Wall Street Brief (February 25): US stocks rebounded across the board, driven by a major AI chip deal and rising consumer confidence. Technology and cyclical stocks strengthened simultaneously, with market risk aversion easing, while tariff uncertainty remains unresolved.

Summary: US stocks rebounded across the board on Tuesday, with the S&P 500 Index up 0.77%, Nasdaq up 1.04%, Dow Jones up 0.76%, and Russell 2000 up 1.20%. Stimulated by a major AI chip deal and a recovery in consumer confidence, technology and cyclical stocks strengthened simultaneously, leading to a marginal decline in market risk aversion, with trading sentiment turning positive as the VIX fell below 20. In terms of major asset classes, gold fell 1.88%, crude oil dropped 0.32%, Bitcoin declined 0.92%, and the US Dollar Index rose 0.17%. However, uncertainty over trade policy persists and may continue to be a potential source of volatility in the short term.

I. Major Events

1. Major AI chip deal finalized

AMD announced a multi-year supply agreement with Meta, with a maximum scale of approximately $60 billion over five years, and granted Meta the option to purchase up to about 10% equity. The first deliveries are set to begin in the second half of 2026. The narrative around AI infrastructure demand has heated up again, with sentiment for tech heavyweights and semiconductors improving.

2. Consumer confidence rebounds to 91.2

The US consumer confidence index rose to 91.2 in February, with the current situation index at 120.0 and the expectations index at 72.0, indicating some improvement in consumption expectations but not yet fully strengthened. After the data release, market expectations of economic resilience slightly rebounded, lifting sentiment for discretionary consumption and small-cap stocks.

3. A 10% temporary import surcharge takes effect

The White House announced a 10% temporary import surcharge for 150 days under Section 122 of the Trade Act, effective from February 24. The implementation of the policy did not immediately alter the main market trend on the day, but trade uncertainties remain, leaving room for future volatility.

II. Major Trends

Over a three-month horizon, small-cap stocks showed a clear advantage, with IWM rising 13.45%, significantly outperforming SPY's 4.28%. Capital continued to flow into small caps. Industrials outperformed technology, with DIA gaining 8.15% over three months compared to QQQ's 1.72%, showing traditional sectors' relative strength. Market breadth improved, with RSP up 10.48% leading SPY's 4.28%, reflecting broader dispersion in gains. In terms of style, value remained dominant, as SPYV gained 7.55% over three months, significantly stronger than SPYG's 1.04%. Technology heavyweights saw short-term adjustments, with MAGS retreating 3.74% within two weeks and the decline accelerating.

III. Market Sentiment

The VIX fell to 19.55, down 6.95% in a single day, indicating a cooling of volatility. The CNN Fear & Greed Index rose to 43 (from 37 the previous day), with sentiment shifting from a slight panic to a cautious range. Market breadth improved significantly, with the ratio of NYSE advancing to declining stocks approximately 2.06:1. The number of Nasdaq advancers was 3,194, significantly higher than the 1,493 decliners. Institutionally, the NAAIM Equity Exposure Index stood at 80.61 as of February 11, reflecting moderate-to-high risk appetite but marginal pullback.

IV. Market Scan

1. Index ETFs

Improved AI sentiment and consumer data boosted broad-based gains in index ETFs, with SPY up 0.73%, QQQ up 1.07%, and small-cap IWM up 1.09%. From a market structure perspective, small caps and equal-weight indices showed more resilience, indicating that the rally was not solely driven by a few heavyweight stocks 'pulling the index.' Risk appetite recovered more broadly across the board.

2. Sector Performance

Consumer and technology sectors led the gains, with XLY up 1.52%, supported by Home Depot earnings and consumer data bolstering sector sentiment; XLK rose 1.30%, fueled by AI-related order news reinforcing expectations of sustained investment in computing power. Meanwhile, cyclical sectors saw a rebound, with XLI rising 1.23%, reflecting eased concerns about growth. Utilities also strengthened, with XLU up 1.11%, indicating that while capital turned offensive, it retained some defensive positions. Healthcare lagged relatively, with XLV down 0.42%.

3. The Magnificent Seven Tech Stocks

Tech heavyweights rebounded with their sectors, with NFLX up 2.66%, TSLA up 2.39%, and AAPL up 2.24%, driving index recovery; GOOG fell slightly by 0.25%, showing internal divergence among heavyweights. Overall, the tech sector reflected more of a sentiment recovery and capital inflow, but a complete synchronization of 'uniform rises and falls' has yet to fully form.

4. Chinese Equities

Chinese概念股 continued to diverge, with TME up 1.77% and FUTU down 1.89%. From an intraday rhythm perspective, the sector lacked a single strong catalyst, and individual stock movements largely fluctuated following overall risk sentiment and capital preference changes.

5. Cryptocurrency concept and popular stocks

Bitcoin fell by 0.92%, and Ethereum dropped by 0.23%. As of 10:00 AM Beijing time on the 25th, Bitcoin rebounded by 3.11%. Mining company RIOT led the gains with a rise of 5.43%, continuing the amplified effect of the cryptocurrency asset rebound. PLTR declined by 1.35%, showing some profit-taking against the backdrop of a broader market recovery, likely due to short-term fund rebalancing; the specific driver remains unclear.

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

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