February 7th Market Overview

Happy Friday

Markets stumbling into the weekend as tariff talk and spiking inflation expectations (4.3%) rattled investors today. January’s jobs report beat forecasts (4% unemployment), tech went red on Amazon’s weak guidance.

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Executive Summary

• Consumer sentiment falls to 67.8, with one-year inflation expectations jumping to 4.3%
  

• January unemployment drops to 4%, wage growth exceeds expectations
  

• Tech sector pressured by $AMZN’s weakest growth guidance on record
  

• Hong Kong plans WTO complaint against U.S. tariffs
  

Market Overview

Key Market Drivers

1. President Donald Trump stated plans to introduce reciprocal tariffs, aiming to raise U.S. tariffs to match rates charged by other countries on American goods
   

2. University of Michigan's consumer sentiment falls to 67.8, below 71.3 expected
   

3. Michigan survey shows inflation expectations jump to 4.3%, highest since November 2023
   

4. January jobs report reveals unemployment dropping to 4% with higher than expected wage growth
   

Stock Spotlight

• $EXPE ▲ 15%: Beats Q4 expectations, reinstates quarterly dividend at $0.40

• $PINS ▲ 20%: Reports strong earnings, receives Bernstein upgrade to outperform with $47 target

• $NET hits record quarter, signs largest-ever $20M contract with Fortune 100 tech company

• $AFRM ▲ 47% YoY revenue growth to $866.4M, GMV reaches $10.1B

Big Name Updates

• $AMZN: Projects 5-9% Q1 revenue growth, $900M forex impact this quarter

• $META: Launches PARTNR program for human-robot collaboration research

• $TSLA: China-made vehicle sales drop 11% YoY to 63,238 units

• $NFLX: Exploring U.S. Formula 1 broadcast rights bid for 2026

Other Notable Company News

• $NET: Bernstein notes strongest customer additions since COVID era

• $DKNG: Needham maintains $60 target, cites Super Bowl promotion strategy

• $NKE: Citi downgrades to neutral, cuts target to $72 from $102

• $TDOC: Citron Research labels as “under-the-radar AI play”

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Sector Watch

Bond Market

The 10-year Treasury yield pushes above 5% following strong wage data and elevated inflation expectations from the Michigan survey. Treasury Secretary Bessent indicates the administration “expects yields to decline naturally under Trump’s policies.”

Policy Watch

• Hong Kong prepares WTO complaint against 10% U.S. tariffs

• VP Vance tasked with overseeing potential TikTok sale

• Indian PM scheduled for U.S. visit February 12-13

• UK demands $AAPL provide backdoor access to encrypted data
  

What to Watch

1. Trump's Tariff Announcement:

• Full details of reciprocal tariff implementation

• Potential retaliation from trading partners

• Impact assessment on multinational corporations

• Focus on sectors most exposed to international trade

2. AI Infrastructure Developments:

• $AMZN's Trainium 2 chip performance data

• Custom chip demand signals from cloud providers

• Supply constraint updates for H2 2025

• Impact on $NVDA and other AI hardware makers

3. Inflation and Consumer Data:

• Follow-through from Michigan survey's 4.3% inflation expectation

• Retail spending patterns after wage growth data

• Bond market reaction to inflation signals

• Consumer discretionary sector response

4. Tech Sector Realignment:

• Cloud spending trends after $AMZN guidance

• $NET's momentum with large enterprise deals

• $AFRM's expansion in UK market

• AI integration progress across major platforms