U.S. Stock Outlook | U.S. ADP Nonfarm Employment Change hits a new high since October last year, DeepSeek impacts and reshapes U.S. stocks, Alphabet falls over 7% in pre-market trading

1. As of February 5th (Wednesday) before the US stock market opens, the three major US stock index futures are all down. As of the time of writing, Dow futures are down 0.15%, S&P 500 futures are down 0.37%, and Nasdaq futures are down 0.70%.

1. As of the time of writing, the German DAX index is up 0.05%, the UK FTSE 100 index is up 0.29%, the French CAC 40 index is down 0.26%, and the Euro Stoxx 50 index is down 0.13%.

1. As of the time of writing, WTI crude oil is down 1.07%, priced at $71.92 per barrel. Brent crude oil is down 1.12%, priced at $75.35 per barrel. Analysts believe that US tariff policies may affect the total volume of global trade, and oil prices may face further pressure.

Market News

The US January ADP employment figures, known as the "little non-farm," recorded 183,000 jobs, the highest since October last year. The expectation was 150,000, with a previous value of 122,000. The hiring momentum from the last quarter of 2024 has continued into January, with stable wage growth in January and a year-on-year salary increase of 4.7% for employed individuals. Those changing jobs saw a wage increase of 6.8%. Notably, the US January non-farm report will be released this Friday, and analysts believe that the US labor market may see robust growth at the start of 2025, while the anticipated annual revision may show that the hiring pace over the past few years has been significantly more moderate. Economists predict an increase of 170,000 in non-farm employment for January, following substantial growth in non-farm employment over the past two months as the labor market recovers from the impacts of hurricanes and large-scale strikes.

The hawkish Federal Reserve and DeepSeek's shockwave reshape the "bull market narrative" of US stocks, with the "seven giants" bidding farewell to the leading role? A recent report from Morgan Stanley's wealth management division pointed out that the US benchmark index—the S&P 500 index—is showing signs of fatigue, and stated that the Federal Reserve's pause in interest rate cuts and the "low-cost AI shockwave" brought by DeepSeek are changing the "bull market narrative logic" of the US stock market. Morgan Stanley emphasized in the report that, overall, investors should focus on the "rotation and switching trends of leadership forces" in the US stock market, with the core contributing forces in the US stock market expected to shift from the stocks of the "seven major technology giants" to value stocks, cyclical stocks, and long-term performance growth areas of "non-generative AI types." Trump's tariffs may cause construction costs to soar by $29,000, potentially suppressing U.S. home buying demand. President Donald Trump's tariff plan could significantly increase the cost of home construction in the U.S., further exacerbating housing shortages. David Belman, a second-generation home builder in Wisconsin, pointed out that Trump has proposed a 25% tariff on goods from Canada and Mexico, a plan that has been postponed until at least March, while a 10% tariff is currently imposed on products from China. These tariff measures could increase the cost of building an average home by as much as $29,000.

Federal Reserve officials voice caution: Adjusting interest rates should be done carefully, observing the impact of Trump's policies. Federal Reserve Vice Chairman Philip Jefferson stated that as long as the economy and labor market remain strong, it is appropriate for policymakers to be cautious when adjusting interest rates. In a speech on Tuesday, Jefferson said, "I still believe that as we gradually shift to a more neutral stance, gradually reducing the monetary policy constraints on the economy is the most likely outcome. I think we do not need to rush to change our stance." San Francisco Fed President Mary Daly also stated on Tuesday that the U.S. economy is in good shape, and the Fed does not need to react quickly to the policies introduced by the Trump administration. Daly said, "There is a lot of uncertainty at the moment. But we can take our time to observe the impact of the economy and any policy changes. We do not need to take preemptive actions in our decision-making."

Gold prices may further rise? World Gold Council: Global central bank demand will provide additional support. According to the World Gold Council, despite the gold industry just finishing a record year for gold demand, there are no signs of a slowdown in global central bank demand for gold. The industry association stated in its "Gold Demand Trends" report on Wednesday: "Geopolitical and economic uncertainties remain high in 2025, and major central banks seem likely to once again view gold as a stable strategic asset." Kitco Metals senior market analyst Jim Wyckoff noted that given the uncertainty brought to the market by the current U.S. government's destructive policies, coupled with the possibility that major central banks may increase gold purchases to diversify away from dollar assets, gold prices could reach $3,000 this year.

Individual Stock News

Cloud business drags down Alphabet (GOOGL.US) Q4 performance, can $75 billion AI infrastructure investment save the day? The earnings report showed that Alphabet's total revenue in the fourth quarter was $96.5 billion, a year-on-year increase of 11.8%, falling short of market expectations; earnings per share were $2.15, higher than the market expectation of $2.13. Sales, excluding partner expenses, were $81.6 billion, while analysts had expected $82.8 billion. The company also projected that capital expenditures would reach $75 billion in 2025, far exceeding analysts' expectations of $57.9 billion, related to the construction of data centers and artificial intelligence infrastructure. Investors will seek to ensure that AI spending is not excessive, following the surprise from Chinese AI startup DeepSeek that shocked Silicon Valley. The stock fell over 7% in pre-market trading AMD (AMD.US) data center revenue fell short of expectations, but the "DeepSeek Storm" is expected to help AMD break Nvidia's "monopoly myth." Data shows that in the fourth quarter, AMD's data center business revenue was approximately $3.86 billion, a year-on-year increase of 69%, but Wall Street analysts had previously expected around $4.09 billion. The chip giant expects its data center business revenue for the current quarter to be between $6.8 billion and $7.4 billion, with analysts generally expecting about $7.04 billion. The Q4 earnings report confirmed some analysts' and investors' concerns—that AMD currently struggles to shake Nvidia's monopoly share in the AI chip sector. However, some Wall Street analysts believe that the "low-cost AI computing power storm" led by DeepSeek may be the core catalyst driving AMD to potentially erode Nvidia's up to 90% "monopolistic market share" in the AI chip market. AMD's pre-market stock fell nearly 10%.

Advertising reform shows initial results, Snap (SNAP.US) performance and guidance exceed expectations. Data shows that Snap's quarterly sales for the period ending December 31 increased by 14% to $1.56 billion. The social media company expects first-quarter sales to reach up to $1.36 billion, higher than analysts' average expectation of $1.33 billion. Snap stated that new advertising formats attracted more small and medium-sized advertisers to use its image social application. User growth for the Snapchat app also exceeded analysts' expectations, with daily active users reaching 453 million in the fourth quarter. Excluding specific items, earnings per share rose to $0.16, above the average expectation of $0.14. The stock rose nearly 3% in pre-market trading.

Due to a strong dollar, Uber (UBER.US) Q1 order guidance is below expectations. The company's Q4 ride-hailing revenue grew by 25%, and delivery revenue grew by 21%, both exceeding expectations. Total revenue increased by 20.3% year-on-year to $11.96 billion, surpassing analysts' average expectation of $11.77 billion. The total net profit was $6.88 billion, of which $6.4 billion benefited from the release of tax valuations. Looking ahead, Uber expects total orders in the first quarter to be between $42 billion and $43.5 billion, which includes a 5.5 percentage point impact from the strong dollar. Meanwhile, analysts expect bookings to be $43.42 billion. The company expects adjusted core earnings for the first quarter to be between $1.79 billion and $1.89 billion, slightly lower than analysts' estimate of $1.85 billion.

Increased supply of weight loss drugs, Novo Nordisk (NVO.US) expects sales to soar again this year. Danish pharmaceutical company Novo Nordisk stated that with the increased supply of the best-selling diabetes drug Ozempic and obesity treatment drug Wegovy, sales are expected to soar again this year. The company stated on Wednesday that at fixed exchange rates, revenue is expected to grow by 16% to 24% this year; in contrast, last year's growth rate was 26%, which is also below some analysts' expectations. The company's net profit for the fourth quarter was 28.23 billion Danish kroner (approximately $3.98 billion), exceeding the expected 26.09 billion Danish kroner The annual net profit reached DKK 100.99 billion, exceeding the expected DKK 99.14 billion. In the three months ending last December, Wegovy sales grew by 107% year-on-year to DKK 19.87 billion (approximately USD 2.76 billion). The stock rose over 3% in pre-market trading.

"Moana 2" and streaming boost Disney (DIS.US) Q1 earnings significantly exceeding expectations. Disney's first-quarter earnings report far surpassed Wall Street estimates, primarily benefiting from the strong box office performance of the animated sequel "Moana 2" during the holiday season, as well as rising profits from the company's streaming business. Data shows that in the first fiscal quarter ending last December, adjusted earnings per share grew by 44% to USD 1.76, exceeding market expectations of USD 1.45. Revenue increased by 5% to USD 24.69 billion, slightly above analysts' expectations of USD 24.62 billion. Operating profit grew by 31% year-on-year to USD 5.1 billion. Looking ahead, Disney expects adjusted earnings per share to grow by 6%-9% compared to the previous year in fiscal year 2025, with operating profit in the streaming entertainment segment expected to increase by approximately USD 875 million.

Important Economic Data and Event Forecast

Beijing time 23:00 US January ISM Non-Manufacturing PMI

Beijing time 23:30 US EIA crude oil inventory change for the week ending January 31, US EIA gasoline inventory change for the week ending January 31, US EIA distillate inventory change for the week ending January 31, US EIA Oklahoma-Cushing crude oil inventory for the week ending January 31, US EIA weekly crude oil imports for the week ending January 31

Earnings Forecast

Thursday morning: Qualcomm (QCOM.US), ARM (ARM.US), MicroStrategy (MSTR.US)

Thursday pre-market: AstraZeneca (AZN.US), Bristol Myers Squibb (BMY.US), Eli Lilly (LLY.US), Roblox (RBLX.US)