General Market News

State Street's chief investment strategist Michael Arone predicts small-cap stocks will outperform in 2026 after nine years of underperformance, alongside healthcare sector gains and inflation undershooting expectations. The Russell 2000 small-cap index has already risen 8% year-to-date, outpacing the S&P 500, while investors pulled $12 billion from small-cap ETFs over the past year. Multiple factors including lower interest rates, weaker dollar, and deregulation support the bullish small-cap outlook.

• Small-cap earnings estimates for 2026 exceed large-cap projections, with declining interest expenses boosting profitability as the Fed continues rate cuts expected to begin in June
• Healthcare stocks present a 'compelling' opportunity trading at depressed valuations near a 40-year low weight in the S&P 500, with only $537 million in ETF inflows versus $10.6 billion for industrials
• Investors appear caught off guard by small-cap strength after withdrawing $12 billion from small-cap ETFs, potentially missing the sector rotation amid January's positive performance indicators

The January consumer price index is expected to show inflation at 2.5% year-over-year, matching May 2025 levels despite concerns that President Trump's 'liberation day' tariffs would drive prices higher. A reading at or below consensus could encourage the Federal Reserve to cut interest rates without risking renewed inflation, as CPI has consistently come in below Wall Street forecasts for three consecutive months.

• Both headline and core CPI are expected to show 0.3% monthly increases in January, with core CPI anticipated at 2.6%, continuing a downward trend from the September 2025 peak above 3%
• Goldman Sachs estimates tariffs will contribute 0.07 percentage points to core inflation, with pressure on clothing, recreation, household furnishings, education and personal care sectors
• With the federal funds rate at 3.5%-3.75%, well above pre-Covid levels, analysts believe the Fed has significant room to cut rates if inflation remains moderate

Schaeffers Research has identified 18 heavily shorted growth stocks that may be positioned for short squeezes amid recent market volatility. The screen identifies stocks where short sellers have accumulated significant positions at higher prices and may now face substantial losses, potentially forcing them to cover their positions. Notable names on the list include AST SpaceMobile (ASTS), IREN (IREN), and nuclear energy startup Oklo (OKLO).

• The analysis uses short interest data from the most recent reporting period (December 15) and estimates short seller returns by tracking when positions were added over the past year using average prices from two-week periods
• The opportunity arises as Wall Street rotates out of growth stocks, creating a contrarian play where shorts facing losses may be forced to cover, potentially triggering upward price momentum
• Key stocks identified include AST SpaceMobile (ASTS), IREN (IREN), and nuclear energy company Oklo (OKLO) as having significant short interest with potential for squeeze scenarios

U.S. stock markets declined sharply on February 12, 2026, with the Nasdaq falling 1.5% as investors shifted focus from economic data to growing concerns about AI disrupting business models and potentially causing higher unemployment. The 'Magnificent Seven' tech stocks led the selloff, with Apple down 3% and software/networking sectors hit particularly hard, while investors rotated into 'old economy' stocks like Walmart and Boeing.

• Tech sector bore the brunt with Apple falling 3%, Meta and Amazon down 2%, and Cisco Systems plunging 11% as AI concerns spread beyond just software to networking hardware
• Investors rotated into non-tech 'old economy' stocks, with Walmart gaining 3% and Boeing up 2%, while the Dow (with limited tech exposure) recently hit a record above 50,000
• Upcoming Friday consumer inflation report could trigger further volatility as markets balance AI disruption fears with Fed policy uncertainty, potentially pushing rate cut expectations from June to September or later

The European Commission will present a plan in March to deepen the EU's single market of 450 million consumers and accelerate the capital markets union to mobilize 10 trillion euros in savings currently held in bank accounts. Commission President Ursula von der Leyen announced the initiative aims to boost EU competitiveness, with phase one targeted for completion by June 2026.

• The EU aims to complete phase one of the Savings and Investment Union by June, covering market integration, supervision, and securitization
• If progress stalls with all 27 member states, the EU will pursue 'enhanced cooperation' with at least 9 countries moving forward at a faster pace
• The capital markets union seeks to unlock approximately 10 trillion euros in savings currently sitting idle in bank accounts for more productive investment

Trucking and logistics stocks fell sharply Thursday after AI company Algorhythm announced its SemiCab platform enables freight operators to scale volumes by 300-400% without adding staff. Leading companies including C.H. Robinson and J.B. Hunt dropped over 20% as investors scrutinize traditional businesses vulnerable to AI disruption. The tool reportedly reduces empty freight miles by over 70%, addressing a problem that costs the industry more than $1 trillion annually.

• C.H. Robinson and J.B. Hunt each dropped more than 20%, while XPO fell 9%, Landstar declined 7.9%, and Expeditors lost 16.5% during Thursday's session
• Algorhythm's SemiCab platform allows operators to scale freight volumes by 300-400% without increasing headcount and reduces empty freight miles by over 70%
• The selloff adds trucking to growing list of traditional industries facing AI disruption concerns, with analysts noting debate around open-source automation agents that could level the playing field for smaller operators

ARKO Petroleum shares declined in their Nasdaq debut, reflecting broader concerns about post-IPO performance amid recent market volatility. The disappointing debut comes as more companies enter the U.S. IPO pipeline driven by pent-up demand, despite investor worries triggered by volatility in tech and data-services stocks.

• ARKO Petroleum's shares fell on their first day of trading on Nasdaq, joining other recent IPO underperformers
• Recent IPOs including YSS.N and Ethos Technologies are trading well below their IPO prices as of Wednesday's close
• Growing IPO pipeline faces headwinds from recent market volatility, particularly in tech and data-services sectors, raising concerns about post-listing performance

SEC Chairman Paul Atkins told Congress the agency will restore some positions after workforce cuts depleted key divisions by nearly 20%. The cuts resulted from Trump administration buyout offers linked to the Department of Government Efficiency initiative. Atkins also defended the SEC against accusations it dropped enforcement cases against crypto companies with ties to President Trump for political reasons.

• Staff exodus from voluntary buyouts reduced some SEC divisions by nearly 20% as of a year ago, raising concerns about the agency's ability to police markets and respond to crises
• Atkins stated the decision to drop crypto enforcement cases was made by the acting chair before his arrival and primarily involved securities registration failures viewed as 'regulation through enforcement'
• The Trump administration has placed limits on agencies' ability to rehire after staffing cuts, though the SEC avoided mass dismissals by offering voluntary workforce reductions

Norway's central bank governor pledged to bring inflation back to its 2% target after core inflation unexpectedly accelerated to 3.4% in January, up from 3.1% in December. The surprise increase, which exceeded both analyst forecasts and the bank's own estimate of 2.9%, casts doubt on further interest rate cuts following a 50-basis-point reduction to 4.0% earlier in 2025.

• Core inflation rose to 3.4% year-on-year in January, surpassing economists' average prediction of 3.0% and triggering a rally in Norway's currency against the euro
• Norges Bank began an easing cycle in 2025 with a 50-basis-point cut to 4.0%, but the inflation surprise may force the bank to halt cuts or even raise rates
• The central bank's next rate decision is scheduled for March 26, with Governor Ida Wolden Bache warning that 'the outlook can change abruptly' and making no promises about future policy rates

As Q1 2026 investor conferences approach, new market themes are emerging including DeepSeek AI's disruption of software stocks, Energy and Materials sectors leading with 15%+ gains, and the Dow crossing 50,000 despite 'sell America' narratives. Software companies lost hundreds of billions in market cap in early February while resource stocks benefited from rising commodity prices and dollar weakness.

• Software giants like Salesforce, Intuit, ServiceNow, and Adobe shed hundreds of billions in market cap during the first week of February due to China's DeepSeek AI moment, raising questions about AI disrupting the SaaS industry
• Energy and Materials sectors are 2026's top performers, both up over 15% year-to-date, outpacing Information Technology which sits near the bottom of S&P 500 sector rankings
• A packed schedule of investor conferences through March, including NVIDIA GTC (March 16) and CERAWeek (late March), will provide critical insights as executives face tough questions on economic strategy, layoffs, and industry disruption

Sen. Thom Tillis rejected a proposal to transfer the DOJ's criminal investigation of Fed Chair Jerome Powell to the Senate Banking Committee, maintaining his blockade on Kevin Warsh's nomination as Powell's replacement. The proposed off-ramp aimed to drop criminal prosecution threats while satisfying President Trump, but Tillis insists on Fed independence and demands the DOJ either prove a compelling case or drop the investigation.

• Tillis, a Banking Committee member, refuses to allow a markup vote on Warsh's nomination until the DOJ investigation is resolved, stating 'we do oversight, we don't prosecute'
• The rejected proposal would have transferred the Powell probe from DOJ to the Senate Banking Committee as a compromise to end criminal prosecution threats
• Tillis believes the White House was unaware of the DOJ investigation and sees no confirmation path for Warsh without resolution, expecting most Democrats to oppose the nomination

Artificial intelligence is creating significant volatility in U.S. stock markets as investors reassess which companies will benefit or suffer from AI disruption. Software, wealth management, and insurance sectors have experienced sharp selloffs following announcements of new AI tools, while questions about massive AI capital spending are pressuring Big Tech megacaps like Microsoft and Amazon. The shift marks a departure from 2025's broad AI-driven rally, with stock picking now focused on avoiding 'implosions' rather than riding a monolithic AI trade.

• The S&P 500 software and services index dropped 15% since end of January 2026, with its forward P/E ratio falling to 22.7x, the lowest in nearly three years, following AI disruption concerns from products like Anthropic's Claude Cowork agent
• Wealth management and insurance stocks tumbled sharply on specific AI announcements: LPL Financial, Raymond James, and Charles Schwab each fell at least 7% after Altruist launched AI tax planning, while insurers dropped following Insurify's ChatGPT-powered comparison tool
• Microsoft and Amazon shares are down 16% year-to-date amid concerns over insufficient returns on massive AI capital expenditures, though some strategists see buying opportunities as valuations become more attractive

Gabriela Berrospi, founder of Latino Wall Street, hosted the inaugural Hispanic Prosperity Gala at Mar-a-Lago on February 10, 2026, featuring political and business leaders. Argentina's President Milei received the Economic Freedom Award at the star-studded event, which showcased Latino economic empowerment and highlighted growing right-wing transnational ties across the Americas.

• Berrospi has built Latino Wall Street into a major financial literacy organization, gaining prominence as a Forbes Finance Council member with a TV show on the New York Stock Exchange in partnership with FinTech TV
• The gala featured Latin Grammy winners, athletes, and business leaders, aiming to counter negative media portrayals and showcase Latino success stories across industries
• Berrospi advocates conservative investment strategies inspired by Warren Buffett and Ray Dalio, focusing on proven index investing and automatic savings rather than get-rich-quick schemes or conspicuous consumption

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