General Market News

Multiple prominent stocks experienced significant declines last week, with financial sector stocks, software companies, and growth names among the worst performers. Bank stocks struggled broadly while earnings disappointments hit companies like Robinhood, Cisco, and DraftKings. The analysis highlights a choppy market environment with notable weakness across various sectors despite ongoing earnings season.

• Robinhood (HOOD) missed Q4 revenue estimates and suffered four price-target cuts, with J.P. Morgan slashing its target to $113, resulting in five consecutive weekly losses
• Cisco Systems (CSCO) fell for four straight days despite a top-line earnings beat, as rising memory chip prices and AI hardware demand created supply shortages
• DraftKings (DKNG) posted a top-line beat but issued a disappointing fiscal year revenue forecast, triggering price-target cuts; the consensus target of $43.61 represents a 96% premium to current levels

JP Morgan analysts have created a research basket called 'Top Mispriced Stocks Amid AI Disintermediation' to identify companies unfairly punished by market fears of AI disruption. The basket includes stocks across defense, payments, software, and consumer sectors where analysts believe protective business moats have been undervalued. JP Morgan argues that certain business models with regulated datasets, proprietary workflows, and embedded enterprise integrations are more resilient to AI automation than recent sell-offs suggest.

• The basket includes C.H. Robinson (NASDAQ:CHRW), which was caught in an AI-driven sell-off triggered by concerns around a competitor that was 'formerly a karaoke machine importer'
• Wayfair (NYSE:W) was identified as less vulnerable to AI-driven shopping agents because home furnishings require high-involvement decisions that cannot be reduced to simple automated commands
• JP Morgan worked with its Delta One team to package picks from multiple sectors where the market's 'shoot-first reaction has outpaced fundamentals'

US stock futures opened lower on Tuesday after a long weekend, with the Nasdaq poised to extend its fifth consecutive weekly decline - its longest losing streak since 2022. Technology stocks continue to face pressure amid concerns over AI investment returns and business model disruption, with the S&P 500 down 1.4% last week and the Nasdaq dropping over 2%.

• Nasdaq futures fell 0.8%, leading declines ahead of the S&P 500 (-0.4%) and Dow Jones (-0.2%), as investors question returns on massive AI spending commitments
• US software and services sector now trades at a discount to the broader market for only the second time in 30 years, according to Hargreaves Lansdown
• Key catalysts ahead include Palo Alto Networks earnings, Federal Reserve meeting minutes on Wednesday, and Friday's core PCE inflation data

AI stocks have experienced significant volatility in early 2026, with software companies particularly hard hit amid concerns that AI model builders like OpenAI and Anthropic will become competitors. Hyperscalers including Amazon, Alphabet, Meta, Microsoft, and Oracle have announced massive capital spending increases totaling $645 billion for 2026, a 56% jump, while none remain in positive territory year-to-date. The market is rotating away from tech into traditional sectors like energy, materials, and healthcare.

• Software stocks face a 'SaaS-pocalypse' as concerns grow that AI agents and coding tools will disrupt traditional software-as-a-service business models and per-seat pricing structures
• Four major hyperscalers are expected to spend $645 billion on AI infrastructure in 2026, up $230 billion from 2025, with companies like Google raising $9 billion through bond sales to fund AI ambitions
• Most major AI stocks are down year-to-date including Palantir (-26%), Salesforce (-28%), Oracle (-18%), Amazon (-14%), and Microsoft (-17%), with Nvidia earnings on Feb. 25 expected to bring additional volatility

Prediction market platforms like Kalshi and Polymarket face at least 20 federal lawsuits from state regulators who argue these companies are operating as unlicensed gambling operations. The platforms classify themselves as federally-regulated financial exchanges offering 'event derivatives' under CFTC oversight, allowing them to bypass state gaming laws that govern traditional sportsbooks. The legal dispute could reach the Supreme Court as states seek to enforce gambling regulations and collect taxes.

• Kalshi's January trading volume reached nearly $10 billion (mostly sports-related), with over $1 billion traded during Super Bowl Sunday alone, as major operators like FanDuel and DraftKings launch competing platforms
• Unlike state-licensed sportsbooks (available at 21+ with consumer protections), prediction markets operate nationwide for users 18+ without state gambling taxes, age restrictions, or responsible gaming mandates
• Trump's CFTC has reversed course from the Biden administration, with new chair Michael Selig signaling support for event contracts and creating an advisory committee including CEOs from Kalshi, Polymarket, Coinbase, and FanDuel

Kevin Warsh, nominated to lead the Federal Reserve, has long advocated for shrinking the Fed's balance sheet from its current $6.7 trillion level, but experts warn this goal faces major technical and regulatory obstacles. The Fed's current monetary policy framework requires banks to hold large reserve levels, making significant balance sheet reduction potentially destabilizing to money markets without substantial changes to financial regulations and Fed operating procedures.

• The Fed's balance sheet peaked at $9 trillion in spring 2022 and has been reduced to $6.7 trillion, but further contraction (quantitative tightening) was halted in 2024 when money markets became unstable
• Analysts say shrinking the balance sheet further would require regulatory reforms to reduce banks' demand for reserves, a process taking 'quarters, not months,' and could increase financial stability risks
• Most Fed watchers believe Warsh will be constrained by financial realities, with analysts stating a return to pre-crisis policy tools or renewed quantitative tightening is unlikely as it would raise bond market borrowing costs

Top Wall Street executives including Goldman Sachs CEO David Solomon and Nasdaq CEO Adena Friedman will headline a 'World Liberty Forum' at Mar-a-Lago on Wednesday, hosted by Donald Trump Jr. and Eric Trump. The event, organized by the Trump family's crypto business World Liberty Financial, will also feature federal regulators and lawmakers, raising conflict of interest concerns among ethics experts given the Trump family has made over $1 billion from crypto projects during the president's first year in office.

• World Liberty Financial's USD1 stablecoin has surpassed $5 billion in circulation to become the fifth-largest stablecoin globally, with a 49% equity stake sold for $500 million to an Abu Dhabi-linked investment vehicle in January 2025
• Federal officials attending include CFTC Chairman Michael Selig, SBA Administrator Kelly Loeffler, and Under Secretary of State Jacob Helberg, alongside NYSE President Lynn Martin and Franklin Templeton CEO Jenny Johnson
• Six ethics experts expressed divergent views on conflicts of interest, with critics concerned about regulators and financial firms appearing to support a Trump family business, while defenders argue all presidents face inherent conflicts and note speakers are unpaid

U.S. Treasury yields declined on Tuesday during a holiday-shortened week as investors awaited several delayed economic data releases. The 10-year yield dropped over 3 basis points to 4.02%, while the 30-year yield fell to 4.66%, with markets closed Monday for Presidents' Day.

• Key data releases expected include ADP Employment Change, Empire Manufacturing Index, NAHB Housing Market Index on Tuesday, and delayed November-December housing data plus the Fed's preferred inflation gauge (PCE) on Friday
• FOMC minutes due Wednesday will be scrutinized for insights on the last interest rate decision and future monetary policy direction
• Traders are pricing in a 90% probability that the Federal Reserve will keep interest rates unchanged in the 350-375 basis point range

Luxury stocks including LVMH, Kering, and Hermes are experiencing heightened volatility as they recover from a two-year sales slowdown, driven by heavy hedge fund short positions and AI-related market concerns. The sector faces pressure from reduced wealthy consumer spending, with hedge funds' active trading against passive index funds amplifying price swings during earnings season.

• Luxury stocks and consumer discretionary sector were among the most shorted by hedge funds entering earnings season, with high short positions exacerbating volatility as investors bet on price declines
• Kering CEO warned that a potential AI market bubble and crash could severely impact luxury demand, as many wealthy Americans hold savings in stocks that fund their luxury purchases
• Valuation gaps are widening among luxury leaders: Hermes trades at 45 times forward earnings (over double LVMH's valuation) despite the sector slowdown, prompting investors to rotate between stocks seeking turnaround opportunities

Chinese equity markets have outperformed major US indices in 2026, driven by strong external demand and expectations of continued policy support from Beijing. The USD/CNY exchange rate fell below 7.0 as China reduced its US Treasury holdings to the lowest level since 2008, reflecting a strategic shift away from dollar dependence. The SSE Composite and Hang Seng Index are trading above key moving averages, targeting resistance levels near 4,191 and 30,000 respectively.

• Chinese exports rose 6.6% year-over-year in December 2025, with exports to Africa surging 25.8% while US-bound exports fell 20%, as Beijing diversifies trade partners ahead of April's Trump-Xi meeting.
• China plans to eliminate tariffs for 53 African nations starting May, after annual trade exceeded $300 billion, and now accounts for 20.9% of Latin American exports (excluding Mexico), surpassing both the US (16.4%) and EU (12.4%).
• Key downside risks include intensifying US-China trade tensions, potential tariffs from multiple governments, China's relationship with Iran as a major oil importer, and ongoing domestic challenges including deflation and the housing market crisis.

Cocoa beans from Ivory Coast's main harvest are piling up unsold in warehouses as exporters refuse to pay the government-set farmgate price of 2,800 CFA francs ($5.09) per kg amid a global cocoa price slump. The Coffee and Cocoa Council regulator has intervened to purchase 100,000 metric tons of unsold inventory, while some farmers are forced to accept illegal below-market prices as low as 1,500 CFA francs per kg due to financial pressures.

• Global cocoa prices fell to two-year lows due to declining demand, making Ivory Coast cocoa (world's largest producer) too expensive for exporters at the guaranteed farmgate price
• The regulator launched a January program to buy 100,000 metric tons of held cocoa and accelerated purchases in February due to concerns about declining quality in poor storage conditions
• Some buyers are illegally offering farmers 1,500-1,800 CFA francs per kg (46-64% of the regulated price), which desperate farmers accept due to lack of resources and mounting debts

London's FTSE 100 and FTSE 250 indexes rose 0.41% and 0.36% respectively on Monday, driven by a rebound in financial stocks following last week's AI-driven selloff. The gains come ahead of key UK economic data releases this week, including inflation, retail sales, and manufacturing activity reports that could influence the Bank of England's monetary policy decisions.

• British banks led gains with NatWest up 4.3% and Barclays up 2.7%, recovering after UK lenders posted their biggest weekly fall since late-March 2025 due to AI disruption concerns
• Investors are pricing in a 25-basis-point interest rate cut next month despite inflation remaining above the Bank of England's 2% target, as tight monetary policy weighs on the economy
• Pinewood stock plunged 28% after Apax Partners withdrew its $792 million buyout bid citing challenging market conditions, while SkinBioTherapeutics fell 41.4% on a profit warning and investigation into its former CEO

Major technology stocks have lost hundreds of billions in market value in early 2026 as investors grow skeptical about whether massive AI spending will deliver returns justifying their high valuations. Microsoft, Amazon, Nvidia, Apple, and Alphabet have collectively shed over $1.3 trillion in market capitalization. Meanwhile, non-AI-focused companies like TSMC, Samsung, and Walmart have gained significant value.

• Microsoft lost approximately $613 billion in market value amid concerns about AI business risks and competition from Google's Gemini and Anthropic's Claude, with its valuation dropping to $2.98 trillion
• Amazon's market cap fell by $343 billion (down 13.85%) to $2.13 trillion after announcing capital spending would jump more than 50% this year
• The shift reflects changing investor sentiment from rewarding long-term AI ambitions to demanding near-term earnings visibility, while TSMC, Samsung, and Walmart collectively added $746 billion in market value

European markets opened higher on Monday, with the pan-European Stoxx 600 up 0.4%, as investors assessed outcomes from the Munich Security Conference. The event highlighted growing concerns about transatlantic relations and Europe's push for greater defense spending and strategic autonomy. German Chancellor Friedrich Merz acknowledged a 'deep divide' in the transatlantic partnership, warning the post-World War Two rules-based order 'no longer exists.'

• Major European indices rose in early trading: London's FTSE 100 gained 0.15%, Germany's DAX advanced 0.34%, and France's CAC 40 climbed 0.1%
• European leaders at the Munich Security Conference emphasized the need for increased defense spending and discussed a common nuclear shield to enhance the continent's strategic autonomy
• Japan's economic growth came in at 0.2% annualized for the December quarter, significantly below the expected 1.6%, while U.S. markets remained closed for Presidents' Day

Global markets are bracing for continued volatility driven by AI disruption fears as major industry leaders gather at India's AI Impact Summit. Recent weeks saw sharp sell-offs across software, wealth management, credit, transport and real estate sectors as investors reassess which industries face disruption from agentic AI. The summit features top executives from Anthropic, Microsoft, and Mistral AI, with expectations of major cloud deals and AI infrastructure announcements.

• European software and analytics firms were hit hard, with RELX recording its worst session decline since 1988, while wealth managers also suffered significant losses
• UBS analysts warn that AI-driven disruption is accelerating beyond software and credit implications remain only partially priced in, with risks expected to increase through 2026-2027
• India's AI Impact Summit is expected to yield major partnership announcements and cloud deals as tech giants target India's large customer base and engineering talent pool

Federal Reserve Governor Stephen Miran, a Trump appointee, is advising Fed Chair nominee Kevin Warsh to adopt a forward-looking approach to monetary policy rather than the data-dependent stance favored by outgoing Chair Jerome Powell. Miran's comments signal a potential shift in the Fed's policymaking framework as Warsh's confirmation faces delays due to Republican opposition tied to a Justice Department probe into Powell.

• Miran argues the current economy does not warrant strict data dependence, stating 'The time for data dependence is when you have enormous uncertainty. I don't think we have enormous uncertainty.'
• Sen. Thom Tillis (R-N.C.) has placed a hold on Warsh's nomination until the administration concludes its investigation into Powell, requiring an unlikely 60-vote discharge to advance confirmation.
• Miran joined the Fed board in August amid turmoil including a legal clash between the Trump administration and Governor Lisa Cook, whose case is now before the Supreme Court.

Kevin Warsh has been nominated as the next Fed Chairman, bringing crisis-tested experience from his 2006-2011 tenure as Fed Governor and a reputation as an inflation hawk. His appointment initially reassured bond markets by reducing uncertainty around monetary policy leadership. The nomination awaits Senate confirmation, with policy expected to remain data-dependent despite potential shifts in Fed communication and balance sheet management.

• Warsh's leadership would likely emphasize shrinking the Fed's balance sheet and potentially reducing forward guidance, which could increase bond market volatility and impact funding markets
• The FOMC's 12-member voting structure includes both Biden and Trump appointees plus regional bank presidents, ensuring policy remains driven by committee consensus rather than a single leader
• Senate confirmation may face delays due to a 'Powell subpoena' situation mentioned by the Senate Banking Committee, though the author expects Warsh will ultimately clear the process

January's economic data showed U.S. inflation cooling to 2.4% year-over-year while the labor market added 130,000 jobs and unemployment held at 4.3%, reviving hopes for a 'soft landing' scenario in 2026. The CPI rose 0.2% monthly, slightly below expectations, though core inflation remained sticky at 2.5% annually, driven largely by persistent shelter costs.

• Headline CPI rose 0.2% in January (below the 0.3% forecast), with energy prices falling 1.5% and gasoline down 3.2%, while core CPI increased 0.3% monthly with shelter up 3.0% year-over-year
• Nonfarm payrolls grew by 130,000 jobs with gains concentrated in healthcare (82,000) and social assistance (42,000), while average hourly earnings rose 3.7% annually to $37.17
• Annual benchmark revisions cut 2025 job gains from 584,000 to just 181,000, suggesting the labor market has cooled significantly from its post-pandemic pace and making future data releases more critical

Gold experienced a sudden flash crash on Thursday morning, plunging from $5,068 to $4,889 in just 20 minutes with no clear catalyst, leaving Wall Street analysts bewildered. The yellow metal recovered quickly to reclaim $5,000 support, but the extreme volatility has left institutional investors uncertain while retail traders remain bullish ahead of a holiday-shortened trading week.

• Wall Street sentiment shifted neutral (33% bullish, 25% bearish, 42% sideways) after the unexplained selloff, while Main Street investors held at 63% bullish in Kitco's survey of 257 retail traders
• CME gold futures open interest has dropped by nearly 150,000 contracts since late January as retail traders migrate to smaller 'mini' contracts, with analysts suggesting speculators and momentum traders are now driving volatility more than institutional players
• Analysts cited multiple risks for next week including thin holiday trading (U.S. Presidents Day, Chinese New Year), potential Supreme Court ruling on presidential tariff powers, and Fed Chair nominee Kevin Warsh's upcoming rhetoric as key factors to watch

The Bureau of Labor Statistics' Consumer Price Index for January 2026 reveals significant disparities in how inflation affects different spending categories and households. Medical Care, Housing, and Food have each grown over 100% since 2000, while categories like college tuition (up nearly 200%) and daycare (up nearly 160%) have surged even more dramatically. Core inflation stands at 2.50% annualized, slightly above headline CPI at 2.39%, but cumulative CPI since 2000 has increased 93.3%.

• Three categories—Medical Care, Housing, and Food & Beverage—have each increased over 100% since 2000, with food costs spiking significantly post-pandemic
• College tuition and fees have risen nearly 200% since 2000, while daycare and preschool costs have surged 160%, with accelerated growth starting in late 2022 after pandemic-era grants expired
• Energy costs (6.3% of total expenditures) are distributed across categories rather than tracked separately, and core inflation excludes food and energy but includes alcoholic beverages, creating disparate impacts on different household types