Wall Street Brief (February 5): US stocks showed divergent trends on Wednesday, with a slight rise in risk aversion. Technology stocks were pressured again, and the Nasdaq plummeted by 1.51%. Capital shifted to defensive sectors, while the Dow Jones Industrial Average rose against the trend.

Summary: US stocks showed divergent trends on Wednesday. The S&P 500 Index fell by 0.51%, the Nasdaq dropped by 1.51%, the Dow Jones Industrial Average rose by 0.53%, and the Russell 2000 Index retreated by 0.90%. Selling pressure spread across semiconductor and software sectors, compounded by weak earnings guidance from some companies, causing technology heavyweights to retreat and putting growth stocks under renewed pressure. Meanwhile, capital flowed into defensive and high-dividend sectors, with traditional heavyweights showing relative resilience, supporting the Dow Jones' positive performance. In major asset classes, gold rose by 0.38%, crude oil fell by 0.97%, Bitcoin dropped by 3.42%, and the US Dollar Index edged up by 0.27%.

I. Major Events

1. Treasury Secretary Bessent mentioned the Federal Reserve's independence, sparking discussions about policy uncertainty.Bessent mentioned during the hearing that the President could intervene in Federal Reserve decisions while also emphasizing the importance of independence, sparking market discussions on policy boundaries. Such statements have to some extent increased uncertainty, potentially affecting market expectations on interest rates and the US dollar.

2. ADP private sector employment rose by only 22,000, fueling concerns about economic momentumADP data showed that private sector employment in January increased by only 22,000, significantly below expectations, with clearer signals of a slowdown in service sector momentum. The weaker-than-expected data heightened market divisions over growth prospects and the interest rate path, pressuring risk asset pricing.

3. Tech stocks under renewed pressure as earnings guidance weighs on chips and softwareTech heavyweights faced renewed selling pressure, with chip and software stocks collectively weakening amid concerns over earnings guidance and AI commercialization. The Nasdaq index came under particularly evident pressure. The pullback in major tech stocks amplified index declines, while also driving continued rotation of funds into non-tech and defensive sectors.

II. Major Trends

Over a three-month horizon, small-cap stocks continue to outperform large-cap stocks. IWM gained 7.05% over three months, significantly higher than SPY’s 1.27%, indicating that capital remains willing to diversify into small and mid-caps in the medium term. Industrial stocks represented by DIA rose 3.30% over three months, clearly outpacing the tech-heavy QQQ’s -0.87%, reflecting the ongoing relative strength of traditional heavyweights. In terms of market breadth, RSP outperformed SPY over three months (5.83% vs 1.27%), maintaining a dispersed rally pattern. However, February 3 breadth data showed more new lows than new highs for the Nasdaq, suggesting that tech heavyweights remain weak. Regarding style rotation, value-focused SPYV gained 4.08% over three months, leading growth-focused SPYG’s -0.96%, indicating that value preference remains dominant. On short-term momentum, QQQ accelerated its two-week gain to 1.23% (from 0.10% in the prior two weeks), but the tech sector retraced on the day, creating a divergence between short-term momentum and intraday performance.

III. Market Sentiment

The VIX closed at 18.64, up 3.56%, reflecting a slight rise in risk aversion. The CNN Fear & Greed Index dropped to 41 (from 44 the previous day), with sentiment retreating to 'neutral with a cautious tilt.' In terms of breadth, the latest available data from February 3 showed 54% of NYSE-listed stocks advancing and 42% of Nasdaq-listed stocks advancing, with new highs vs new lows at 281/127 for the NYSE and 307/417 for the Nasdaq, indicating continued weakness in tech heavyweights.

IV. Market Scan

1. Index ETFsThe Dow ETF (DIA) rose 0.50%, showing steadier performance from traditional heavyweights as capital favored sectors with stronger cash flow visibility. The Nasdaq ETF (QQQ) fell 1.75%, with weakness in tech heavyweights remaining the core drag, continuing the structural divergence of 'heavyweight retracement and non-heavyweight absorption.'

2. Industry SectorsThe materials sector (XLB) rose 2.35%, driven by a rebound in precious metals that helped repair the resource chain. The energy sector (XLE) gained 2.25%, supported by rising oil prices. The tech sector (XLK) fell 2.79%, pressured by broadening selling in chips and software. Real estate (XLRE) rose 1.59%, benefiting from defensive capital inflows. Consumer staples (XLP) gained 1.30%, and healthcare (XLV) rose 1.25%, reflecting overall strength in defensive sectors.

3. Seven Major Tech StocksApple (AAPL) rose 2.60%, showing relative resilience amid broader tech sector weakness. Tesla (TSLA) fell 3.78%, with the market continuing to focus on uncertainties related to robotics and autonomous driving. NVIDIA (NVDA) fell 3.41%, Meta (META) dropped 3.28%, and Google (GOOG) declined 2.16%, with tech heavyweights retreating in unison.

4. Chinese概念股Chinese concept stocks weakened as a whole. BILI dropped 6.56%, NTES fell 5.41%, BIDU declined 4.77%, FUTU decreased by 4.02%, TME was down 3.41%, KWEB slipped 2.91%, BABA fell 2.76%, and PDD dropped 1.15%. There was no clear single catalyst during the day, with declines mainly driven by a broader retreat in risk appetite.

5. Cryptocurrencies and related stocksThe latest quote for Bitcoin fell by 3.42%, with sentiment in the crypto market remaining under pressure. CRCL dropped 1.98%, with relatively muted news flow; Palantir (PLTR) plummeted 11.62%, as high-valuation, high-volatility stocks faced concentrated selling amid weakness in the software sector, leading to a concurrent cooling of related thematic热度.

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