Core Viewpoint - Rising fears about artificial intelligence (AI) are negatively impacting the stock prices of companies perceived to be at risk, including both small software firms and large wealth-management companies [1][2]. Market Reaction - A recent selloff was triggered by a tax-strategy tool from Altruist Corp., causing shares of Charles Schwab Corp., Raymond James Financial Inc., and LPL Financial Holdings Inc. to drop by 7% or more [1]. - This decline represents the most significant drop for these stocks since the trade-war market meltdown in April [2]. Investor Sentiment - Investors are shifting from identifying potential winners in the AI space to avoiding companies that may be displaced by AI advancements [5]. - The mood among investors has changed dramatically, with a focus on potential disruption rather than growth opportunities [4][5]. Industry Impact - The software industry has been particularly affected, with fears of AI disruption spreading to financial services, asset management, and legal services [6]. - New AI tools have led to significant stock declines across various sectors, including a notable impact on US insurance brokers following the launch of an application by Insurify [7]. Competitive Threats - Altruist's CEO noted the unexpected scale of the market's reaction, indicating a strong signal regarding the competitive threat posed by AI in wealth management [8]. - The architecture used to build Altruist's product, Hazel, is seen as capable of replacing traditional jobs in wealth management, which typically require entire teams [9]. Broader AI Adoption - Companies like OpenAI and Anthropic are making strides in software engineering and are beginning to penetrate other industries [9]. - There are ongoing questions about how quickly and effectively AI technology will be adopted across various sectors, including banking [10]. Valuation Concerns - The recent pullbacks in stock prices may reflect broader anxieties about inflated valuations resulting from the AI spending boom and a resilient US economy [11]. - Investors are becoming increasingly sensitive to negative market signals, leading to significant sell-offs in response to perceived risks [12]. Future Outlook - Some industry experts believe that concerns about AI's disruptive potential may be premature, as the market is still in the early stages of understanding AI's long-term implications [13].

Core Insights - The launch of Altruist's AI-assisted tax planning tool, Hazel, has caused significant turmoil in the wealth management sector on Wall Street, raising fears about the disruption of traditional investment advisory business models [1] - Hazel utilizes deep learning algorithms to analyze complex financial documents in approximately three minutes, offering tailored tax-saving strategies for a monthly fee of $60, which threatens to drastically reduce the costs associated with traditional tax planning [1] - The market reacted negatively, with wealth management and brokerage stocks experiencing a sharp decline, reaching their lowest valuations since April of the previous year [1] Company Performance - LPL Financial (LPLA.US) saw its stock price drop by 8.3%, reflecting investor concerns over service commoditization [1][2] - Charles Schwab (SCHW.US) recorded a significant decline of 7.4%, becoming a highly traded stock on that day [1] - Raymond James (RJF.US) faced its largest single-day drop since the onset of the pandemic, falling by approximately 8.8% [2] - Other established firms like Ameriprise Financial (AMP.US) and Stifel Financial (SF.US) also experienced declines ranging from 4% to 7% [2] Analyst Perspectives - Some industry analysts believe the market's reaction to the "AI panic" may be an overreaction, as the core barriers in wealth management, such as the need for complex behavioral coaching and deep trust with high-net-worth clients, are not easily replicable by automation [2] - Morningstar's research indicates that if traditional firms fail to integrate similar AI capabilities quickly, their customer acquisition costs will continue to rise amid the digital asset transfer wave, leading to fundamental changes in future revenue structures [2]

Market Overview - Major equity averages experienced a decline towards the end of the trading day, despite the S&P 500 hitting a record high earlier in the session [2][5] - The S&P 500 closed down approximately 0.3%, the Nasdaq down about 0.6%, while the Dow saw a slight increase of 0.1% [6] - Trading volume in the S&P 500 was down 15% from the ten-day average, indicating a cautious market sentiment [4] Economic Indicators - Investors are awaiting a significant jobs report, which is expected to influence market sentiment and the Federal Reserve's decisions [5] - The upcoming inflation report on Friday is also anticipated to provide insights into the U.S. economy [5] Company Performances - Datadog's stock rose nearly 14% after beating expectations in its fourth-quarter results, despite a weaker full-year forecast [10] - Spotify saw a significant increase of almost 15%, attributed to adding 38 million new users, reaching a total of 751 million [12] - European Wax Center's stock surged 43% after agreeing to be taken private by General Atlantic, valuing the company at approximately $330 million [14][15] Notable Declines - Alphabet's shares fell 1.8% after raising nearly $3 billion in debt, highlighting the funding needs of tech companies [16] - Coca-Cola's stock declined as the company projected organic sales growth of 4-5% for 2026, slightly below analyst expectations [17] - Wealth management firms, including Charles Schwab and Raymond James, experienced declines of 7.4% and 8.8%, respectively, following the launch of a new tax planning offering by Altruist [18] Earnings Reports - Ford reported an adjusted EPS of $0.13, below the estimated $0.18, and projected adjusted EV for 2026 between $8 billion to $10 billion [20] - Robinhood's stock dropped approximately 7% in after-hours trading after its fourth-quarter net revenue missed analyst estimates [21] - Lyft's stock fell about 15% in after-hours trading despite authorizing a new share buyback, as the outlook for the first quarter was lower than expected [23][24] - Zillow Group met revenue estimates but provided a first-quarter revenue outlook that was below analyst expectations [25]

Economic Data - The US economy added 130,000 jobs in January, significantly exceeding expectations of 65,000 jobs added for the month [1][5] - The unemployment rate decreased slightly to 4.3% from 4.4% [1][6] - Revisions to 2025 payrolls showed a decrease in job growth to 181,000 from a previously reported 584,000, marking the weakest annual job growth outside of a recession since 2003 [2][6] Market Reactions - The tech-heavy Nasdaq Composite rose approximately 0.9%, while the Dow Jones Industrial Average increased by 0.6% (280 points), and the S&P 500 gained 0.7% [1] - The positive January jobs data has led to increased bets on Federal Reserve rate cuts, with over 40% of market participants expecting the Fed to hold rates steady through June [4] Corporate Earnings - McDonald's is set to report earnings after the market close, while Kraft Heinz announced a pause in its spin-off plans, indicating that its challenges are manageable [5][11] - Kraft Heinz plans to invest $600 million in marketing, sales, research and development, and pricing to accelerate its return to profitable growth [11][12] - Cisco is expected to report quarterly results, competing with Nvidia in the AI networking chip market [5]

Hello and welcome to Market Domination Overtime. Stocks closing mixed and our very own Ines Fay has the very latest. Enz.>> Yeah, Josh. Just taking a look at the Dow right now. The Dow up uh just onetenth of a percent. Uh so the Dow now on the third record close uh in a row and then the NASDAQ composite down about 6/10en of a percent. The S&P 500 down 3/10en of a percent.So we have seen some selling going into the close. It was close there on whether or not the Dow would hit another record close. But just t ...

Market Overview - The Dow closed up 0.1%, marking its third consecutive record close, while the NASDAQ composite fell by 0.6% and the S&P 500 decreased by 0.3% [1][2]. Wealth Management Industry - Wealth management stocks, such as Charles Schwab and LPL Financial Holdings, faced significant declines, with Schwab down over 7% and LPL down 8%. This is attributed to a new AI tool that threatens traditional wealth management practices by allowing financial advisors to customize strategies for clients [3][4]. Retail Investor Behavior - According to Schwab's latest STAX report, retail investors are actively buying the dip, with the STAX reaching its highest level since February of the previous year. This indicates a bullish sentiment among more active traders [5][6]. - Microsoft was highlighted as a top stock, experiencing a 9% pullback post-earnings, which led to a net inflow of approximately $1.7 billion from clients seeking opportunities [7][8]. Earnings Reports - Ford's Q4 results showed automotive revenue of $42.4 billion, matching estimates, but adjusted EPS fell short at 13 cents compared to the expected 18 cents. The company reported a net loss of $11.1 billion for the fourth quarter and $8.2 billion for the full year, largely due to losses in the EV sector [24][25]. - Robinhood's Q4 earnings revealed an EPS of 66 cents, with net revenue of $1.28 billion, missing expectations. Transaction-based revenue also fell short, leading to an 8% decline in after-hours trading [27][30]. Future Projections - Ford anticipates adjusted EBIT of $8 to $10 billion by 2026, with expected losses in its Model V EV business unit of $4 to $4.5 billion, not projected to become profitable until 2029 [26]. - Analysts remain optimistic about Robinhood, with over 80% maintaining a buy rating despite recent earnings misses. The company is expected to navigate the current crypto winter better than in previous downturns due to its diversified revenue streams and improved management [31][40].

Core Viewpoint - Wealth-manager stocks experienced a significant decline due to weak retail sales impacting market indexes [1] Group 1: Market Impact - Weak retail sales have led to a downturn in wealth-manager stocks, indicating a potential correlation between consumer spending and the performance of financial services companies [1]

Market Overview - The Dow is experiencing gains, aiming for a third consecutive record close, while the S&P 500 and NASDAQ show mixed performance with slight declines [1][2][8]. - The S&P 500 equal-weighted index and small-cap indices like the S&P 600 are reaching record highs, indicating strong performance in broader market segments [3]. - Bond yields are decreasing, with the 10-year yield down to 4.14% and the 30-year yield at 4.79%, suggesting a shift in investor sentiment towards bonds [4]. Sector Performance - Utilities and real estate sectors are leading the market, with utilities up approximately 2.3% and real estate up about 1.5%, reflecting their sensitivity to interest rates [5]. - Financials, technology, and healthcare sectors are underperforming, indicating a potential shift in investor focus away from these areas [5][6]. AI and Technology Insights - The AI sector is entering a new phase, with companies increasingly relying on debt for capital expenditures rather than free cash flow, as seen in major firms like Google and Amazon [9][10]. - Investors are currently accepting of big tech companies taking on debt to finance AI developments, but there is a growing concern about the return on investment (ROI) and whether these expenditures will yield positive results in the future [12][14]. - The competitive landscape in AI is evolving, with uncertainty about which companies will emerge as leaders, prompting a cautious approach from investors [16][17]. Alphabet's Bond Offering - Alphabet is raising approximately $32 billion through multiple bond deals, including a rare 100-year bond, to finance its AI infrastructure buildout despite having substantial cash reserves [20][21]. - The demand for long-term bonds from companies like Alphabet indicates a shift in investment strategies, with institutional investors seeking stable, long-term returns [21]. Tax Implications for Big Tech - Major tech companies like Amazon and Meta are projected to see significant reductions in their tax bills for 2025, attributed to favorable tax provisions and credits related to AI investments and capital expenditures [22][23]. - This reduction in tax liabilities is expected to positively impact their bottom lines, although it may attract public scrutiny regarding their tax practices [23]. Job Market and Economic Outlook - The upcoming jobs report is anticipated to show a modest increase in employment, with projections around 70,000 new jobs added, but the White House is preparing for potential criticism if the numbers fall short of expectations [22][23]. - The labor market is described as stable, with sluggish hiring but no significant increase in layoffs, indicating a cautious economic environment [22].

🚨JUST IN: WEALTH MANAGEMENT STOCKS SLIDE ON FEARS AI WILL REPLACE THEIR TAX PLANNING SERVICESThe company Altruist introduced the AI tool will allow clients to “create fully personalized tax strategies for clients by reading and interpreting their 1040s, paystubs, account statements, meeting notes, emails, and custodial and CRM data, and applying deep tax logic to the analysis.”Morgan Stanley, Ameriprise Financial, Stiefel Financial and Piper Sandler Companies posted declines after the announcement ...

Economic Indicators - Nonfarm payrolls are expected to increase by +68,000 in January, with the unemployment rate remaining unchanged at 4.4% [1] - Average hourly earnings are projected to rise by +0.3% month-over-month and +3.7% year-over-year in January [1] - Initial weekly unemployment claims are anticipated to decrease by -7,000 to 224,000 [1] - Existing home sales in January are expected to decline by -4.3% month-over-month to 4.16 million [1] - January CPI is expected to rise by +2.5% year-over-year, with core CPI also expected to increase by +2.5% year-over-year [1] Retail Sales and Employment Costs - US December retail sales were unchanged month-over-month, falling short of expectations of +0.4% [2] - The employment cost index for Q4 rose by +0.7% quarter-over-quarter, which is the smallest increase in 4.5 years and below the expected +0.8% [2] Stock Market Performance - Stock indexes experienced mixed trading, with the Dow Jones reaching a new all-time high while the S&P 500 closed down -0.33% and the Nasdaq down -0.56% [6][5] - The broader market initially found support from weaker-than-expected retail sales and employment cost index reports, which lowered bond yields [5] Earnings Season Insights - Over half of the S&P 500 companies have reported earnings, with 78% beating expectations [7] - S&P earnings growth is expected to rise by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven tech stocks, Q4 earnings are projected to increase by +4.6% [7] Interest Rates and Bond Market - The markets are pricing in a 23% chance of a -25 basis point rate cut at the next Federal Reserve meeting [8] - The 10-year T-note yield fell to a 3.5-week low of 4.13%, supported by weaker-than-expected economic reports [9] Sector Performance - AI-infrastructure stocks faced pressure, with Western Digital down more than -7% and other tech stocks also declining [12] - Wealth-management stocks dropped significantly, with Raymond James Financial down more than -8% due to concerns over AI disruption [13] - Homebuilding stocks rose after the drop in mortgage rates, with Toll Brothers up more than +6% [14] Company-Specific Developments - Goodyear Tire & Rubber Co reported Q4 adjusted EPS of 39 cents, below the consensus of 49 cents, leading to a decline of more than -14% [15] - Incyte forecasted dull-year total net product revenue of $4.77 billion to $4.94 billion, causing a drop of more than -8% [16] - Spotify reported a record 38 million monthly active users in Q4, leading to a rise of more than +17% [17]