Faith in AI wavers, software and chip stocks both collapse, AMD plunges 17%, cryptocurrencies decline again

The sell-off in U.S. tech stocks continues to spread across the entire technology sector, including semiconductors and AI concept stocks. Macro data remains mixed, failing to provide market support. Funds are withdrawing from U.S. tech and growth stocks, rotating into value sectors such as energy and materials.

After hours, Google announced solid sales performance, but its expense guidance nearly doubled, far exceeding expectations. Qualcomm provided a lackluster revenue outlook. Although Arm’s sales forecast exceeded most expectations, it still did not meet investors’ highest hopes.

(Intraday movement of the U.S. stock benchmark indices)

According to Wallstreetcn, ADP employment data fell short of expectations, indicating a cooling labor market; however, the ISM Services PMI remains strong, suggesting inflation pressures persist. The mixed data makes it difficult for the market to reprice the Fed’s rate cut path more aggressively, only slightly boosting the rate cut expectations for 2026.

(Rebound in expected Fed rate cut magnitude)

Against this backdrop, U.S. stocks show clear style divergence. Sectors represented by software and high-momentum strategies are experiencing rare concentrated sell-offs in recent years. AMD plunged 17% in a single day after issuing weak guidance, dragging down the semiconductor sector, with the Philadelphia Semiconductor Index falling 4.4%. Software and AI-related stocks like Palantir, Snowflake, and Datadog continue to be under pressure.

(Tech giants underperforming the S&P 493 component stocks index)

Bret Kenwell from eToro said:

Due to concerns that AI will eat into the software industry’s business, software stocks are suffering a heavy blow. However, despite the long-term impact remaining uncertain, many software companies continue to generate steady profits and revenue growth, and analyst expectations for these metrics are also rising.

Since reaching a record high in October, the S&P 500 software sector has fallen more than 25%. Kenwell pointed out that the software sector is rapidly approaching “oversold” levels.

For those looking for a bottom, Jeffrey Yale Rubin of Birinyi Associates noted that the average bear market decline in this sector is 32.53%. He also mentioned that the most severe decline of 53.94% occurred during the global financial crisis.

The Dow Jones Industrial Average rose against the trend, supported by healthcare and defensive weights, while the S&P 500 slightly declined, and the Nasdaq 100’s decline widened significantly. A technical rebound occurred intraday, but before Alphabet’s earnings report, selling pressure resumed. The Nasdaq broke below its 100-day moving average, and the S&P 500 also lost key short-term support, increasing technical pressure.

(S&P 500 breaks below the 50-day moving average)

Several institutional investors stated that the current sell-off is no longer based on short-term performance but is about re-pricing around whether “AI will reshape or even erode traditional software business models.” JPMorgan pointed out:

The current market is not waiting for good news to buy, but actively avoiding high-growth, high-valuation assets until uncertainty is digested.

Funds continue to flow into previously overlooked sectors. Energy and materials led the S&P 500 higher on the day, with the chemical sector recording the fourth-largest single-day gain in the past decade. Even as the index declined, the number of rising stocks in the S&P 500 still outnumbered decliners, and equal-weighted indices rose, indicating that the “decentralization” rotation is still deepening.

(Energy sector leads U.S. stocks)

Wallstreetcn mentioned that U.S. Treasury Secretary Janet Yellen reiterated the “strong dollar policy,” pushing the dollar index higher to recover the previous day’s decline. From a rate pricing perspective, Bloomberg strategists still believe the dollar’s terminal rate expectations are relatively low, which also limits the performance space for precious metals and risk assets.

(Dollar index recovers from yesterday’s decline)

In precious metals, volatility has intensified. Gold briefly returned above $5,000 intraday but failed to hold as the dollar strengthened and risk assets came under pressure, falling back below $5,000. Silver showed relative resilience, rising slightly, while platinum and palladium retreated after an early rebound. Overall, precious metals are more influenced by the dollar and fund rebalancing, and have yet to form a new trend.

U.S. stocks closed mixed on Wednesday. The semiconductor index plunged 4.4%. AMD tumbled 17% due to weak guidance, marking its largest single-day decline in eight years; Palantir also fell 12%. SanDisk dropped nearly 16%.

U.S. benchmark indices:

• S&P 500 closed down 35.09 points, down 0.51%, at 6882.72.

• Dow Jones Industrial rose 260.31 points, up 0.53%, at 49501.30.

• Nasdaq fell 350.606 points, down 1.51%, at 22904.579. Nasdaq 100 declined 447.382 points, down 1.77%, at 24891.238.

• Russell 2000 down 0.90%, at 2624.55.

• VIX fear index up 10.16%, at 18.

U.S. sector ETFs:

• Semiconductors plunged 4.41%, while the photovoltaic sector rose 4.52%, and oil & gas and energy sectors gained at least 2.2%.

(U.S. sector ETFs on February 4)

The seven major tech giants:

• Magnificent 7 index down 1.32%.

• Apple up 2.6%, Microsoft up 0.72%, Google down 1.96%, Amazon down 2.36%, Meta down 3.28%, Nvidia down 3.41%, Tesla down 3.78%.

Chip stocks:

• Philadelphia Semiconductor Index down 4.36%, at 7619.156.

• TSMC ADR down 2.98%, AMD plunged 17.31%.

• SanDisk fell nearly 16%.

Chinese concept stocks:

• Nasdaq Golden Dragon China Index down 1.95%, at 7461.61, with significant declines in early trading and low volatility since 23:00 Beijing time.

• Among popular Chinese concept stocks, NetEase down 5.3%, China Internet Plus down 5.6%, Full Truck Alliance down 6.3%.

Other stocks:

• Circle down 2.01%.

European markets have hit new closing highs for three consecutive days, with Siemens up about 7.2%, Deutsche Bank up about 5.4%, and Novo Nordisk sharply down about 17.2%. Denmark’s stock market fell about 6.7%, Germany’s DAX declined over 0.5%, and Italy’s banking sector continued to reach new closing highs.

Pan-European indices:

• STOXX 600 up 0.03%, at 618.12, barely maintaining three consecutive days of record closing highs.

• Euro Stoxx 50 down 0.41%, at 5970.47.

Country indices:

• Germany DAX 30 down 0.52%, at 24652.24.

• France CAC 40 up 1.01%, at 8262.16.

• UK FTSE 100 up 0.85%, at 10402.34, reaching a new record close for the second consecutive day.

(Performance of major European and American indices on February 4)

Sectors and stocks:

• Among Eurozone blue chips, Siemens fell 7.17%, Deutsche Bank down 5.39%, Prosus down 4.92%, Rheinmetall down 4.60%, the fourth-largest decline.

• All components of the STOXX 600: Entain up 10.47%, followed by Aeminsdi, Loomis, Brenntag, Azelis Group NV, Wendel Group with gains of 9.92%-9.05%.

• Sector-wise, STOXX 600 chemicals up 4.76%, autos & parts up 3.61%, telecoms up 3.57%, food & beverages up 2.74%, travel & leisure up 2.24%, retail up 2.08%.

The U.S. Treasury Department’s quarterly refinancing plan met expectations, with the 30-year U.S. Treasury yield rising 2 basis points to 4.92%, and the 2-year yield slightly down 1 basis point to 3.56%.

U.S. Treasuries:

• NY close: 10-year yield up 1.20 basis points at 4.2775%.

• 2-year yield down 0.82 basis points at 3.5614%, continuing to decline since 22:45 Beijing time; 30-year yield up 2.07 basis points at 4.9149%.

(Major U.S. Treasury yields)

European bonds:

• End of European trading: German 10-year yield down 3.2 basis points at 2.859%, trading range 2.888%-2.856%.

• UK 10-year yield up 2.9 basis points at 4.546%.

• France 10-year yield down 1.9 basis points at 3.448%.

The dollar rose 0.3%, recovering from yesterday’s decline. Bitcoin plunged, dropping over 5% intraday to around $72,000. Ethereum fell over 5%, hitting a nine-month low.

Dollar:

• NY close: ICE dollar index up 0.21% at 97.640, trading range 97.309-97.730.

• Bloomberg dollar index up 0.33% at 1191.55, trading range 1187.30-1192.37.

(Bloomberg dollar index recovers from yesterday’s decline)

Non-USD currencies:

• NY close: EUR/USD down 0.12%, GBP/USD down 0.33%, USD/CHF up 0.24%.

• Commodity currencies: AUD/USD down 0.33%, NZD/USD down 0.70%, USD/CAD up 0.23%.

Yen:

• NY close: USD/JPY up 0.74% at 156.91 yen, trading range 155.70-156.94, rising throughout the day.

• EUR/JPY up 0.64% at 185.26 yen, GBP/JPY up 0.42% at 214.229 yen.

Offshore RMB:

• NY close: USD/CNH at 6.9412, up 61 points from Tuesday’s NY close, trading range 6.9290-6.9434.

Cryptocurrencies:

• NY close: Spot Bitcoin plummeted over 5% to around $72,000.

(Bitcoin price)

• Spot Ethereum fell over 5%, hitting a nine-month low.

U.S. Energy Information Administration (EIA): Due to severe cold weather impacts, U.S. crude oil inventories saw the largest decline since 2016.

Crude Oil:

• WTI March futures up 3.05%, at $65.14/barrel.

(WTI futures intraday spike and retreat)

• ICE Brent April futures at $69.46/barrel.

Natural Gas:

• NYMEX March natural gas futures at $3.4650 per million British thermal units.

Gold tested the $5,000 psychological level for two consecutive days. Spot silver rose 3%.

Gold:

• NY close: Spot gold up 0.32% at $4962.73 per ounce.

(Gold tests $5,000 again)

• COMEX gold futures up 0.98% at $4984.20 per ounce.

Silver:

• NY close: Spot silver up 3.62% at $88.2660 per ounce.

• COMEX silver futures up 5.11% at $87.555, hitting a daily high of $92.015 at 22:06.

Other metals:

• NY close: COMEX copper futures down 2.77% at $5.9420/lb.

• Spot platinum up 0.60%, palladium up 1.05%.

• LME copper down $434 at $13,044/ton. LME tin down $1596 at $48,526/ton.

Risk warning and disclaimer

Market risks are inherent; please invest cautiously. This article does not constitute personal investment advice and does not consider individual user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.