Wall Street Brief (February 19): US stocks closed slightly higher on Wednesday, with NVIDIA driving a stabilization in the large tech sector; risk sentiment remains cautious, and whether the recovery can continue needs to be observed

Summary: US stocks closed slightly higher on Wednesday, with the S&P 500 Index up 0.56%, the Nasdaq Index up 0.78%, the Dow Jones Index up 0.26%, and the Russell 2000 Index up 0.45%. AI order-related news drove strength in NVIDIA, and sentiment in the technology sector improved somewhat; however, rising US Treasury yields continued to weigh on interest rate-sensitive sectors, keeping the overall index gains moderate. Over a two-week period, the broader market maintained a structure of 'traditional industries relatively strong, technology relatively weak.' The VIX fell to 19.62, down 3.30% for the day, reflecting a slight easing of panic sentiment, but the market remained cautious, and the sustainability of the recovery still needs to be monitored. In terms of major asset classes, gold rose 2.02%, crude oil surged 4.37%, Bitcoin fell 1.54%, and the US dollar index gained 0.64%.

I. Major Events

1. The Federal Reserve released the minutes of the January FOMC meetingThe Federal Reserve released the minutes of its January meeting, prompting the market to reassess policy paths and risk balances. The minutes reinforced expectations of a 'recalibration,' leading funds to price interest rate-sensitive sectors more cautiously, while changes in yields also became an important backdrop for the day's market divergence.

2. Hassett's criticism of the New York Fed's tariff study sparks controversyWhite House economic advisor Hassett publicly criticized the conclusions of the New York Fed's tariff study and called for disciplinary action against the researchers. This move has fueled market discussions on policy communication and institutional independence, making 'policy uncertainty' once again a risk factor that investors need to consider.

3. Oil prices close up over 4% as geopolitical risks boost supply concernsThe escalation of US-Iran tensions and lack of progress in Russia-Ukraine negotiations have triggered market concerns about the supply side, with oil prices surging 4.37% in a single day. The energy sector strengthened accordingly; meanwhile, rising oil prices have also led to a rebound in inflation expectations, reigniting discussions about cost pressures.

II. Major Trends

Over a two-week period, DIA performed the best (2 weeks: 2.29%), while QQQ was the weakest (2 weeks: -3.18%), continuing the short-term structure of 'traditional sectors relatively strong, technology relatively weak.' Over a three-month horizon, small-cap stocks significantly outperformed, with IWM rising 8.84% in three months, compared to SPY’s 1.61% during the same period, highlighting a more pronounced small-cap dominance. In terms of breadth, RSP outperformed SPY over three months (3 months: 7.66% vs. 1.61%), indicating the rally was not driven solely by a few heavyweights, showing better market breadth. In terms of style, value stocks continued to hold an advantage, with SPYV up 5.60% over three months, while growth stocks SPYG fell 1.72% during the same period, with deeper short-term pullbacks in growth (2 weeks: -3.21% vs. 2.62%). The MAGS tech giants fell 5.03% over two weeks, showing that pressure from heavyweights had not fully eased.

III. Market Sentiment

The VIX dropped to 19.62, falling 3.30% in a single day, slightly easing panic sentiment. The CNN Fear & Greed Index rose to 40 (from 38 the previous day) but remained in a relatively cautious range. In terms of market breadth, the number of advancing stocks on the NYSE slightly outnumbered declining stocks on the previous trading day (approximately 1.02:1), while the Nasdaq saw slightly more decliners (approximately 1.07:1). Volume at 17.76 billion was below the 20-day average of 20.70 billion, suggesting a restrained recovery in risk appetite. The latest available Put/Call ratio stood around 0.88, showing moderate hedging demand without a clear shift toward aggressive positioning.

IV. Market Scan

1. Index ETFsDriven by the recovery of tech heavyweights, QQQ rose 0.75%, making it the strongest performer among index ETFs; DIA rose 0.23%, lagging behind. The limited overall index gains indicate the rebound remains focused on structural repair and hasn't yet spread to broader weightings and style sectors.

2. Industry SectorsThe surge in oil prices boosted the energy sector, with XLE rising 1.92%, becoming the leading sector of the day. In contrast, rising yields weighed on defensive and real estate sectors, with XLU falling 1.66% and XLRE down 1.34%. High-dividend assets saw a temporary decline in attractiveness. The tech sector rebounded amid improved AI sentiment, with XLK rising 1.03%, but interest rate pressures still caused notable internal divergence within the sector.

3. The Seven Major Tech StocksCatalyzed by large AI orders, NVIDIA rose 1.63%, with funds continuing to focus on core computing power chains. Tesla gained only 0.17%, showing weaker momentum, maintaining the pattern of 'the strong getting stronger and peripheral names staying on the sidelines.'

4. Chinese Stocks Listed AbroadChinese stocks showed limited volatility overall, with Futu rising 2.40% to lead the pack, while Tencent Music fell 0.26%, lagging behind. Capital flows were mainly driven by transactional recovery, with no clear catalysts at the sector level to drive consistent upward movement.

5. Cryptocurrencies and Related StocksBitcoin fell by 1.57%, with weak sentiment across the crypto market. RIOT led gains, rising 5.73%, while MSTR lagged behind with a 2.70% decline. Mining companies and strategy stocks showed divergent trends, with volatility remaining at elevated levels.

$NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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