US stock market enters a high-risk window? After a turbulent week, the US January nonfarm payrolls and the financial reports of Google and Amazon become the focus of the market.

After investors digested the sell-off of technology stocks, the sharp fluctuations in precious metals, and the news of US President Trump nominating Kevin Wash as the next Federal Reserve Chairman, the three major US stock indexes all fell last Friday - the Dow Jones fell by 0.36%, the S&P 500 fell by 0.43%, and the Nasdaq Composite Index fell by 0.94%. However, there was little change in the overall week - the Dow Jones fell by 0.4% for the week, the S&P 500 rose by 0.3% for the week, and the Nasdaq Composite Index fell by 0.2% for the week. Last week, some of the most violent stock market fluctuations in the US stock market came from technology stocks. Although Meta and Microsoft Corporation both announced higher spending targets in their latest earnings reports, the market feedback for the two 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. In the fourth quarter of 2025, Meta's core indicators all significantly exceeded market expectations, while spending continues to increase - Capital expenditure is expected to reach $115-135 billion in 2026, far exceeding market expectations of around $110.6 billion. In the market's view, Meta is in a benign cycle of profit nurturing computation, fully chasing the AI wave generated by its core advertising business. Although Microsoft Corporation's core financial indicators for the second quarter of fiscal year 2026 (ending in December of last year) also exceeded market expectations, a "slight decline" in Azure growth was interpreted as a signal that the AI-driven cloud growth story may face volatility. What also put pressure on the market was Microsoft Corporation's surge in capital expenditures - capital expenditures in the second quarter reached $37.5 billion, a 66% year-on-year increase, and exceeded analysts' expectations of $36.2 billion. At the same time as the high growth in capital expenditures, the slowing growth of Azure has raised concerns and doubts about whether the company's high capital expenditures are reasonable, and its competitive advantage in AI competition. Meanwhile, Trump's nomination of former Federal Reserve board member Wash as the next Federal Reserve Chairman also brought pressure to the US stock market. It is reported that Wash's stance is relatively hawkish and more inclined to maintain the independence of the Federal Reserve, weakening market expectations of loose monetary policy by the Fed. In addition, Wash is a staunch supporter of the Federal Reserve's balance sheet reduction. In several speeches over the past year, Wash has repeatedly stated that the Federal Reserve's aggressive bond-buying program has gone too far and may drag it into a chaotic political quagmire of fiscal policy. Some market participants have warned that Wash is likely to cut back on asset purchases faster in exchange for rate cuts, which would create 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 Republican Senator Tom Tillis of North Carolina insists on his position - blocking any personnel nominations to the Federal Reserve until the Department of Justice completes its investigation into current Federal Reserve Chairman Powell, the process may be delayed. Part of the drop in US stocks on Friday was also affected by the violent fluctuations in the precious metals market. Last Friday, spot gold fell more than 9%, spot silver plunged nearly 27%, and spot platinum also fell nearly 18%. Market observers point out that the sharp decline in gold and silver prices was initially triggered by the news of Wash's nomination as Federal Reserve Chairman, but accelerated significantly during the afternoon trading session in the Eastern time zone. The influx of funds into the precious metals market began to concentrate on profit-taking, coupled with the rapid rise of the US dollar index, making gold and silver priced in dollars significantly more expensive for overseas investors. In addition, Wash's appointment is believed to help stabilize the US dollar, shaking the trading logic of "precious metals as an alternative to the US dollar as a global reserve asset". Data shows that the US dollar index rose by about 0.8% on Friday, clearly suppressing precious metals. On the trading level, forced liquidation and leverage unwinding are considered to be important factors that amplify the decline. When gold and silver prices plummet, margin calls trigger a chain reaction, forcing investors to sell passively, resulting in a downward stampede. After experiencing a turbulent week, market sentiment has turned cautious. As of publication, futures for the three major US stock indexes are all falling. Spot gold fell by 0.66% to $4833 per ounce, spot silver rose by over 3% to $87.80 per ounce. Brent crude oil futures fell by over 4% to $67.55 per barrel, while WTI crude oil futures fell by over 2% to $63.46 per barrel. In addition, Bitcoin is also worth keeping an eye on. In the early hours of February 1st Beijing time, Bitcoin fell to $75,719 per coin, the lowest level since April 2025. As of publication, Bitcoin was trading at $77,715 per coin. There have been cases in the past where Bitcoin's decline has dragged down US stocks, which investors should be wary of. Since a major sell-off in October last year, the cryptocurrency market has been clouded, with the overall market in a very low state. The delayed introduction of new market structure regulations in the US crypto industry has weakened investor interest in digital assets. The lack of sustained buying pressure raises doubts once again about Bitcoin's role in asset allocation. In the upcoming week, investors' attention will be focused on the US non-farm payroll report for January, which will be released on Friday. Data related to manufacturing and services, as well as the consumer confidence index released by the University of Michigan, will also be in focus. In terms of corporate earnings, another busy earnings week is on the horizon. Two members of the "Seven Giants" - Alphabet Inc. Class C and Amazon.com, Inc. - will announce their earnings on Wednesday and Thursday respectively, while other tech giants like Palantir and AMD will also report their earnings this week. Outside of the tech industry, companies such as Walt Disney Company, PepsiCo, Eli Lilly, Novo Nordisk A/S, Toyota, and Philip Morris International will also announce their earnings. Economists expect the US non-farm payroll to add 65,000 jobs in January, with the unemployment rate expected to remain at 4.4%. However, in the early hours of January 31st local time, several US federal government departments ran out of funding. As a result, the labor department, responsible for compiling employment data, was among the federal departments affected by the shutdown. Although the Senate finally passed a spending bill on January 30th to provide funding for most federal government departments, 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. Some market participants had expressed concerns that the shutdown might delay the release of the US non-farm payroll report, but some analysts have pointed out that the actual impact of the shutdown on government operations is limited. The situation in the Middle East will continue to be a major factor affecting international oil prices. Due to tensions over possible US military action against Iran and the potential blockade of the Strait of Hormuz, oil prices have risen by about 7% in 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, Larry Rani, posted on social media, saying "Contrary to the artificially created atmosphere of media warfare, a negotiating framework is gradually taking shape." International media widely interpreted this as a sign of progress toward negotiations between Iran and the United States. In an interview on January 31, Trump said that Iran is in talks with the United States. Recently, the US has been increasing pressure on Iran, deploying multiple warships, including aircraft carriers, in the Middle East region, threatening military intervention. Earlier on January 31, social media was filled with rumors of the assassination of the commander of the Islamic Revolutionary Guard Corps Navy, drone attacks on naval bases, and explosions in multiple locations. Iranian media denied each of these rumors, stating that the claims were false. In addition, on February 1st, members of "OPEC+" agreed to maintain the current oil production levels, keeping crude production steady in March. "Having a strong track record at the Federal Reserve" As a former Federal Reserve board member with extensive experience on Wall Street and in the White House, Wash's nomination not only signals a potential ideological shift in US monetary policy, but will also have a profound impact on US consumers, financial markets, and global economic trends. Looking back at Wash's career, his rich experience in key positions gives him the confidence to be considered for the position of the new Federal Reserve Chairman. In 2006, Wash was nominated by former US President George W. Bush to join the Federal Reserve, serving as a Federal Reserve board member until 2011, one of the youngest members in the history of the institution. He was involved in the design of emergency rescue policies during the global financial crisis, including emergency lending programs to stabilize credit markets and coordination of the Troubled Asset Relief Program (TARP), accumulating practical experience in dealing with complex economic crises. In addition, he is a graduate of Stanford University with a law degree from Harvard University, has worked for Morgan Stanley investment bank, and has served as a special assistant for economic policy in the White House, with a combination of academic depth, financial operation, and policy-making vision. Economists at Deutsche Bank Aktiengesellschaft stated in a client report, "Wash has a strong track record to lead the Federal Reserve, with a background somewhat similar to Chairman Powell." Trump's nomination directly reflects his core policy demands - to push for significant interest rate cuts. In the nomination statement, Trump praised Wash as "a completely ideal candidate who will not disappoint," highlighting expectations for Wash to push for loose monetary policies. In terms of policy expectations, Wash's nomination will break from the Powell era's "pragmatic, consensus-driven" monetary policy framework, and move towards a direction that emphasizes inflation control and policy independence. Although Trump hopes for Wash to push for aggressive rate cuts, Wash's policy stance shows a distinct "hawkish undertone + pragmatic flexibility" feature. As a public critic of post-financial crisis era Federal Reserve policies, Wash has warned that large-scale asset purchases and near-zero interest rates distort markets, undermine long-term price stability, and voted against the second round of quantitative easing policies. He has repeatedly criticized the Federal Reserve for having a "mission creep" problem and called for "mechanism reform," arguing that the Fed's current policy framework lacks credibility. 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 in the future, rather than simply catering to short-term economic stimulus demands. However, market analysis generally believes that Wash is not a rigid ideological hawk. Krishna Guha, Global Policy and Central Bank Strategist at Evercore ISI, pointed out that Wash's hawkish reputation and independent image make him more likely to rally Federal Open Market Committee (FOMC) consensus, pushing for 2-3 rate cuts this year, aligning with government demands while balancing inflation control goals. Tobin Marcus Corporation, a research firm, predicts that Wash may agree with the policy logic of "loose interest rates supported by productivity growth," but final decisions will still be constrained by economic data and will not completely depart from the Fed's traditional "data-dependent" framework. "A macroscopic single bet on AI" In the entire economic system, there is an increasing sense that everything seems to lead to AI. When Alphabet Inc. Class C and Amazon.com, Inc. announce their earnings on Wednesday and Thursday respectively, investors will once again observe the willingness of large tech companies to invest in this opportunity. Like other members of the "Seven Giants", these two companies are expected to raise their capital expenditure expectations as they compete for favorable positions in the ongoing AI arms race. Analyst Kyle Roda of Capital said, "Concerns about the 'ROI of AI investments' have reemerged, sparking doubts about valuations." He pointed out that the market's harsh reaction to Microsoft Corporation's capital expenditure scale, "implies that the return on AI investments is declining, and at extreme valuation levels where the market is almost priced to perfection, the growth potential is diminishing." Apollo's Chief Economist Tosin Slok said in a report last Friday, that the rapid expansion of spending is starting to put pressure on the debt market, as AI is turning to debt financing, increasing concentration and relevance risks. Slok said, "AI-related exposures are becoming ubiquitous in all kinds of investment portfolios, seemingly achieving diversification between issuers and industries, but are increasingly masking a macroscopic single bet on AI. What was initially a capital expenditure cycle supported mainly by own funds is rapidly 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 also continue to watch the trading of various commodities that support AI development. In the past few months, whether it is precious metals or basic metals, prices have risen significantly, although there was a sharp pullback last Friday. The impact of AI on the labor market and economic growth is also worth closely monitoring. According to data from the US 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, the GDP continues to grow. The economic growth indicator for the third quarter of 2025 in the US was calculated to be 4.4% on an annualized basis, higher than the 3.8% in the second quarter, raising questions about the source of productivity and where it should be attributed. Investors will get more clues about the changes in US GDP in the fourth quarter in February. Chris Zakarelli, Chief Investment Officer at Northlight Asset Management, said, "The US economy is currently running at a very high level, with a real growth rate of 4.4%, significantly higher than normal, and is likely to gradually decline this year. However, if it can stay above 3% for the whole year, it may bring double-digit returns to the stock market." He added, "It is often said that 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 sustainable increases, enabling companies to significantly increase profits, we should expect the market to rise accordingly."