The three major stock index futures all rose, Cisco's stock jumped after earnings, and Moody's warned that the US labor market remains weak.

Pre-Market Market Trends

1. On Thursday, February 12, U.S. stock futures rose across the board. As of press time, Dow futures up 0.33%, S&P 500 futures up 0.31%, Nasdaq futures up 0.29%.

2. European markets also gained: Germany DAX up 1.22%, UK FTSE 100 up 0.11%, France CAC 40 up 0.74%, Euro Stoxx 50 up 0.59%.

3. Crude oil prices declined slightly: WTI down 0.09% at $64.57 per barrel. Brent down 0.17% at $69.28 per barrel.

Market News

Market misjudged the Fed’s stance? Trump’s “global minimum interest rate” vision may become reality. Despite January’s US non-farm payrolls beating expectations significantly, leading to a reduction in Fed rate cut expectations from three to two times by 2026, hedge fund titan and Greenlight Capital founder David Einhorn predicts the Fed will cut rates “far more than twice” this year, stating the market is severely underestimating future easing. Einhorn points to political pressure from the Trump administration and upcoming leadership changes at the Fed as key catalysts for an aggressive rate cut cycle. He strongly dismisses concerns that a strong economy will prevent rate cuts, believing traditional constraints may no longer apply under new economic and fiscal leadership.

Apollo Asset Management: Software industry enters “violent tech cycle,” valuation logic faces historic reset. Co-CEO John Zito warns that driven by AI disruptive forces, the software sector is in an early stage of an “extremely violent tech cycle.” With valuations undergoing major resets, markets are increasingly screening for winners and losers. Zito emphasizes the industry remains critical but notes a fundamental shift in investment patterns: “We must remain extremely humble in the face of everything happening now,” and “we need to think very carefully about what the world will look like in a year or two.” While he expects software usage to grow, investors’ willingness to pay is being recalibrated.

Wall Street receives a big boost: Fed plans to ease bank regulations, with some directives being rescinded. As Vice Chair Michelle Bowman continues to relax oversight, the Fed signals plans to revoke some non-public corrective orders issued to banks to improve operations. Sources say earlier this month, regulators informed many banks they would review existing “non-compliance correction orders,” which are non-public defect correction directives. If a directive conflicts with the latest Fed guidance—focusing more on immediate financial health rather than process compliance—it will be rescinded. Bank executives will have a say in formulating remaining corrective measures.

Disappointing non-farm payrolls rebut rate cut expectations; Moody’s warns: Don’t be fooled, the good times won’t last! January added 130,000 jobs, well above the 70,000 expected; unemployment rate fell to 4.3%. The data cooled expectations for a Fed rate cut, delaying the next move from June to July. However, Moody’s Chief Economist Mark Zandi warns not to get too optimistic: he doesn’t believe growth can be sustained. Zandi repeatedly warns that the US economy’s foundation is fragile and could slip into recession at any time. He tweeted Wednesday that the latest employment data did little to ease his concerns, citing that “the labor market remains fragile and highly susceptible to shocks.” Although January added 130,000 jobs, considering significant downward revisions in historical data since last April, employment has essentially stagnated. He also notes that nearly all job gains in January came from healthcare, which he views as not a good sign for the overall economy.

Fed hawks again! Schemidt: Inflation remains high, rates need to stay “restrictive.” Kansas Fed President Esther George states that the Fed should keep rates at a “certain restrictive level,” expressing ongoing concern about persistent high inflation. “In my view, further rate cuts could prolong high inflation,” she says. She adds that rates should still exert some pressure on the economy, but current conditions may not warrant that: “The economy shows momentum, and inflation remains overheated. I see little sign of economic restraint.” She emphasizes that ongoing price pressures indicate demand exceeds supply in most sectors. While new innovations like AI may eventually boost productivity and allow economic expansion without fueling inflation, “we’re not there yet.”

Stock News

Siri “reboot plan” disrupted! Apple (AAPL.US) internal testing hits a snag, “AI-powered Siri” delivery postponed. Leaker Mark Gurman reports that Apple’s long-planned major AI upgrade for Siri faced testing obstacles in recent weeks, likely delaying the release of several highly anticipated new AI features. Major AI functionalities originally scheduled for iOS 26.4 may be split into multiple releases—some key features pushed to iOS 26.5 or even iOS 27.

Sanofi (SNY.US) suddenly changes CEO: R&D “fizzle” becomes “death knell,” Merck executive takes over. On February 12, Sanofi announced the sudden departure of CEO Paul Hudson, replaced by Merck executive Belen Garijo. The French pharma giant had heavily invested in R&D but saw little results, exhausting the board’s patience. Hudson, who led Sanofi for over six years, had been trying to find a successor for the blockbuster drug Dupixent, facing patent cliffs and declining sales after peak revenue. Last year’s mixed or failed late-stage trials further disappointed shareholders. As of press time, Sanofi stock pre-market fell over 6%.

Storage chip price hikes become “profit killers”! Cisco (CSCO.US) beats earnings but stock falls; AI orders surge but costs weigh. The company reported Q2 revenue up 10% YoY to $15.3 billion, beating estimates of $15.1 billion; net income rose from $2.43 billion to $3.18 billion; adjusted EPS of $1.04 beat expectations of $1.02. AI infrastructure orders from hyperscale data centers reached $2.1 billion, a significant jump from $1.3 billion last quarter. Core networking revenue grew 21% YoY to $8.3 billion, surpassing the $7.9 billion forecast. However, Cisco expects Q3 adjusted EPS of $1.02–$1.04, just meeting the $1.03 consensus, and warns that gross margin forecasts are below expectations. Like the entire tech sector, Cisco faces storage chip shortages, as many product lines rely on these components. The company is also investing in upgrades to better support AI applications. As of press time, Cisco pre-market fell over 7%.

Applovin (APP.US) shatters “software doom” myth! AI boosts performance, Q4 net profit jumps 84%. Focused on “AI + digital advertising,” Applovin reports Q4 revenue up 66% YoY to $1.66 billion, beating estimates of $1.61 billion; GAAP net income about $1.1 billion, up 84%; GAAP EPS of $3.24, above expected $2.96. The company forecasts Q1 2026 revenue of $1.745–$1.775 billion, higher than the $1.7 billion expected, and adjusted EBITDA of $1.465–$1.495 billion, also above expectations. Applovin’s strong recent results and outlook suggest that platform software giants supporting enterprise workloads are unlikely to be replaced by AI or generative AI applications; instead, their fundamentals may benefit long-term from AI. As of press time, Applovin pre-market fell over 5%.

McDonald’s (MCD.US) value meal packages reshape cost-effectiveness; Q4 US revenue hits two-year high. McDonald’s US sales grew at the fastest pace in over two years in Q4, driven by value meal promotions appealing to cost-conscious consumers. Revenue reached $7 billion, up 9.5% YoY, beating estimates by $160 million; adjusted EPS of $3.12 beat expectations by $0.07. Same-store sales in the US increased 6.8%, surpassing expectations and marking the highest growth since 2023. The chain’s recent focus has been on restoring its position as an affordable dining option post-pandemic, with efforts including budget menus and $5 value meals paying off, outperforming competitors.

Pre-acquisition stellar performance: Confluent (CFLT.US) Q4 earnings, customer growth double expectations, cloud revenue surges 23%. Confluent released its FY2025 Q4 and full-year results before being fully privatized by IBM. The report shows strong performance in cloud and profitability, exceeding expectations. For Q4 ending December 31, revenue hit $314.8 million, up 21% YoY; Confluent Cloud contributed $169 million, up 23%. Profitability improved significantly, with non-GAAP EPS of $0.12, well above the $0.10 forecast.

Lithium prices rebound but industry remains cold; US Albemarle (ALB.US) Q4 losses worse than expected, shuts down key Australian plant. The company reported Q4 revenue of $1.43 billion, up 16.3%, beating estimates by $80 million; net loss of $455.9 million, or $3.87 per share, compared to net profit of $33.6 million last year. Despite lithium prices rising recently, they remain well below 2023 highs. Albemarle has shut down its Kemerton plant in Western Australia and canceled plans for two new production lines. It expects FY2026 revenue of $6 billion and adjusted EPS of $2.61. As of press time, stock pre-market fell over 2%.

Key markets perform strongly! Unilever (UL.US) Q4 sales beat expectations; 2026 outlook remains solid. Thanks to strong sales of premium beauty and home care products in the US and India, Unilever’s Q4 sales reached €12.6 billion, down 2.7% YoY but with core sales up 4.2%, beating analyst estimates of 4%. Volume grew 2.1%, prices up 2.0%. Looking ahead, Unilever expects FY2026 core sales growth to be at the lower end of its 4–6% target, in line with expectations. The company also announced a €1.5 billion (about $1.8 billion) share buyback starting in Q2.

Important Economic Data and Event Preview

Beijing Time 21:30 US Initial Jobless Claims for the week ending February 7

Beijing Time 23:00 US January Existing Home Sales (annualized)

Earnings Reports

Friday morning: Applied Materials (AMAT.US), Airbnb (ABNB.US), Vale (VALE.US), Roku (ROKU.US)