Weekly Market Insight

Today's Market Recap

Dow +0.04%, S&P 500 +0.47%, Nasdaq +0.90%, Russell 2000 +0.70%

US equities were higher in Monday trading, though stocks ended off best levels. Today's upside extended Friday's sharp rally that saw S&P 500 post best day in eight months. Equal-weight (RSP) trailed cap-weighted index but edged out another fresh record close. Big Tech mixed with some standouts to the upside, while semis, software, and broader AI trade also firmer. Other outperformers included IBs, exchanges, PE, communication/networking, machinery, E&Cs, A&D, precious-metals miners, ag chemicals, grocers, China tech, nuclear, quantum computing, and retail favorites. Laggards included memory, pharma, managed care, MedTech, transports, P&C insurance, payments, retail, food/beverage, HPCs, steel, commodity chemicals, apparel retail, hotels, and cruise lines. Most-shorted names also weaker. Treasuries little changed to a touch firmer, reversing earlier weakness. Dollar index down 0.8%, more than erasing last week's gain. Gold finished up 2.0%, back above $5K. Silver ended up 6.9%, back above $80. Bitcoin futures up 1%, off earlier weakness. WTI crude settled up 1.3%. (FactSet)
Stocks rebounded on the back of tech/AI leadership and software rebound. AI narrative was boosted by positive developments surrounding OpenAI ecosystem (Altman memo on OpenAI back to beating 10% monthly growth, DA Davidson upgrade) and extent of the multiple and positioning reset in software. Macro in focus ahead of a high-profile data week. Hassett talked down employment numbers, a dynamic that seems to have dampened some of the earlier upward pressure on yields, from report China told banks to dial back their exposure to US Treasuries and pro-stimulus takeaways from landslide LDP victory in Japan (also political instability in UK). At the same time, Street does not seem to view softer labor market backdrop as a deterrent to the ongoing broadening out trade (more strategist commentary about how pro-cyclical trades have more room to run). Also some attention today on dollar weakness and related trades (particularly precious metals strength). (FactSet)

Last Week's Market Recap (Monday, February 2nd - Friday, February 6th)

Dow +2.50%, S&P (0.10%), Nasdaq (1.84%), Russell 2000 +2.17%

US Equities: Major US equity indices were mixed last week, though equal-weight S&P outperformed the cap-weighted index by ~220 bp. Russell 2000 was also a bright spot, while Nasdaq the laggard; Big tech was mostly down. (FactSet)
Group performance: Outperformers included staples, value, O&G, homebuilders, industrial/precious metals, machinery, railways, multis, pharma, and banks. Underperformers included software, retail favorites, payments, asset managers, medical devices, entertainment, exchanges, managed care, and media. (FactSet)
Rates/FX: Treasurieswere firmer with yields lower across the curve. Dollar Index was up 0.6% following two consecutive weeks lower; yen weakness was the big story in FX ahead of Japan's election on Sunday. (FactSet)
Commodities/Crypto: Gold was up 5.0%, still below $5K/oz. Silver down 2.0%. WTI crude settled down 2.5%, its first weekly decline since December amid some easing of US-Iran tensions. BTC was down 16.5%, worst week since 2022. (FactSet)

S&P 500 Sector Performance (Source: FactSet)

Outperformers: Consumer Staples. +6.04%, Industrials +4.68%, Energy +4.32%, Materials +3.50%, Healthcare +1.91%, Real Estate +1.55%, Financials +1.50%, Utilities +0.17%
Underperformers: Consumer Disc. (4.57%), Communication Services (4.36%), Tech (1.36%)

What happened last week?

AI disruption fears around software:

AI disruption weighed heavily on software last week. IGV software ETF is now down ~30% since late October versus a flat S&P 500, leaving the group at its most oversold level since 2018. Losses accelerated midweek, with nearly $300B in market cap erased Tuesday and close to $1T wiped out through Wednesday across software and data names. Selloff was catalyzed by Anthropic's release of specialized Claude Cowork plugins, which enable AI to function as domain-specific analysts across legal, finance/accounting, sales/marketing, and customer support. Despite the damage, broader equity indices proved resilient as capital rotated into cyclicals under the ongoing "run-it-hot" macro narrative. (FactSet)

Big tech earnings and capex concerns:

Oversized capex spending reinforced investor concerns around AI-driven spending and near-term FCF pressure. Offsetting the capex overhang, AWS growth re-accelerated to 24% y/y, the fastest pace in over three years, driven by AI workloads, a sharp rise in backlog, rapid growth in in-house chips, and continued hyperscale capacity expansion. (FactSet)

Overall, sell-side takeaways onearnings season were largely upbeat, highlighting elevated sales growth, record margins, broadening out, solid 2026 guidance, record high corporate sentiment. (FactSet)

Data flow had some cautious takeaways:

December JOLTS lowest since Sep-20, though separation rate flat. Challenger reported US employers announced 108,435 layoffs in January, up 205% from December and highest January total since 2009. January ADPprivate payrolls below consensus, with pay growth flat. Initial claims jumped w/w. January ISM manufacturing highest since Aug-22 with big jump in new orders and increase in employment. January ISM services essentially in line with expectations, employment declined, though still expanding. Treasury's quarterly refunding announcement in line with expectations, no change to auction sizes. Prelim February consumer sentiment edged higher, though worries around prices and job market persist. (FactSet)

Other developments:

1) Metals remained highly volatile, with moves largely attributed to positioning rather than fundamentals; most banks expect volatility to persist; 2)Government shutdown ended after Trump signed bill; 3)US-Iran nuclear talks underway in Oman; 4)homebuilders are reportedly proposing to White House plan to build 1 million "Trump Homes", while Bloomberg separately reported Trump administration considering an antitrust probe into the industry; 5)US and India finalized a trade deal with Trump reducing reciprocal tariffs on India to 18% from 25%. (FactSet)

This week

Notable Earnings: Monday AM: WAT; Monday PM: AMTM, ON; Tuesday AM: KO, DDOG, DD, HOG, HAS, MAR; Tuesday PM: NET, F, LYFT, MAT, HOOD, ZG; Wednesday AM: CVS, HLT, HUM, KHC, MCD, PSN, SHOP, TMUS; Wednesday PM: ALB, APP, CSCO, MGM, VKTX; Thursday AM: BIRK, CC, CROX, H, QSR, SHAK, TRIP, ZBRA, ZTS; Thursday PM: ABNB, AMAT, COIN, DKNG, BROS, EXPE, GDDY, IR, CART, PINS, ROKU, TOST, WYNN; Friday AM: MRNA, WEN. (FactSet)
Notable Macro Events: Monday: NY Fed Inflation Expectations; Tuesday: Dec Retail Sales, Dec Import/Export Price Index; Wednesday: Jan Employment Report; Thursday: Jobless Claims, Jan Existing Home Sales; Friday: January CPI. (FactSet)

Key Dates/Data Releases for this week (Source: Market Week)

2/10: Retail sales, import and export prices
2/11: Consumer Price Index, Treasury statement
2/12: Existing home sales

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