U.S. stocks mixed, Dow continues to hit new highs, U.S. December retail sales unexpectedly stagnate, boosting expectations of rate cuts this year

On Tuesday, Eastern Time (February 10), the night before the non-farm payrolls release, U.S. stocks showed mixed gains and losses, with the overall market remaining cautious. The Dow Jones Industrial Average edged higher, continuing to hit new highs. December retail sales data unexpectedly stagnated, boosting bets of Fed rate cuts this year, and U.S. Treasury yields declined. Commodities and cryptocurrencies also traded sideways and volatile.

【U.S. Stock Indices】

At the close, the S&P 500 fell 0.33% to 6,941.81; the Dow Jones rose 0.10% to 50,188.14; the Nasdaq dropped 0.59% to 23,102.47.

Latest data shows weak consumer spending at the end of the holiday season. U.S. December retail sales unexpectedly remained flat month-over-month, below the expected 0.4% growth, and core retail sales used for GDP calculation declined 0.1%. Previous months’ figures were also revised downward. Retail stocks came under pressure on Tuesday, with Costco down over 2% and Walmart down over 1%.

Following the data release, the market slightly increased the probability of three rate cuts this year, with two already fully priced in. However, most institutions believe that a single retail report is insufficient to alter the Fed’s overall path. Futures markets still expect the first rate cut to occur as early as June.

In response, BMO Capital Markets noted that consumer momentum at the end of 2025 is significantly weaker than previously assumed, providing a less optimistic starting point for growth in 2026. Northlight Asset Management bluntly stated: “Consumer sentiment has finally caught up with reality, but not in a good way.”

Anthony Saglimbene, Chief Market Strategist at Ameriprise Financial, said, “Another key factor putting pressure on middle- and lower-income consumers is their perception of the employment environment, and we know their confidence is becoming more uncertain. If January job growth falls short of expectations, it could impact the market’s broad rally theme.”

Saglimbene added, “The market seems to be rotating into sectors that may be less susceptible to AI trading shocks.” He pointed out recent gains in materials, utilities, and other sectors.

The software sector has stabilized somewhat but remains fragile overall. Analysts believe recent market reactions to “AI disruption” are more emotional, characterized by “sell first, think later.” Goldman Sachs indicated that anxiety around AI disruption is nearing a cyclical peak, and some sector declines lack fundamental triggers. JPMorgan also noted that the historic pullback in software stocks reflects excessive short-term AI impact pricing rather than a rejection of long-term fundamentals.

Goldman Sachs CEO David Solomon said last week’s sharp decline in software stocks due to fears of AI competition might be an overreaction. He stated at a UBS conference in Key Biscayne, Florida, “I think the narrative over the past week has been somewhat too broad. There will be winners and losers, and many companies will undergo transformation.”

【U.S. Treasury Bonds】

U.S. Treasury yields declined across the board, with the benchmark 10-year yield ending at 4.148%, and the 2-year yield, sensitive to Fed policy, at 3.452%.

Analysts believe the decline in yields provides medium-term support for gold and silver, but short-term trends have clearly entered a phase of high-level digestion.

【Popular U.S. Stocks】

Among popular stocks, Nvidia fell 0.79%, Apple down 0.34%, Google C down 1.78%, Google A down 1.77%, Microsoft down 0.08%, Amazon down 0.87%, TSMC up 1.85%, Meta down 0.96%, Tesla up 1.89%, Ouster Semiconductor down 1.13%, Intel down 6.19%.

In major news, Google’s parent company Alphabet is expected to raise nearly $32 billion in debt within less than 24 hours. After issuing $20 billion in dollar-denominated bonds on Monday across seven tranches, Alphabet is issuing bonds denominated in pounds and Swiss francs, breaking records in both markets.

【Global Indices】

In Europe, the FTSE 100 index declined slightly by 0.31% to 10,354 points. France’s CAC 40 rose slightly by 0.06% to 8,328 points. Germany’s DAX fell slightly by 0.11% to 24,988 points.

In Asia, the Hang Seng Index rose modestly by 0.58% to 27,183 points. The China Enterprises Index increased by 0.81% to 9,243 points. The Nikkei 225 surged 2.28% to 57,651 points.

【China Indices】

On February 10, overnight, the Hang Seng Tech Index futures rose 0.39%, the Nasdaq Golden Dragon China Index increased 0.87%, and the FTSE China A50 Index was up 0.02%.

【Chinese Concept Stocks】

Popular Chinese stocks included Tencent Holdings (HK) down 1.61%, Alibaba up 2.18%, Pinduoduo down 0.13%, NetEase down 0.01%, Baidu up 0.47%, Ctrip down 1.84%, Li Auto up 2.94%, Xpeng Motors up 1.65%, NIO up 1.53%.

【Forex and Commodities】

On Tuesday, the US dollar index remained near a one-week low, essentially unchanged, closing at 96.799.

Spot gold paused its two-day rally, initially spiking after the retail sales data but quickly giving back gains. London gold closed down 0.18% at $5,039 per ounce. Spot silver briefly broke below $80, with London silver ending down 0.67% at $81 per ounce.

As markets await developments in US-Iran negotiations, Russia-Ukraine ceasefire talks, and US economic and oil inventory data, crude oil prices traded within a range. WTI crude settled down 0.17% at $64.25 per barrel, while Brent crude rose 0.06% to $69.08 per barrel.

【Market Highlights】

U.S. December Retail Sales Unexpectedly Stagnate; Weak Consumer Spending at Year-End

U.S. December retail sales underperformed compared to the 0.6% MoM increase in November and fell short of Wall Street’s 0.4% expectation. Holiday season consumer momentum was weak and uneven. Of 13 retail categories, 8 declined, with low-income groups’ spending especially weak. While high-income households supported overall consumption through asset appreciation, high prices and weather conditions suppressed broader spending.

Fed: U.S. Consumer Debt Default Rate Surges to Near Decade-High Levels

A report from the New York Fed shows that in Q4 last year, the delinquency rate on U.S. household debt rose to 4.8%, the highest since 2017, driven mainly by rising defaults among low-income and young borrowers. The increase was primarily due to mortgage delinquencies.

Google Raises Nearly $32 Billion in 24 Hours; 100-Year Pound Bonds Achieve Nearly Tenfold Oversubscription

Google’s parent company Alphabet plans to raise nearly $32 billion in debt within less than 24 hours. After issuing $20 billion in dollar bonds across seven tranches on Monday, Alphabet issued bonds denominated in pounds and Swiss francs, breaking records in both markets. The pound bonds include an extremely rare 100-year maturity, the first such issuance by a tech company since the dot-com bubble era. All bond tranches received strong demand, with the dollar bonds reportedly oversubscribed by over $100 billion. The £1 billion (about $1.4 billion) 100-year bond was nearly ten times oversubscribed.

AI Panic “Contagion”: Altruist’s New Tool Spooks Wealth Management Stocks; Charles Schwab Down Over 9% Intraday

On Tuesday, Altruist launched an AI tool for tax planning, directly targeting core wealth management business. Insurance broker stocks experienced similar declines after Insurify launched a new tool on Monday, with the S&P 500 Insurance Index falling nearly 4%, the largest drop since October last year. Last week, tools released by Anthropic triggered a sell-off in software stocks, with Thomson Reuters experiencing a 20% weekly decline—the largest in its history.

Elon Musk’s xAI Loses Another Key Executive; Co-Founder Wu Yu-Hui Resigns

Other co-founders like Igor Babuschkin, Kyle Kosic, and Christian Szegedy have also left. Greg Yang announced last month he would step down to focus on fighting Lyme disease.

U.S. President Trump Expected to Hold Second Iran Talks Next Week

He stated, “Iran will not have nuclear weapons or missiles.” If US-Iran negotiations fail, the US may deploy another aircraft carrier strike group to the Middle East in preparation for possible military action.

Ray Dalio’s Latest In-Depth Interview: US on the Brink of Chaos and Civil War; Gold as the Only Safe Haven

Bridgewater’s Dalio issued a stark warning: the US is in “Phase Five,” on the verge of chaos and civil war. Under debt imbalance and political polarization, gold remains the only “non-others’ debt” safe haven, recommended to comprise 5%-15% of investment portfolios. Dalio advised diversification and choosing stable residences to hedge against fiat devaluation and upcoming turbulence.

Paramount Unwilling to Give Up: Improves Hostile Takeover Plan, Pledges $2.8 Billion Breakup Fee for Warner Bros.

Paramount revised its hostile bid for Warner Bros., promising to pay a $2.8 billion breakup fee, a $1.5 billion debt refinancing guarantee, and quarterly “tardiness fees” of $0.25 per share. However, the base offer remains at $30 per share, and analysts believe a bid above $32 is needed to sway Warner Bros.’ board.

U.S. Commerce Secretary Raimondo Admits Visiting Jeffrey Epstein’s Private Island

Commerce Secretary Gina Raimondo acknowledged on Tuesday that years ago, he had lunch on Jeffrey Epstein’s notorious private island with family. “In 2012, during a family vacation, I took a boat there and indeed had lunch with him,” Raimondo testified before the Senate Appropriations Committee.