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

Strong earnings reports lead to a surge in multiple software stocks.

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 rebounded again. As of the time of writing, 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 shares fell over 2%, while Nvidia and Meta declined slightly.

U.S. AI application software stocks surged strongly at the market open. As of the latest update, Spotify and Datadog both soared over 16%, Shopify increased over 6%, and Unity rose nearly 5%.

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

JPMorgan strategists stated that software stocks are expected to rebound from a historic decline, as the market’s short-term disruptive impact of artificial intelligence is unrealistic. Led by Dubravko Lakos-Bujas, the team noted that “extreme price movements” could lead to at least short-term sector rotation of funds back into software stocks. Investors should increase allocations to high-quality software stocks that are more resistant to AI disruption. The team wrote in a report: “Given the portfolio de-risking, overly pessimistic outlook on AI disruption in 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 reading of 0.6%. The December 2025 export price index rose 0.3% MoM, above the expected 0.1%, 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 8 out of 13 retail categories, including clothing stores and furniture stores. Auto dealer sales also fell. Meanwhile, spending at building materials stores and sporting goods retailers increased. These figures suggest consumer spending momentum waned as the holiday shopping season drew to a close. Although many economists expect tax refunds this year to support early-year demand, 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 mainly rely on modest wage growth, is less robust.

The ADP report released the same day showed that, for the four weeks ending January 24, the average weekly increase in U.S. private-sector employment was 6,500 jobs.

Additionally, the U.S. January non-farm payrolls and CPI reports will be released on Wednesday and Friday evenings, respectively.

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, stated on Monday that due to slowing labor force growth and rising productivity, U.S. employment growth may slow in the coming months.

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 the Fed cutting interest rates by 25 basis points by March is 17.7%, while the chance of holding rates steady is 82.3%. The probability of a cumulative 25 basis point cut by April is 32.4%, with a 63.5% chance of no change, and a 4% chance of a cumulative 50 basis point cut. By June, the probability of a 25 basis point cut is 50.4%.