-bound shipments, indicating that despite initial tariff concerns, Chinese exports to America remain robust.

• Major Chinese ports handled 40% more containers during the week ended Feb. 1 compared to a year earlier, marking the fastest growth in over 12 months and well above the 10% average weekly growth in 2025
• Large container shipments to the U.S. ran above 2024 and 2025 levels for most of January into February, with freight rates rising and some Ningbo port terminals operating beyond capacity with vessels overbooked by more than 20%
• Despite 'China-plus-one' diversification strategies, U.S. customers have resumed ordering and new product development after a year-long trade truce kept tariffs at lower levels, with factories like Agilian Technology maintaining pre-tariff export volumes to America

Major tech companies including Alphabet and Amazon have announced massive AI infrastructure spending plans of up to $185 billion and $200 billion respectively for 2026, causing stock selloffs despite strong earnings. The heavy capital expenditures on data centers and compute capacity, combined with rising memory chip costs and fears that AI agents may disrupt traditional SaaS business models, have created anxiety across tech sectors. With 59% of S&P 500 companies having reported Q4 2025 results showing 13% EPS growth, investors are now watching whether AI infrastructure spending benefits the broader ecosystem.

• Amazon stock fell 7% after missing Q4 EPS estimates by two cents and announcing $200 billion in 2026 capex, while Alphabet's stock softened despite record $400 billion annual revenue after forecasting up to $185 billion in 2026 spending
• Software sector experienced a selloff led by Salesforce and Adobe due to concerns that new AI agents like Anthropic's legal-tech tools could replace traditional SaaS subscription models rather than complement them
• Apple and Qualcomm warned about rising memory chip costs impacting margins, with Apple noting the impact will become 'a bit more significant' in coming months as AI infrastructure consumes high-end memory supply

Pakistan's new power pricing plan, requiring IMF approval, will end business subsidies for households, causing middle-class electricity bills to rise roughly 50% while reducing industrial rates by 13-15%. The shift is expected to add 1.1 percentage points to inflation over 12 months but aims to ease costs for export-focused industries and cut 102 billion rupees ($365 million) in subsidies.

• Households using 100-300 units monthly will face rate increases up to 76% due to new fixed charges, while lowest-income users (1-100 units) will see fixed charges jump from zero to PKR 400
• Industrial electricity prices will fall 13-15%, addressing complaints that high power costs erode Pakistan's export competitiveness in textiles and manufacturing
• The pricing overhaul follows Pakistan's 2023 inflation spike of nearly 40%, though inflation has since cooled to 5.8%; analysts warn new power prices could reverse this progress

The Pentagon is conducting a review to identify and penalize defense contractors with histories of delays and cost overruns, following a White House executive order that caps executive compensation at $5 million and bans stock buybacks. Defense stocks fell this week as the review continues, with companies facing potential contract cancellations if deemed 'underperformers.'

• Northrop Grumman fell over 4%, Boeing and L3 Harris dropped nearly 3% each, RTX declined 1%, and Huntington Ingalls eased 1% as the Pentagon extended its review deadline beyond the original Feb. 6 date
• Boeing's new Air Force One delivery is delayed by more than four years until 2028 and is $1.5 billion over budget, while Northrop Grumman faces possible penalties for delays in Ukraine armaments
• The Pentagon is specifically examining companies that directed cash to buybacks and dividends rather than factory investments, with penalties including potential contract cancellations for habitual delays

The U.S. economy added 130,000 jobs in January, beating expectations with unemployment at 4.3%, but annual revisions revealed nearly 900,000 fewer payroll jobs than previously reported for 2025. The strong headline masks growing concerns about AI-driven automation replacing knowledge workers, potentially disrupting the traditional labor-to-consumption economic feedback loop that drives growth.

• Total job growth in 2025 was revised down sharply from 584,000 to just 181,000, indicating last year's labor market was materially weaker than believed in real time
• January job cuts surged 118% year-over-year to 108,435 (highest since 2009), while announced hiring plans fell to 5,306, the lowest January total on record since tracking began in 2009
• AI agents now create 80% of databases and 97% of test environments on platforms like Databricks (versus near-zero two years ago), allowing companies to boost productivity without adding workers and threatening the traditional wage-consumption economic cycle

U.S. markets face a holiday-shortened trading week with Presidents' Day closure on Monday, followed by a packed schedule of delayed economic reports, Federal Reserve January meeting minutes, and key inflation data. The week features crucial PCE index readings, manufacturing and services PMI data, and earnings reports from major companies including Walmart, Palo Alto Networks, and Newmont. Investors will monitor delayed housing data from November and December alongside regular weekly economic indicators.

• FOMC will release January meeting minutes on Wednesday, Feb. 18, alongside delayed housing starts, building permits, durable goods orders, and retail/wholesale inventories
• Friday's calendar includes the critical PCE and core PCE index for December, GDP update, S&P flash manufacturing and services PMIs for February, plus delayed new home sales reports for November and December
• Major earnings reports scheduled from Walmart, Palo Alto Networks, Newmont, Kinross Gold, Carvana, DoorDash, Etsy, Live Nation, and Wayfair

Technical analyst Dr. Ter Schure predicts the NASDAQ 100 will peak around March 18, 2026, at approximately $26,600, based on mid-term election year seasonality patterns and Elliott Wave analysis. The index has traded sideways since October 2025, creating uncertainty, but historical mid-term election patterns suggest a rally from early February through mid-March followed by a multi-month decline through October.

• Mid-term election year seasonality shows the NASDAQ 100 typically bottoms in early February, rallies to a March 18 peak, then declines through October. The index bottomed February 6, 2026, aligning with this pattern.
• The target of $26,608 represents 161.8% of the 2020-2021 rally measured from the 2020 low. When third waves miss targets, B-waves of fourth waves often reach them, as seen in July 2011, November 2015, October 2018, and February 2020.
• The analyst expects a multi-month correction following the March peak, potentially dropping to 5,800 (+/- 300) before the next rally phase can begin toward 8,100+.

January 2025 U.S. job gains showed improvement over 2025's stagnant performance, with unemployment falling to 4.3%, but concerns remain about the labor market's underlying health. Every month in 2025 saw negative revisions, with the year averaging just 15,000 monthly job gains and the final six months showing a net loss of 1,000 jobs. Economists warn of a potential 'income-less expansion' as both job growth and wage gains remain under pressure.

• Nearly all January job gains came from health care-related sectors, raising concerns about employment opportunities for workers in other fields
• Average hourly earnings growth slowed to 3.71% annually (lowest since July 2024), threatening consumer spending which drives over two-thirds of U.S. economic activity
• The weak labor market creates policy tensions at the Federal Reserve, with some officials opposing rate cuts due to inflation concerns while others advocate for reductions given employment weakness

Investors are rapidly selling stocks across sectors due to fears of AI disruption, with financial services companies being the latest casualty following new AI tool announcements. The sell-off has hit software, financials, and legal services stocks, despite analysts suggesting many companies are being unfairly 'mispriced' due to overreaction. Morgan Stanley reports that 30% of tracked companies cited measurable AI impacts in Q4, up from 16% a year earlier, making disruption concerns more quantifiable.

• Financial sector stocks like Charles Schwab and LPL Financial dropped this week after Anthropic launched an AI model for financial analysis and Altruist introduced an AI tax planning tool; SPDR Software & Services ETF is down 19% year-to-date
• Analysts characterize the reaction as 'sell first, ask questions later,' with Morgan Stanley and Deutsche Bank identifying mispriced stocks including Microsoft, Intuit, Palo Alto Networks, and Spotify as potential opportunities
• Equity strategists warn that 'disruption-related volatility' will likely be recurring, though some believe meaningful AI disruption will play out over a much longer timeline than investors currently anticipate