US stocks opened with mixed performance on Friday evening, Beijing time. Investor anxiety was palpable as renewed concerns over artificial intelligence weighed on the market, triggering sell-offs in sectors like logistics and real estate. The US core Consumer Price Index hit its lowest level in nearly five years.

The Dow Jones Industrial Average edged up 0.27 points to 49,452.25, while the Nasdaq Composite fell 49.38 points, or 0.22%, to 22,547.77. The S&P 500 gained 1.25 points, or 0.02%, to 6,834.01. Shares of Applied Materials surged following strong earnings and an encouraging outlook. Airbnb, Inc. saw its stock price rise as investors welcomed the company's optimistic guidance. Pinterest, Inc. reported fourth-quarter results that fell short of expectations and issued weak forward guidance. US markets experienced a broad decline on Thursday, with worries about the disruptive impact of artificial intelligence spreading across various sectors, particularly real estate, trucking, and software. The S&P 500 dropped nearly 1.6%, and the Nasdaq fell approximately 2%. The Dow Jones lost nearly 670 points, a decline of 1.3%. All members of the "Magnificent Seven" tech stocks closed lower on Thursday. Cisco led the market downturn, plunging 12% due to disappointing guidance. Apple fell 5% during regular trading, marking its largest single-day drop since April 2025. "In terms of the AI bubble, the reality is that the frenzy around certain stocks is fading as the market tries to identify winners and losers and becomes more selective," said Brian Levitt, a global market strategist at Invesco. He added, "But with the Dow nearing 50,000 and the S&P 500 approaching 6,900... while there are clearly some brutal declines beneath the surface, overall, this is not an AI bubble. The market is behaving quite healthily." UBS strategists noted in a Friday morning report, "While the full impact on these industries and individual stocks remains to be seen, we believe this validates the monetization potential of AI. The latest developments also highlight AI's transformative nature, making it a key component for investor portfolios." They further suggested that focusing solely on the US information technology sector "is unlikely to fully capture the direct beneficiaries of AI" and recommended that investors diversify across industries and geographies. Dan Ives, Head of Global Technology Research at Wedbush Securities, stated in a Friday interview that while some software stocks may become casualties of the AI rise, investors should not write off the entire sector. "Is Adobe a potential loser? What about pure-play software stocks like UiPath? Yes," he said. "But what about Salesforce, ServiceNow? No—I believe they will be core parts of the AI revolution and its application cases." Ives argued that Wall Street has misjudged the "ripple effect across the entire tech sphere" that AI will bring. "I think what you're seeing here is a massive dislocation," he remarked regarding the software stock sell-off. "I would say, in my career, this is the most disconnected judgment I've seen, where you're essentially treating this sector as one undergoing a structural collapse." UBS strategists believe credit markets have not fully priced in the shock risks that AI may bring to various industries. Any turbulence in the corporate debt sector could make financing more difficult, thereby impacting the AI investment boom. Strategists including Matthew Mish indicated that the leveraged loan sector is most vulnerable to a shock. An AI-induced industry disruption could resemble the sell-off in junk-bond energy companies a decade ago or the dot-com bubble burst over twenty years ago, where concentrated investments in a single sector led to creditor losses.

**Economic Data** US prices for goods and services rose at a slower annual rate than expected in January, offering hope that the persistent inflation problem may be starting to ease. The Bureau of Labor Statistics reported on Friday that the Consumer Price Index increased 2.4% year-over-year in January, down 0.3 percentage points from the previous month. This inflation rate fell back to the level seen in April 2025, the month after President Trump announced significant tariffs on US imports. Core CPI, which excludes food and energy, rose 2.5% year-over-year. Economists surveyed by Dow Jones had expected both figures to be 2.5%. On a monthly basis, seasonally adjusted overall CPI increased 0.2%, while core CPI rose 0.3%; market expectations had been for a 0.3% increase for both. Although housing costs were a primary driver of CPI increases, they rose only 0.2% for the month, pulling the annual increase down to 3%. Elsewhere, food prices increased 0.2%, with five of the six major grocery store food groups posting increases. Energy prices fell 1.5%; vehicle prices were stable, with new car prices up just 0.1% and used car and truck prices down 1.8%. This lower-than-expected data boosted futures market expectations for Federal Reserve rate cuts. According to the CME Group's FedWatch Tool, traders increased the probability of a June rate cut to approximately 83%. The report further complicated the economic outlook. From a macro perspective, the US economy has continued strong growth after a brief slowdown early in 2025. The latest update from the Atlanta Fed's GDPNow model estimates fourth-quarter economic growth at 3.7%. However, inflation remains persistently above the Fed's 2% annual target, even with energy prices largely under control. Additionally, Fed officials continue to express concerns about the labor market; the US averaged only 15,000 new jobs per month last year. Consumer spending was acceptable last year but unexpectedly flattened near the holiday season. Given these conflicting economic signals, the market widely expects the Fed to pause its rate-cutting cycle—the Fed cut rates three times in the second half of 2025. This year, the Fed faces a shift in the policy environment: following the rotation of regional Fed bank presidents, the overall stance appears more inclined toward aggressively combating inflation, while incoming Chair Kevin Walsh may advocate for rate cuts.