Daily Report 6th February - AI Monetisation fears drive the market down further
U.S. stocks sold off, led by large technology names, with the main U.S. indices extending a multi‑day losing streak and volatility moving higher. Treasury yields fell notably along the curve as traders increased bets on Federal Reserve rate cuts later this year.
Watch Youtube Video The S&P 500 and Nasdaq were down for a third straight session, with the S&P dropping a little over 1% and the Nasdaq about 1.5% in the latest session, while the Dow fell more than 400 points. The recent Nasdaq slide was described as the worst three‑day drawdown since April of last year, underscoring a clear risk‑off tone in growth stocks. Losses were concentrated in tech and consumer‑related names, with big platform companies and AI beneficiaries under pressure amid concerns about high valuations and uneven AI monetization. Chipmaker Qualcomm tumbled after a weak outlook, while mega‑caps like Amazon, Microsoft, Apple, Meta, Tesla and Eli Lilly also traded lower, dragging the indices. Amazon down 6-7% despite beating its earnings target. Rates, Fed expectations, and volatility U.S. 2‑year and 10‑year Treasury yields fell by roughly 6–7 basis points, reflecting a shift toward safety and rising expectations for earlier Fed cuts, including some probability of a move by March and higher odds by mid‑year. The VIX volatility index spiked above 23 intraday before easing back near 21, signaling elevated demand for downside protection in equities. and general uncertainty. Commentary emphasized mounting “labor pains” and softer confidence indicators, which investors see as increasing pressure on the Fed to ease policy. At the same time, there is growing differentiation between companies successfully turning AI investment into profits and those mainly incurring higher costs, contributing to sharp single‑stock swings and broader market volatility.
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