[Market Analysis] Software stocks rebound, financial stocks plummet... Influenced by "sluggish" economic indicators, bond buying increases, and interest rate cut expectations heat up

On the 11th local time, the U.S. stock market saw economic indicators such as a decline in small business optimism and weak retail sales worsen, which was bullish for the bond market and boosted expectations of interest rate cuts. On the other hand, concerns related to AI in the stock market spread to financial stocks, and the nervousness among investors continues.

Bonds strengthen, expectations of rate cuts expand to 60 basis points

The U.S. macroeconomic surprise index plummeted significantly, pushing market expectations for rate cuts this year to 60 basis points. As a result, Treasury yields dropped noticeably during trading, especially long-term bonds, with the yield curve showing a bull flattening.

AI panic sweeps financial stocks

Goldman Sachs traders said, “Concerns over AI headline risks seem to have peaked,” with related inquiries surging. Particularly, asset management companies (SCHW, AMP, LPLA, RJF, SF) plummeted without any specific reason.

The market experienced sell-offs following news that “Altruist launched AI-based tax planning features.” However, Christian DeGrasse of Goldman Sachs analyzed, “This product is not a replacement for advisors but an auxiliary tool,” adding, “It seems the market only saw headlines mentioning AI and advisory firms and acted quickly without understanding the details.”

The most common question among investors is “What’s the next target?” Fortunately, software stocks rebounded 8.5% from their lows and are trending toward stability.

Retail investors buy the dip on a large scale

Vanda Research data shows that retail investors are actively buying the dip on a large scale. Major indices rose in the early session but gave back gains in the afternoon, with only the Dow Jones Industrial Average closing at a record high and performing well.

The Nasdaq failed to hold the 100-day moving average, while the S&P 500 once again fell after touching the 7,000 “Gamma Wall.”

Bitcoin drops below $70,000

Bitcoin rose during U.S. trading hours, supported by a rebound in large tech stocks, but failed to fully recover from the previous night’s plunge, falling below $70,000. However, perpetual futures funding rates have returned to normal, showing more stability than during the panic on February 6.

Is the correction over… experts remain cautious

Retail investors generally believe the tech sector correction has ended, but Peter Carr of Goldman Sachs warned, “Although large tech stocks have underperformed the market by about 6 percentage points in recent months, there is still room for further decline compared to past non-event-driven corrections (10-12%).”

Market attention has now shifted to the employment data to be released tomorrow (the 12th).