U.S. stocks collectively decline, with the Nasdaq dropping over 1%. A legal plugin triggers AI replacement panic, causing a sharp decline in the software sector.

Tuesday, Eastern Time (February 3), U.S. stocks experienced another switch in style, with all three major indices closing lower, and the Nasdaq down over 1%. Funds rotated into cyclical and value stocks, while an AI legal plugin once again sparked fears of AI replacing human jobs. The software services sector in the U.S. stock market plummeted, as investors worried that the core businesses of software companies are facing threats of being replaced by AI technology. Gold and silver rebounded strongly, with the former briefly returning to the $5,000 level. Trump signed a bill to end the partial government shutdown.

【U.S. Stock Indices】

At the close, the S&P 500 fell 0.84% to 6,917.81; the Dow Jones Industrial Average declined 0.34% to 49,240.99; the Nasdaq dropped 1.43% to 23,255.19.

Overnight, U.S. stocks were again impacted by AI tools. The new AI tool released by Anthropic triggered fears that core software business is facing AI replacement, leading to the most severe sell-off since April last year. Funds quickly flowed out of tech stocks and into smaller-cap, value stocks, and gold, which are seen as more economically sensitive.

Legal software and data services companies were hit hardest. Thomson Reuters (TRI) fell as much as 20.7% during trading, LegalZoom.com (LZ) also dropped over 20%, the UK stock of London Stock Exchange Group declined 12.8%, its US pink sheet trading fell over 10%, and CS Disco (LAW) also fell over 10% during the day.

According to Anthropic, its new tool can automate various legal tasks, including contract review, NDA classification, briefing writing, and templated responses. However, the company also reminded that the plugin does not provide legal advice. “AI-generated analysis should be reviewed by a licensed attorney before being used for legal decision-making.”

For publishing companies, the risk of AI replacing jobs is not limited to legal services. The free generative AI medical research integration tool OpenEvidence is becoming a new challenger to Wolters Kluwer’s clinical decision products. Last Friday, a similar scene occurred: Google DeepMind launched Project Genie, raising market concerns that this AI tool could disrupt the gaming industry, causing a collective decline in Unity and other gaming companies. Panic also spread to software development companies (BDCs), including Blue Owl Capital Corp., whose stocks declined amid growing market fears about companies heavily exposed to the software industry.

Morgan Stanley analyst Toni Kaplan pointed out in a research report that Anthropic’s new features for the legal field intensify industry competition, “We see this as a sign of increased competition, which could have negative impacts.”

Stephen Yiu, Chief Investment Officer of Blue Whale Growth Fund, said, “This year will be critical in determining whether companies are AI winners or victims. The key skill is to avoid the losers. Standing against AI before the dust settles is a dangerous move.”

Jeffrey Favuzza, a trader on Jefferies’ stock trading team, made a startling statement: “We call this the ‘SaaSpocalypse,’ the end of SaaS stocks. The trading style is entirely ‘get me out fast’ type of selling.”

【U.S. Treasury Bonds】

U.S. Treasury yields fluctuated slightly, with the benchmark 10-year yield closing at 4.267%, and the 2-year yield sensitive to Federal Reserve policy at 3.578%.

【Popular U.S. Stocks】

Among popular stocks, Nvidia fell 2.84%, Google Class C declined 1.22%, Google Class A dropped 1.16%, Apple down 0.20%, Microsoft fell 2.87%, Amazon declined 1.79%, Meta dropped 2.08%, TSMC fell 1.61%, Tesla rose 0.04%, Power Semiconductor declined 1.69%, Intel gained 0.90%.

On the news front, Nvidia is reportedly close to a $20 billion investment in OPENAI’s latest funding round.

Intel CEO Pat Gelsinger said he is positioning for the GPU market, and that the shortage of memory chips will not ease until 2028.

【Global Indices】

In Europe, the FTSE 100 index in the UK declined slightly by 0.26%, closing at 10,315 points. France’s CAC 40 fell 0.02% to 8,180 points. Germany’s DAX declined 0.07% to 24,781 points.

In Asia, the Hang Seng Index rose slightly by 0.22% to 26,835 points. The China Enterprises Index fell 0.30% to 9,053 points. The Nikkei 225 surged 3.92% to 54,720 points.

【China Indices】

On February 3, overnight, Hang Seng Tech Index futures dropped 1.27%, Nasdaq China Golden Dragon Index declined 0.94%, and FTSE China A50 Index rose 0.18%.

【Chinese Concept Stocks】

Among popular Chinese concept stocks, Tencent Holdings (HK) fell 2.92%, Alibaba dropped 2.83%, Pinduoduo declined 0.13%, NetEase fell 0.56%, Baidu declined 2.50%, Ctrip dropped 2.47%, Li Auto rose 2.90%, Xpeng Motors gained 4.03%, NIO increased 0.55%.

【Forex and Commodities】

On Tuesday, the US dollar index oscillated downward. Although it rebounded during the session, it quickly gave back all gains and ultimately closed down 0.2% at 97.437.

Gold and silver rebounded strongly after two days of sharp declines. Spot gold opened higher and quickly surged past the $4,900 level, oscillating around $4,950 during the European and US trading sessions. It once recorded a daily maximum increase of over $320, the largest since November 2008, and finally closed up 6.13% at $4,946.67 per ounce. Spot silver surged over 10% during the session and returned above $89, but then quickly gave back some gains, ending up 7.68% at $85.20 per ounce.

Due to ongoing tensions between the US and Iran, WTI crude oil rebounded after bottoming out, briefly returning above $64, and closed up 2.85% at $63.91 per barrel. Brent crude rose 2.29% to $67.82 per barrel.

【Highlights】

U.S. House Approves Government Funding Bill to End Partial Shutdown

The U.S. House passed a funding agreement negotiated between President Trump and Senate Democrats, which is expected to end the partial government shutdown. The bill has now been sent to the President for signature. The House vote was 217 to 214.

U.S. Stocks Erupt in AI Panic! Anthropic’s New Tool Sparks Software Sell-Off

In this sell-off, legal software and data services companies were hit hardest. Morgan Stanley analysts believe that Anthropic’s new legal features intensify industry competition. Jefferies traders described SaaS stocks experiencing a “doomsday-style” sell-off, “People are just selling everything, regardless of price.” If Microsoft is struggling, the situation for companies more vulnerable to disruptive technologies could be even worse.

Federal Reserve Board Member Milani: More Than 100 Basis Points of Rate Cuts Needed This Year; Looking Forward to Waller’s Next Moves

Milani explicitly stated that potential inflation is not a problem and that there is little evidence of strong price pressures in the economy. He noted that the rise in long-term yields is partly due to improved growth expectations, not increased inflation concerns.

Gold and Silver Rebound: Dead Cat Bounce or Bull Market Restart?

Institutions have reduced positions due to extreme volatility and the breakdown of key trendlines in gold and silver, while retail investors have “bought the dip” with physical assets, providing support. Whether this rebound is a short-term dead cat bounce or a bull market restart depends on whether gold can hold above key resistance levels like $5,100, and whether silver can break through $92. The recovery of retail interest will be a key signal for market stabilization. The long-term bullish case (central bank gold purchases, rate cut expectations, etc.) remains intact, but the market needs time to digest high volatility and rebuild technical structures.

Nvidia’s Huang Renxun Denies Rumors of Deal Changes with OpenAI: Everything Is Progressing as Planned

Nvidia CEO Jensen Huang said he will participate in OpenAI’s next funding round, calling it “the largest private placement in history.” Earlier Monday, Sam Altman publicly stated he did not understand where these crazy rumors came from, claiming they are building “the world’s best AI chips.” Market rumors of a “hundred-billion-dollar deal” stalling have circulated, but the latest news suggests Nvidia is close to a $20 billion investment in OpenAI’s latest funding round.

Intel CEO: Memory Chip Makers Tell Me Supply Shortages Will Not Ease Until 2028

Pat Gelsinger said at a Cisco Systems conference that he has spoken with two major memory manufacturers, who clearly stated that “it will not ease until at least 2028.” He added that AI will “absorb a large amount of memory.”

AMD Q4 Data Center Revenue Surges Nearly 40%, Sets Record; Q1 Revenue Guidance Not Explosive Enough, Down Over 7% After Hours

AMD’s Q4 revenue exceeded $10 billion, a new high, with over 30% year-over-year growth. EPS growth slowed but beat analyst expectations by nearly 16%. Data center revenue reached a record $5.4 billion. Sales of MI308 chips in China generated about $390 million. US export restrictions caused inventory and related costs of about $440 million in 2025; the Q1 revenue guidance midpoint is $9.8 billion, slightly above consensus but below the more optimistic over $10 billion. CEO expects data center revenue to grow 60% annually over the next three to five years.

Novartis Expects 2026 Sales to Drop 13% — Worse Than Expected; US Stocks Fall Over 10% During Trading

Novartis Q4 sales declined 7.6% YoY but still beat analyst estimates. Sales of the star weight-loss drug Wegovy also exceeded expectations. The company expects a first-ever annual sales decline in nine years, with sales and operating profit projected to fall 5% to 13% in 2026 at fixed exchange rates, compared to analyst estimates of 1.4% and 3.1% declines respectively. The guidance reflects expectations of growth in international sales and decline in US sales; the global GLP-1 market is expected to continue expanding, but actual prices will be lower.

Goldman Sachs: The Market’s Overall “Misjudgment” of New Fed Chair Waller — “Balance Sheet Reduction Will Be Difficult” and Rate Cuts Are a Prerequisite for Nomination

Goldman Sachs FX strategist Mike Cahill said it is wrong to judge Waller’s policy stance based solely on his previous remarks, “Willingness to cut rates is a prerequisite for him to get this job.” Goldman economist Mericle noted that Waller is unlikely to push for a significant balance sheet reduction, as there is broad support within the Fed for the “ample reserves” framework. Goldman bond trader Brown bluntly said aggressive balance sheet reduction would be too destructive to risk assets.

Walmart Joins the “Trillion-Dollar Club”

U.S. retail giant Walmart rose against the trend on Tuesday, with the company’s market capitalization surpassing $1 trillion for the first time, joining the “trillion-dollar club” dominated by tech companies.