AI Disruption Concerns, Geopolitical Tensions, and Fed Policy in Focus

Index Update:  Software-as-a-service companies remained under pressure amid concerns that advancing AI automation tools could reduce demand for traditional enterprise software, with Salesforce, Intuit, and ServiceNow extending their monthly declines in pre-market trading. Hardware firms linked to datacenter investment also saw volatility as investors questioned whether heavy AI-driven capital spending will generate expected returns. In contrast, Warner Bros rose over 2% after resuming deal discussions with Paramount on an improved offer. Broader sectors traded mixed, supported by softer inflation data that strengthened expectations of multiple Federal Reserve rate cuts this year.

Market Movers:  On Friday, the top gainers were Algorhythm Holdings, Inc. (+222.22%), followed by JIADE LIMITED (+125.44%). On the contrary, Rich Sparkle Holdings Limited. (-50.03%), and Mega Fortune Company Limited. (-39.47%) declined the most the same day.

Commodities Update:  Oil prices retreated on Tuesday, with WTI falling over 1% toward USD 63 per barrel and Brent dropping below USD 68, as investors awaited the second round of US–Iran nuclear talks in Geneva. The pullback erased most of Monday’s 1.4% gains, which were driven by heightened geopolitical tensions after Iran conducted naval drills in the Strait of Hormuz following the deployment of a second US aircraft carrier. While potential supply disruptions and parallel US-led Russia–Ukraine negotiations added to uncertainty, gains were capped by reports that OPEC+ may resume output increases in April, adding supply to an already oversupplied market. Gold declined more than 1% to around USD 4,920 per ounce, marking a second straight loss amid thin trading due to holidays in China and other Asian markets. Despite softer US inflation data last week strengthening expectations of Federal Reserve rate cuts—currently priced at slightly more than two reductions starting around July—investors remained cautious ahead of the Fed minutes, US GDP data, and the PCE inflation report. Silver fell over 2% below USD 76 per ounce, extending its three-week slide amid subdued liquidity and lingering effects from January’s speculative surge in China. After hitting record highs above USD 120 in late January and subsequently plunging on position unwinding, silver has struggled to stabilize. Market focus now turns to upcoming Fed communications and core PCE data for clearer direction on US monetary policy.

Macro Updates:  US Dollar Holds Firm Ahead of Key Economic Data

The dollar index traded above 97, maintaining recent gains as investors awaited key US economic releases, including the Federal Reserve’s meeting minutes, advance GDP data, and the core PCE inflation index. Although the currency faced pressure last week after softer inflation data strengthened expectations for rate cuts, stronger payroll growth and a surprise decline in unemployment signaled labor market resilience. Markets are currently pricing in a June rate cut, with around 62 basis points of total easing expected this year, reflecting two quarter-point reductions and roughly a 50% chance of a third.

Private Sector Hiring Shows Renewed Momentum

US private employers added an average of 10,250 jobs per week in the four weeks ending January 31, 2026, up from 7,750 in the prior period, according to ADP Research. The data mark a third straight week of improving job gains and the strongest hiring pace since late November, indicating a pickup in labor market momentum.

Bonds Commentary:  The US 10-year Treasury yield declined toward 4%, its lowest level since early December, as softer inflation data strengthened expectations for Federal Reserve rate cuts. Markets are pricing in around 62 basis points of easing this year, suggesting two quarter-point cuts and roughly a 50% chance of a third, with June seen as a potential starting point. However, stronger-than-expected payroll growth and a drop in the unemployment rate signaled resilience in the labor market. Investors now await the Fed meeting minutes, advance GDP figures, and core PCE inflation data for clearer direction on monetary policy.

Futures Update:  U.S. stock futures declined Tuesday as concerns over AI-driven disruption pressured sentiment following the long weekend. Recent fears that artificial intelligence could reshape business models triggered sharp losses last week in software, brokerage, and trucking stocks, marking the steepest weekly drop for major indexes since mid-November. While some analysts view AI adoption as a rotational theme rather than a broader market risk, uncertainty has been heightened by advances from Chinese AI players, including Alibaba’s launch of its Qwen 3.5 model. Premarket trading showed weakness across major technology names such as Nvidia, Microsoft, and Alphabet. Meanwhile, investors also monitored renewed U.S.–Iran nuclear talks and looked ahead to the upcoming personal consumption expenditures (PCE) report, which could influence the Federal Reserve’s interest rate outlook.

After initially displaying a lack of direction early in the trading session, stocks gained some momentum in the afternoon on Friday but ultimately retreated again before the market closed. The S&P 500 declined by less than a tenth of a percent, finishing at 6,836.18. From a technical perspective, the index encountered resistance at significant levels and drifted lower, suggesting the possibility of a short-term decline. The 14-day Relative Strength Index (RSI) remains below the midpoint, indicating continued bearish sentiment. Key support is seen around 6,700, which could serve as a level for a potential rebound, while resistance is near 6,900.