Performance boost! Late at night, US software stocks surge!

Strong earnings reports drive many software stocks higher.

On Tuesday, February 10 (local time), the three major U.S. stock indices opened higher collectively, then diverged in their movements. The Nasdaq briefly turned down, hit a short-term bottom, and then surged again. As of the latest update, the Dow Jones Industrial Average rose 0.67%, the S&P 500 increased 0.19%, the Nasdaq gained 0.05%, and the Nasdaq Golden Dragon China Index rose 0.56%.

Most large tech stocks advanced, with Microsoft up nearly 2%, Tesla up over 1%, and Apple, Amazon, and Broadcom posting modest gains. Google A fell over 2%, while Nvidia and Meta declined slightly.

AI application software stocks in the U.S. opened strongly, with Spotify and Datadog both soaring over 16%, Shopify up more than 6%, and Unity up nearly 5% as of the latest update.

Spotify’s latest financial report shows that its total revenue for Q4 2025 was €4.53 billion, exceeding market expectations. Meanwhile, Datadog’s revenue and net profit for Q4 2025 also surpassed market forecasts.

JPMorgan strategists stated that software stocks are likely to rebound from a historic decline because the market’s expectation of short-term disruptive AI impacts is unrealistic. Led by Dubravko Lakos-Bujas, the team noted that “extreme price movements” could lead to at least short-term sector rotation, and investors should increase allocations to high-quality software stocks that are more resistant to AI disruption. In a report, the team wrote, “Given the position unwinding, excessive pessimism about AI disrupting the software industry, and solid fundamentals, we believe the risk-reward balance is increasingly favoring a rebound.”

On the economic data front, retail sales, often called “horrible data,” came in below expectations. The U.S. Department of Commerce reported on Tuesday that retail sales in December 2025 were flat month-over-month, versus an expected 0.4% increase and a previous 0.6%. The December 2025 export price index rose 0.3% MoM, above the 0.1% forecast, while the import price index increased 0.1%, matching expectations.

Analysts pointed out that the unexpected stagnation in December retail sales indicates consumers were more cautious with their spending at year-end. Data showed declines in eight out of thirteen retail categories, including clothing and furniture stores. Auto dealer sales also fell. Meanwhile, spending at building materials and sporting goods stores increased. These figures suggest consumer spending momentum weakened as the holiday shopping season wound down. Although many economists expect tax refunds to support demand early this year, households remain dissatisfied with high living costs and continue to worry about the job market. The breadth of consumer spending is also concerning. Wealth generated by stock market gains may stimulate demand, but there are signs that non-essential spending among low-income Americans, who rely mainly on modest wage growth, is less robust.

The ADP report released the same day showed that, for the four weeks ending January 24, private sector employment in the U.S. increased by an average of 6,500 jobs per week.

Additionally, the U.S. will release January non-farm payroll data and CPI reports on Wednesday and Friday evenings this week.

A survey of economists indicates that non-farm employment in January may have increased by 70,000 jobs, compared to a 50,000 increase in December. The unemployment rate in December was 4.4%, and economists expect it to remain at that level in January.

Kevin Hasset, director of the White House National Economic Council, said Monday that employment growth in the U.S. could slow in the coming months due to slowing labor force growth and rising productivity.

The U.S. employment situation will largely determine the Federal Reserve’s future policy path. The next Fed meeting is scheduled for March 17–18. According to the CME FedWatch Tool, the probability of a 25 basis point rate cut by the Fed by March is 17.7%, with an 82.3% chance of holding rates steady. The probability of a 25 basis point cut by April is 32.4%, with a 63.5% chance of no change, and a 4% chance of a 50 basis point cut. By June, the chance of a 25 basis point cut is 50.4%.