U.S. stocks face high-risk window period? After a turbulent week, U.S. January non-farm payrolls and Google, Amazon financial reports become market focus.

After investors digested the sell-off of tech stocks, the sharp fluctuations in precious metals, and the news of U.S. President Trump nominating Kevin Wash as the next chair of the Federal Reserve, the three major U.S. stock indices all closed lower last Friday - the Dow Jones fell 0.36%, the S&P 500 fell 0.43%, and the Nasdaq Composite fell 0.94%. However, there was not much change over the whole week - the Dow Jones fell 0.4% for the week, the S&P 500 rose 0.3% for the week, and the Nasdaq Composite fell 0.2% for the week. Some of the most violent stock market fluctuations last week came from tech stocks. Despite Meta and Microsoft Corporation announcing higher spending targets in their latest earnings reports, the market feedback was completely different - Meta rose 10.4% last Thursday and rose 8.8% for the week, while Microsoft Corporation fell nearly 10% last Thursday and fell 7.7% for the week. Meta's core indicators for the fourth quarter of 2025 significantly exceeded market expectations, while spending continued to rise - capital expenditures for 2026 are expected to reach $115-135 billion, far exceeding the market's expectation of around $110.6 billion. In the market's view, Meta is in a benign cycle of "profit nurturing computing power", catching up with the AI wave generated by its core advertising business. Although Microsoft Corporation's core financial indicators for the second quarter of 2026 (ending in December of last year) also exceeded market expectations, the "slight decline" in Azure growth was seen as a signal that the AI-driven cloud growth story may face fluctuations. The significant increase in Microsoft Corporation's capital expenditures - reaching $37.5 billion in the second quarter, an increase of 66% year-on-year, and exceeding analysts' expectations of $36.2 billion. Along with the high increase in capital expenditures, the slowdown in Azure growth has raised concerns and doubts about whether the company's high level of capital spending is justified and its competitive advantage in AI competition. Meanwhile, Trump's nomination of former Federal Reserve Governor Wash as the next Federal Reserve Chair has put pressure on the U.S. stock market. It is reported that Wash is relatively hawkish and more inclined to maintain the independence of the Federal Reserve, weakening market expectations of loose monetary policy by the Federal Reserve. In addition, Wash is a staunch supporter of reducing the Fed's balance sheet. In numerous speeches over the past year, Wash has repeatedly stated that the Fed's years of aggressive bond-buying programs have gone too far and could draw it into the messy political quagmire of fiscal policy. Some market participants warn that Wash is likely to accelerate the reduction of the Fed's balance sheet in exchange for rate cuts, which would be a unique policy combination that is not conducive to the expansion of liquidity in the stock and bond markets. Trump's nomination still needs to be approved by the Senate. It is worth noting that if North Carolina Republican Senator Tom Tillis insists on his position - to block any nominations to the Federal Reserve until the Department of Justice completes its investigation into current Fed chair Powell, the process could be delayed. U.S. stocks last Friday also experienced a sharp drop due to the violent fluctuations in the precious metals market. Last Friday, spot gold fell over 9%, spot silver plummeted nearly 27%, and spot platinum also fell nearly 18%. Market participants pointed out that the sharp drop in gold and silver prices was initially triggered by the news of Wash's nomination as Federal Reserve Chair, but accelerated significantly during the afternoon trading session. Funds that had poured into the precious metals market began to concentrate on profit-taking, coupled with the rapid rise in the U.S. dollar index, making gold and silver priced in dollars significantly more expensive for overseas investors. In addition, Wash's assumption of office is seen as helping to stabilize the U.S. dollar, shaking the trading logic of "precious metals as an alternative to the dollar as a global reserve asset." Data shows that the U.S. dollar index rose by about 0.8% last Friday, exerting significant pressure on precious metals. On a trading level, forced liquidation and deleveraging are seen as important factors amplifying the decline. When gold and silver prices plummeted, margin calls triggered a chain reaction, forcing investors to sell passively, leading to a stampede-like downward movement. After a turbulent week, market sentiment shifted to caution. As of the time of writing, futures for the three major U.S. stock indices were all down. Spot gold fell by 0.66%, trading at $4833 per ounce; spot silver rose by over 3%, trading at $87.80 per ounce. Brent crude oil futures fell by over 4%, trading at $67.55 per barrel; WTI crude oil futures fell by over 2%, trading at $63.46 per barrel. In addition, Bitcoin is also worth mentioning. In the early morning of February 1st Beijing time, Bitcoin fell to $75,719 per coin, hitting its lowest level since April 2025. As of the time of writing, Bitcoin is trading at $77,715 per coin. There have been instances in the past where a drop in Bitcoin has dragged down U.S. stocks, which investors should be wary of. Since a significant sell-off in October last year, the cryptocurrency market has been shrouded in gloom, with overall market conditions very sluggish. The delay in new market structure regulations for the U.S. crypto industry has dampened investors' interest in digital assets. The lack of sustained buying has raised questions about the role of Bitcoin in asset allocation once again. In the coming week, investors' focus will be on the U.S. non-farm payrolls report for January, which will be released on Friday. Data related to manufacturing and services, as well as the Consumer Confidence Index from the University of Michigan, will also be key points of focus. In terms of corporate earnings, another busy earnings week is on the horizon. Two members of the "Big Seven" - Alphabet Inc. Class C and Amazon.com, Inc. - will release their earnings on Wednesday and Thursday, respectively, while other tech giants such as Palantir and AMD will also report earnings this week. Outside of the tech industry, companies like Walt Disney Company, PepsiCo, Inc., Eli Lilly, Novo Nordisk A/S, Toyota, and Philip Morris International Inc. will also be reporting earnings. Economists expect that the U.S. non-farm payrolls added 65,000 jobs in January, with the unemployment rate expected to remain at 4.4%. However, in the early morning of January 31st local time, several federal government departments in the U.S. ran out of funding. Due to a lack of a new budget, several government departments faced a "shutdown," including the Department of Labor, which collects employment data. Although the Senate finally passed a spending bill to fund most of the federal government on January 30th, the bill still needs to be reviewed by the House of Representatives, whose members are not in Washington and will not return until Monday, February 2nd. Market analysts had expressed concerns that the shutdown could delay the release of the U.S. non-farm payrolls report, but some have pointed out that the impact of the shutdown on actual government operations is limited. The situation in the Middle East will continue to be a major factor influencing international oil prices. The tension in the region, due to the possibility of the U.S. taking military action against Iran and the potential closure of the Strait of Hormuz, has led to a rise in oil prices by about 7% over the past five trading days. On the evening of January 31st, the Secretary of the Supreme National Security Council of Iran and advisor to the Supreme Leader, Larrajani, posted on social media, stating that "contrary to the fabricated media war atmosphere, the negotiation framework is gradually taking shape." International media have widely interpreted this as progress in Iran's negotiations with the U.S. Trump, in an interview on January 31st, said that Iran is in talks with the U.S. Recently, the U.S. has continued to pressure Iran, deploying multiple warships, including aircraft carriers, in the Middle East region, threatening military intervention. Earlier on January 31st, rumors filled social media about the assassination of the naval commander of the Iranian Islamic Revolutionary Guard and the attack on naval bases by drones, as well as explosions in several locations. Iranian media have debunked these rumors one by one, stating that the claims are not true. In addition, on February 1st local time, OPEC+ member countries agreed to maintain their policy of pausing production increases, keeping crude oil production at current levels in March. "Holding a strong track record at the Federal Reserve" As a former Federal Reserve governor with extensive experience on Wall Street and at the White House, Wash's nomination not only signifies a potential ideological shift in U.S. monetary policy but will also have far-reaching implications for U.S. consumers, financial markets, and the global economic outlook. Looking back at Wash's career, his rich experience in key positions gives him the confidence to be a candidate for the new Federal Reserve Chair. Wash was nominated by former U.S. President George W. Bush to join the Federal Reserve in 2006 and served as a Federal Reserve governor until 2011, making him one of the youngest members in the institution's history. He was involved in the design of emergency aid policies during the global financial crisis, including emergency loan programs to stabilize credit markets and the coordination of the Troubled Asset Relief Program (TARP), accumulating practical experience in dealing with complex economic crises. In addition, he graduated from Stanford University, holds a law degree from Harvard University, worked at Morgan Stanley Investment Bank, and served as a special economic policy assistant at the White House, combining academic depth, financial practice, and policy-making perspectives. Economists at Deutsche Bank Aktiengesellschaft noted in a client report, "Wash's strong track record of leading the Federal Reserve, his background is somewhat similar to Chairman Powell." Trump's nomination directly targets his core policy demands - to push for significant interest rate cuts. In his nomination statement, Trump praised Wash as "fully meeting the ideal candidate criteria, will not disappoint anyone," behind which is the expectation for Wash to push for loose monetary policy. In terms of policy expectations, Wash's nomination would break the pragmatic, consensus-driven monetary policy framework of Powell's tenure, moving towards a direction that emphasizes inflation control and policy independence. Although Trump expects him to push for aggressive rate cuts, Wash's policy stance exhibits a clear "hawkish inclination + pragmatic flexibility" characteristic. As a prominent critic of the Federal Reserve's post-financial crisis policies, Wash has warned that large-scale asset purchases and near-zero interest rates could distort markets, disrupt long-term price stability, and has voted against the second round of quantitative easing policies. He has repeatedly criticized the Fed for having a "mission creep" problem, calling for "mechanism reforms," believing that the Fed's current policy framework suffers from a credibility deficit. This means that compared to Powell, Wash has a lower tolerance for inflation and may be more inclined to tighten policy to guard against inflation risks, rather than simply catering to short-term economic stimulus needs. However, market analysis generally believes that Wash is not a rigid ideological hawk. Krishna Guha, Global Policy and Central Bank Strategy Director at Evercore ISI, stated that Wash's hawkish reputation and independent image make it easier for him to build consensus within the Federal Open Market Committee (FOMC) and could potentially lead to 2-3 rate cuts this year, responding to government demands while balancing inflation control goals. Tobin Marcus Corporation, an expert at the Wolfson Research Group, predicts that Wash may agree with the policy logic of "loose rates supported by productivity growth," but ultimate decisions will still be constrained by economic data and difficult to completely deviate from the Fed's traditional "data-dependency" framework. "A macro single bet on AI" In the whole economic system, there is an increasing feeling that all roads seem to lead to AI. As Alphabet Inc. Class C and Amazon.com, Inc. release their earnings on Wednesday and Thursday, investors will once again observe the willingness of large tech companies to invest in this opportunity. Like other members of the "Big Seven," these two companies are expected to raise their capital expenditure expectations as they compete for advantageous positions in the ongoing AI arms race. Capital analyst Kyle Roda said, "Concerns about 'AI investment returns' have resurfaced, sparking doubts about valuations." He pointed out that the market's harsh reaction to Microsoft Corporation's capital expenditure scale "implies diminishing returns on AI investments, and in a market already pricing in near-perfect conditions and extreme valuations, the room for growth is shrinking." Apollo's Chief Economist Tosin Sloak stated in a report last Friday that the rapid expansion of spending is also beginning to put pressure on the debt market, with the shift to debt financing for AI raising the "concentration and relevance risks." Sloak said, "Exposures related to AI are becoming ubiquitous in various investment portfolios, seemingly diversified between issuers and industries, but increasingly covering a macro single bet on AI. What was initially a capital expenditure cycle mainly supported by internal funds is quickly evolving into a financing event." There are also issues with raw materials in the AI industry chain. In addition to the tech companies themselves, investors will continue to watch the trading of various commodities that support AI development. In the past few months, both precious metals and base metals have seen significant price increases, despite a sharp pullback last Friday. The impact of AI on the labor market and economic growth is also worth paying close attention to. According to data from the U.S. Bureau of Labor Statistics, job growth in 2025 was significantly weaker than the previous year - with 584,000 new non-farm jobs in 2025, compared to 2 million in 2024. Meanwhile, GDP is still growing. The economic growth rate for the third quarter of 2025 in the U.S. was calculated at an annualized rate of 4.4%, higher than the 3.8% in the second quarter, raising questions about the source of productivity and where to attribute it to. Investors will gain more insights in February about the changes in GDP for the fourth quarter of the U.S. Chris Zakarelli, Chief Investment Officer at Northlight Asset Management, said, "The U.S. economy is running at a very high level, with a 4.4% real growth rate, significantly above normal, and will likely gradually decline this year. But if it can maintain above 3% for the whole year, it may bring double-digit returns for the stock market." He added, "People often say the stock market is not the economy itself, and vice versa. However, higher corporate profits do drive stock prices, and as long as productivity and output achieve sustained increases that allow companies to significantly increase profits, we should expect the market to rise as well."