U.S. Stock Market Outlook | U.S. January Non-Farm Payrolls Miss Expectations, Unemployment Rate Unexpectedly Declines, Alibaba Denies Investment Rumors in DeepSeek

1. As of the time of writing on February 7 (Friday), U.S. stock index futures are basically unchanged, with Nasdaq futures down 0.09%, S&P 500 futures down 0.06%, and Dow futures up 0.02%.

1. As of the time of writing, the German DAX index is down 0.11%, the UK FTSE 100 index is down 0.18%, the French CAC40 index is down 0.19%, and the Euro Stoxx 50 index is down 0.19%.

1. As of the time of writing, WTI crude oil is up 0.62%, priced at $74.75 per barrel. Brent crude oil is up 0.64%, priced at $71.06 per barrel.

Market News

U.S. non-farm payrolls fall short of expectations, unemployment rate unexpectedly declines. In January, the seasonally adjusted non-farm employment figure in the U.S. recorded 143,000, significantly below the market expectation of 170,000, marking the lowest level since October of last year. The U.S. unemployment rate in January recorded 4.0%, the lowest since May of last year, with market expectations remaining at 4.1%. The number of non-farm jobs added in December was revised up by 51,000 from 256,000 to 307,000. After revision, the total number of jobs added in November and December was 100,000 higher than previously reported. The hiring pace slowed in January due to wildfires and snowstorms hindering growth in some sectors, while the Federal Reserve hinted at pausing the interest rate cut process, which poses adverse factors for economic growth. However, the U.S. labor market remains healthy, continuing to drive economic growth without causing inflationary pressures. This also helps explain why Federal Reserve policymakers expressed no urgency to further lower borrowing costs after three rate cuts last year.

"Blood is flowing"! Tariff storm + tech stock "earnings kill," over $10 billion in funds flee U.S. stocks. As of the week ending February 5, U.S. stock funds experienced their fourth weekly outflow in five weeks, due to U.S. President Donald Trump's tariffs exacerbating geopolitical risks and investors being cautious about the weaker-than-expected earnings of major tech companies. According to LSEG Lipper data, investors net sold $10.71 billion worth of U.S. stock funds, the largest single-week sell-off since December 18, 2024. In contrast, investors net allocated $4.86 billion and $1.88 billion to Asian and European funds, respectively Due to geopolitical uncertainty, gold futures prices are approaching record highs. Gold futures prices have risen, slightly below the historical peak. Analysts at Commerzbank stated that the rise in gold prices is not driven by the usual price factors—such as a strong dollar and interest rate expectations—but rather by safe-haven demand during times of political turmoil. They noted in a report that this particularly reflects the uncertainty surrounding President Trump's policies. Nevertheless, there are signs that the price increase has been exaggerated, and a correction may occur in the coming weeks. Commerzbank added that by mid-year, the spot gold price is expected to be $2,700 per ounce, and $2,650 per ounce by the end of 2025.

Bank of America: The global dominance of U.S. stocks is weakening, recommending to go long on Chinese stocks. Bank of America strategists expect that after the U.S. stock market halted its continuous rise in early 2025, its leading advantage will continue to fade. Strategists, including Michael Hartnett, pointed out that year-to-date, stock markets in Brazil, Germany, the UK, China, and Canada have outperformed the S&P 500 index, as the so-called seven major tech companies have failed to provide the momentum they have historically offered. They recommend going long on Chinese stocks, as they expect that the trade and tech war will not escalate. Regarding bonds, Bank of America anticipates that U.S. Treasury yields will fall below 4%, as President Trump seeks to address government spending issues to prevent a debt spiral while also hoping Congress will approve his tax cut plan.

10-year U.S. Treasury yield falls below 4.50%, potentially opening the door for further declines. LBBW analyst Elmar Voelker stated in a report that the 10-year U.S. Treasury yield has significantly fallen below the 4.50% mark for the first time this year, potentially opening the door for further declines. From a chart analyst's perspective, the decline in yields may signal to bond bulls. The upward trend in yields appears to have been broken, a trend that began in the fall of 2024, largely triggered by Trump's impending election victory.

Can the strong dollar momentum be stopped? UBS: The U.S. economy drives the dollar "super cycle." President Trump's "America First" trade policy calls for the U.S. Treasury to investigate foreign exchange manipulation. This means that the issue of a strong dollar has been brought back to the agenda, although opinions differ on the source of the strong dollar. UBS released a research report stating that although the dollar remains the primary global reserve currency, UBS does not believe this is the reason for the dollar's continued appreciation in recent years. Instead, UBS argues that the strength of the dollar is largely explained by relative economic performance, often referred to as "American exceptionalism."

Individual Stock News

Alibaba (BABA.US) denies investment rumors in DeepSeek. There were previous market rumors that Alibaba planned to invest $1 billion in DeepSeek, causing Alibaba's stock price to surge nearly 7% in pre-market trading. However, Alibaba subsequently denied the rumor, with Group Vice President Yan Qiao responding in a social media post, stating: "As a fellow company from Hangzhou, China, we applaud DeepSeek, but the information circulating about Alibaba investing in DeepSeek is false news." "As of the time of writing, Alibaba's pre-market gain has narrowed to within 4%.

Tesla (TSLA.US) domestic car sales in January fell 11.5% year-on-year, marking the fourth consecutive month of decline. According to data from the China Passenger Car Association, Tesla sold 63,238 China-made vehicles in January, a year-on-year decrease of 11.5% and a month-on-month decrease of 32.6%, marking the fourth consecutive month of decline. Deliveries of the China-made Model 3 and Model Y fell by 32.6% year-on-year. Last month, Tesla launched a revamped version of its best-selling SUV, the Model Y, in China, where it faces increasing pressure from challengers.

After the merger with Honda (HMC.US) fell through, Foxconn is rumored to be restarting negotiations with Nissan (NSANY.US). Following reports that Foxconn's parent company, Hon Hai Precision, intends to restart cooperation talks with struggling Nissan, Nissan's stock price rose in response. Previously, the collaboration plan between Nissan and Honda had collapsed. It is reported that Hon Hai Chairman Liu Yangwei has instructed Hon Hai's electric vehicle strategy officer, former Nissan executive Guan Run, to proactively contact French automaker Renault (RNLSY.US), which holds about 36% of Nissan's shares, to discuss the possibility of releasing equity. Last year, Hon Hai explored the possibility of investing in or acquiring Nissan, but temporarily shelved the plan after Nissan reached a cooperation agreement with Honda in December to incorporate both brands into the same holding company. This week, Honda and Nissan confirmed that they are still discussing various options, including the possibility of terminating cooperation talks. According to insiders, as Nissan prepares to end negotiations with Honda, the company is seeking new partners, which may reopen the door for cooperation with Foxconn.

Pre-market surge of over 21%! Pinterest (PINS.US), the social platform favored by Generation Z, exceeded expectations in both performance and outlook, with user numbers surpassing 550 million. The company stated in its earnings outlook on Thursday that revenue for the current period is expected to be between $837 million and $852 million, exceeding the consensus estimate of $835 million from Wall Street analysts. Profit, excluding certain items, is expected to be between $155 million and $170 million, surpassing the consensus estimate of $141 million from analysts. The app developed by Pinterest allows users to search for images and videos and save them to virtual message pinboards. Additionally, Pinterest reported fourth-quarter revenue and overall user growth data that exceeded analysts' expectations. Pinterest's total revenue in the fourth quarter grew 18% year-on-year to $1.15 billion, slightly above the consensus estimate of $1.14 billion from analysts, marking Pinterest's first quarter with revenue exceeding $1 billion. Pinterest's monthly active user total reached approximately 553 million, setting a new record and surpassing the consensus estimate of 547.4 million users from analysts.

Rumored "Tesla of the truck industry" Nikola (NKLA.US) is close to filing for bankruptcy, with a market value evaporating by $24 billion. According to insiders, electric truck manufacturer Nikola is nearing a bankruptcy filing. The company's stock price fell 20% in after-hours trading to $0.60 Nikola is collaborating with Pillsbury Winthrop Shaw Pittman LLP to explore bankruptcy options, including the sale or restructuring of the company. The company has been struggling to raise funds, and its cash balance is decreasing, losing hundreds of thousands of dollars for every truck sold. Nikola stated on Thursday that it is evaluating various options, including financing as part of a financial restructuring. However, the company declined to comment on whether it is seeking bankruptcy proceedings. Last month, reports indicated that the electric truck manufacturer was exploring various options, including selling part of its business or the entire company.

Important Economic Data and Event Forecast

Beijing time 22:25 Federal Reserve Governor Bowman speaks on bank regulation

Beijing time 23:00 U.S. February University of Michigan Consumer Sentiment Index preliminary value, U.S. December Wholesale Inventories MoM final value (%)

Beijing time 01:00 the next day Federal Reserve Governor Cook speaks