Energy Stocks Surge on Policy Reversal as AI Fears Hit Tech

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US Markets Grapple with Jobs Data and Rate Cut Fears

Wall Street ended the session on a nervous note, as a seemingly robust jobs report and growing anxiety around artificial intelligence soured investor sentiment. The Dow Jones Industrial Average snapped a three-day winning streak, reflecting a broader market unease.

Strong Jobs Report Masks Deeper Weakness

The US economy added 130,000 jobs in January, comfortably beating economists' expectations. This apparent strength, however, has had the opposite of the desired effect on markets. A strong labour market makes it less likely that the US Federal Reserve will feel pressured to cut interest rates, a key driver of recent stock market gains. The unemployment rate also dipped to 4.3%—its lowest level since August—while workers' wages rose 3.7% from a year ago.

However, a closer look at the figures reveals a much more fragile picture:

• Massive Downward Revisions: The real story lies in the revisions to past data. Newly released figures show that job growth for 2025 was overstated by more than 400,000, with only 181,000 jobs added for the entire year, down from the 584,000 initially reported. Similarly, the numbers for 2024 were revised down from 2 million to 1.5 million. This suggests the labour market is significantly weaker than headlines imply.
• Concentrated Growth: Recent job creation was heavily concentrated in healthcare and related fields, which are less sensitive to the wider economy, raising questions about the breadth of the recovery.
• AI's Growing Impact: There is early evidence of automation hitting white-collar workers. The financial activities and information sectors lost a combined 34,000 jobs in January. Analysts at Goldman Sachs noted that tech-related employment is now at its lowest level since May 2022.

The Fed's Patient Stance

Federal Reserve officials have seized on the headline data to reinforce their cautious stance. Cleveland Fed President Beth Hammack said rates could remain on hold “for quite some time,” while Dallas Fed President Lorie Logan warned that cutting too soon could reignite price pressures. With the Fed's next meeting on 17-18 March, traders now increasingly see the central bank keeping rates steady until at least June.

However, not all prominent investors are convinced. David Einhorn of Greenlight Capital suggested the market is being too cautious, stating, "I think by the time we get to the end of the year, it’s going to be substantially more than two cuts."

The Great AI Divide: Fear, Optimism, and Debt

Fears surrounding the long-term impact of AI continue to weigh on parts of the technology sector, particularly software companies. Investors appear concerned that new AI tools could disrupt existing business models, leading to a sell-off in some of the sector's biggest names, with ServiceNow falling 6% and Salesforce retreating by 5%.

However, not everyone is pessimistic. Hedge fund billionaire Bill Ackman revealed his fund, Pershing Square, has made a major new investment in Meta, calling it one of the clearest beneficiaries of AI integration. Pershing Square believes concerns over Meta's AI-related spending are short-sighted. This confidence is backed by Meta's plan to spend between $115 billion and $135 billion on AI-related projects this year.

AI's Funding Shift: Debt Over IPOs

A new dynamic is emerging in how the AI boom is being financed. Instead of new companies going public, established tech giants are turning to the debt markets. A recent UBS report estimated that global tech and AI-related debt issuance could soar to $990 billion this year. Oracle and Alphabet have already completed major debt sales, and there are indications that Amazon, Meta, and Tesla could follow. This prospect of nearly $1 trillion in new debt has raised warning signs for some investors.

OpenAI's Military Deal

In a significant development, OpenAI announced it has struck a deal with the US government to create a specialised chatbot for military use. The move came after competitor Anthropic reportedly declined a similar deal over concerns the technology could be used to cause harm, highlighting an ethical split among leading AI firms.

Major Policy Shift Set to Reshape Energy and Autos

A planned overhaul of US climate policy is set to dramatically reshape the investment landscape for the energy, automotive, and infrastructure sectors. The Trump administration is preparing to reverse nearly two decades of emissions policy in what one official called "the largest act of deregulation in the history of the United States."

Potential Winners: Traditional Energy and Infrastructure

This regulatory rollback is expected to provide a significant boost to traditional energy producers by lowering their costs. Companies like ConocoPhillips, Permian Resources, and coal producer Hallador Energy stand to gain. Further buoying the sector, the US Treasury has reopened access to Venezuela’s oil fields for American firms, sparking a rally in energy giants like Exxon Mobil and Chevron.

Potential Headwinds: The EV Sector

The proposed changes directly challenge rules designed to accelerate the switch to electric vehicles (EVs). By scrapping targets that would have required a large percentage of new car sales to be electric by the early 2030s, the policy shift could slow the transition. This creates a more challenging environment for pure-play EV makers like Tesla, while potentially easing pressure on traditional car manufacturers such as General Motors and Ford.

Ford recently highlighted these pressures in its latest earnings report, which missed expectations in its worst result for four years. The company cited a $2 billion tariff bill from the Trump administration as a key factor.

Political Headwinds: Congress Challenges Trump's Tariff Policy

In a symbolic but significant move, Congress has formally pushed back against President Donald Trump’s signature economic policy on trade tariffs. The House of Representatives approved a resolution to revoke tariffs on Canada, with several Republicans breaking ranks to join Democrats. The pushback comes as the Treasury Department revealed the US generated $30 billion from tariffs in January, a more than 300% year-over-year increase.

While the resolution has little chance of becoming law, the vote signals eroding political power. The real-world impact of these policies was highlighted by Ford, which partly blamed a hefty tariff bill for its disappointing earnings. For investors, this introduces a new layer of political uncertainty, especially concerning trade-sensitive sectors.

Corporate Corner: Consumer Brands Face Tough Choices

Beyond the macroeconomic shifts, individual companies are navigating a challenging consumer environment, leading to starkly different strategies.

Chipotle's Premium Gamble vs. The Value Meal Victory

Fast-casual restaurant Chipotle is holding firm on its premium pricing strategy, even as it faces pushback from customers over high prices, contributing to a drop in sales and its stock price. This contrasts sharply with McDonald's, which has used value deals to win over lower-income customers, reporting a nearly 7% boost in domestic same-store sales. Restaurant Brands International, parent of Burger King, also reported better-than-expected results, driven by strong international sales.

A Tale of Two Toymakers: Hasbro vs. Mattel

A similar split is evident in the toy industry. Mattel's shares plunged 27% in their worst day in two decades after the company warned of a tough year ahead. In contrast, rival Hasbro received a boost after its strategic bet on digital gaming paid off, with that segment's revenue soaring by 86%. This shows how embracing new technology is creating a clear performance gap.

European Headwinds and Corporate Restructuring

Dutch brewer Heineken has announced plans to cut up to 6,000 jobs, or about 7% of its global workforce, as beer volumes fell. Separately, Kraft Heinz has paused its planned split into two companies, as its earnings forecast for 2026 came in well below analyst expectations. Meanwhile in Europe, French software company Dassault Systèmes saw its stock fall more than 20% on a major earnings miss and weak guidance.

Sector Spotlight: Ride-Sharing and Real Estate

Lyft's Rough Ride

Ride-sharing company Lyft saw its shares hit a pothole, falling nearly 17% after missing revenue targets. The company pointed to intense competition from rivals like Uber, higher promotional costs, and even bad weather affecting ride volumes. Despite the setback, Lyft is planning a $1 billion share buyback programme and hopes that new laws making insurance cheaper in California will help lift its performance by the end of the year.

Zillow's Profit Milestone

Online real estate firm Zillow reported its first profitable year since 2012, a significant milestone. However, its quarterly results were mixed, with revenue beating expectations but earnings per share falling short. The news wasn't enough to prevent a stock drop, showing that investors remain cautious about the housing market's prospects.

Digital Assets: Price Dips and New Players

The world of digital assets is seeing fresh volatility and innovation. The price of Bitcoin recently dipped to its lowest point since November 2024, falling to around $66,000 before recovering slightly. Other major tokens like Ethereum and Solana also took a hit, as broader caution around technology investments spread to the crypto sector.

Asia Pushes for Crypto Legitimacy

Hong Kong is taking another step to position itself as a global crypto hub, outlining a framework to allow licenced platforms to offer more complex products to professional investors. Meanwhile, Malaysia’s central bank is set to launch pilot programmes for stablecoins—digital tokens pegged to its currency—and for tokenised deposits.

Tech Giants Wade In, Influencers Follow

Payments firm Stripe is launching a new system to allow artificial intelligence 'agents' to make payments directly using stablecoins, joining major firms like Visa and Mastercard in building infrastructure for machine-to-machine transactions.

In a move that could bring digital finance to a new generation, YouTube influencer MrBeast is acquiring the neobank Step. The bank primarily serves younger customers (Gen Z and Alpha), and the deal signals a new front in the battle for the future of finance.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).