Macroeconomic & Market Overview

• U.S. stock indices are facing pressure, with futures lower and Treasury yields rising ahead of the January Consumer Price Index report. The market is showing a pattern of opening higher on overseas gains before fading during the U.S. session.
• A significant market selloff is being driven by fears of Artificial Intelligence (AI) disrupting established business models. The Roundhill Magnificent Seven ETF entered correction territory, down nearly 11 percent from its recent high, as what were once seen as AI beneficiaries are now trading lower in unison.
• This "AI scare trade" has spread beyond software, sharply impacting the logistics sector. The Russell 3000 Trucking Index dropped significantly after a small firm, Algorhythm Holdings, claimed its AI platform boosts freight management efficiency. Shares of major brokers like C.H. Robinson Worldwide and Landstar System plunged on the news.

Major U.S. Policy & Regulatory Changes

• The Trump administration has revoked the Environmental Protection Agency's 2009 endangerment finding, which served as the legal basis for regulating greenhouse gases under the Clean Air Act. This move eliminates federal vehicle emissions standards.
• The policy shift is expected to benefit traditional automakers like General Motors, Ford, and Stellantis, which focus on more profitable trucks and SUVs, while potentially harming Tesla by removing a key market for its high-margin emissions credits.
• The administration is also reportedly considering rolling back tariffs on steel and aluminum products.
• A potential shutdown of the Department of Homeland Security looms this weekend after the Senate failed to advance a funding bill amid disagreements on immigration enforcement.

Sector-Specific Analysis

• Technology & Software: The software sector is experiencing a severe downturn, with the iShares Expanded Tech-Software Sector ETF (IGV) down 31 percent from its peak. Citigroup analysis suggests a short-term bounce may be due after a "selling crescendo," but warns of longer-term risk as the market re-evaluates the terminal value of software companies. A potential 10 percent to 20 percent reduction in terminal value is being priced in by investors.
• Semiconductors: In contrast to the software gloom, semiconductor-equipment maker Applied Materials (AMAT) shares surged after forecasting strong revenue growth driven by demand for AI processors. Investment is also flowing into AI chip startups like Positron, Cerebras, and D-Matrix as alternatives to Nvidia, particularly for the "inference" market where models are run after training.
• Cryptocurrency: Weakness in digital assets is weighing on industry firms. Coinbase reported a fourth-quarter loss and a 22 percent drop in revenue as Bitcoin's price has declined 15.9 percent year-to-date.

Key Corporate Developments

• Goldman Sachs (GS): The firm's top lawyer and general counsel, Kathy Ruemmler, is resigning following the release of documents detailing her close ties to Jeffrey Epstein.
• DraftKings (DKNG): Shares slid after its 2026 profit guidance of USD 700 million to USD 900 million in adjusted Ebitda fell below analyst expectations. The company cited steep spending to build out its new prediction markets platform.
• Berkshire Hathaway: Investors are anticipating the first annual shareholder letter from new CEO Greg Abel on February 28, seeking clarity on his capital allocation strategy for the company's over USD 350 billion cash reserve.
• Other Companies: Pinterest (PINS) stock dropped on fears of AI disruption. Maplebear (CART), Instacart's parent company, fell after reporting lower fourth-quarter profit following a USD 60 million settlement with the Federal Trade Commission.