Weekly Market Recap

WEEKLY INVESTMENT RECAP Week of February 9-13, 2026

MARKET OVERVIEW

Markets enter this week attempting to stabilize following last week's sharp selloff in technology stocks, which sent the S&P 500 into negative territory for 2026 and wiped out approximately $1 trillion in market capitalization. The Dow Jones Industrial Average emerged as the relative outperformer, hitting a historic milestone of 50,000 on Friday's strong rebound, while growth stocks and technology names continue to face pressure from AI spending concerns and rotation into value sectors.

LAST WEEK'S TURBULENCE

The prior week was marked by significant volatility as investors reassessed valuations in technology and software stocks. The S&P 500 fell into the red for the year, closing at 6,798.40 on Thursday before rebounding Friday. The Nasdaq Composite declined 1.8% for the week and sits 0.9% lower year-to-date, while the tech-heavy Nasdaq-100 dropped 4% from the previous Friday's close.

The selloff was triggered by concerns over massive AI capital expenditure plans from major tech companies. Alphabet guided 2026 CapEx to $175-185 billion, well above the $115 billion analysts expected, while Amazon set a $200 billion CapEx forecast, more than $50 billion above estimates. While these spending hikes signal executive confidence in AI's long-term potential, investors are demanding clearer evidence that these enormous expenditures will translate into actual profits and durable revenue growth.

Software stocks bore the brunt of the decline, with the iShares Expanded Tech-Software Sector ETF hitting its most oversold state since 2001. Bitcoin also suffered, plummeting from above $83,000 to as low as $60,000, hitting its lowest level since April and down sharply from October's record high above $126,000.

However, Friday brought a powerful rebound as investors stepped in to buy the dip. The Dow soared 1,006 points (2.06%) to cross 50,000 for the first time, the S&P 500 rose 1.63%, and the Nasdaq gained 1.88% in what was their best day since May for the Dow and S&P.

SECTOR ROTATION CONTINUES

A significant market rotation continues to unfold as money flows out of technology and into traditional value sectors. The S&P Equal Weight Index hit fresh all-time highs last week, indicating broad market participation beyond the megacap technology names. Industrials, materials, energy, and consumer staples all reached new highs, demonstrating that market leadership is expanding.

This rotation reflects growing investor selectivity around AI investments and valuations, with participants seeking opportunities in sectors that have lagged the tech-driven rally of recent years.

ECONOMIC CONCERNS

Troubling labor market data emerged last week. JOLTS Job Openings for December fell to 6.54 million, down 386,000 from November's downwardly revised total. The openings rate dropped to 3.9%, the lowest since April 2020 during the early days of the Covid pandemic. The ratio of job openings to unemployed workers fell to 0.87 to 1, well below the pandemic peak of over 2 to 1.

Layoffs edged higher by 61,000, while professional and business services led job opening declines with 257,000 fewer positions. These concerning trends set the stage for heightened focus on this week's employment report.

THIS WEEK AHEAD

This week features the critical January employment report on Wednesday, along with important inflation data on Thursday, and a continued flow of fourth-quarter earnings.

Key Economic Reports:

Monday, February 10: Retail Sales, Factory Orders

Tuesday, February 11: January Employment Situation (Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings)

Wednesday, February 12: Producer Price Index (PPI), Existing Home Sales, Initial Jobless Claims

Thursday, February 13: Consumer Price Index (CPI) and Core CPI

The January jobs report on Tuesday is the week's marquee event. Following last week's weak JOLTS data showing declining job openings and the lowest openings rate since the pandemic's early days, investors will scrutinize payroll gains, the unemployment rate, and wage growth for signs of labor market health. This report will also include annual benchmark revisions to payroll data that could meaningfully adjust historical employment figures.

Thursday's CPI report will provide crucial insight into inflation trends as the Federal Reserve calibrates its policy path. With the next FOMC meeting scheduled for March 17-18, this inflation data will help shape expectations for the timing and magnitude of future rate adjustments.

Earnings Calendar:

Fourth-quarter earnings season continues with several notable reports:

Monday: Cleveland-Cliffs, Becton Dickinson, Apollo Global Management

Tuesday: Coca-Cola, Ford Motor, Robinhood Markets, CVS, AstraZeneca, Spotify, Marriott International, Lyft, Duke Energy

Wednesday: McDonald's, T-Mobile, Shopify, Cisco Systems, Humana, AppLovin

Thursday: Applied Materials, Arista Networks, Vertex Pharmaceuticals, Airbnb, Coinbase Global

Friday: Moderna, Enbridge

As of last Thursday, 291 S&P 500 companies have reported fourth-quarter results, with 79% beating earnings estimates and 65% exceeding revenue expectations. Earnings growth is tracking at 13.64% year-over-year with revenue growth of 9.25%. Full S&P 500 earnings are projected to grow approximately 12-13% for the quarter, with 2026 full-year growth expected around 14-15%.

Market Positioning

The dramatic rotation from growth to value, technology to traditional sectors, and the Dow's outperformance versus the Nasdaq signals a fundamental shift in market leadership. Whether this represents a temporary correction in overextended technology valuations or the beginning of a more sustained rebalancing remains to be seen.

Technical indicators show the S&P 500 fell below both its 50-day and 100-day moving averages last week for the first time since mid-November, though the 200-day moving average below 6,500 remains well below current levels. The market hasn't closed below the 100-day since last spring's tariff concerns.

Consumer sentiment improved in early February, rising to 57.3 from 56.4 in January. Notably, one-year inflation expectations dropped sharply to 3.5% from 4.0%, the lowest level in over a year, providing some encouragement on the inflation front ahead of Thursday's CPI report.

What We're Watching

The upcoming employment and inflation data will be critical in determining whether the Fed maintains its current dovish tilt or adopts a more cautious stance. Weak labor market data could accelerate rate cut expectations, while sticky inflation could force the Fed to remain on hold longer than markets currently anticipate.

The technology sector's ability to stabilize after last week's volatility will also be important. If the Friday rebound represents genuine stabilization rather than a temporary bounce, it could restore confidence in growth stocks. However, continued pressure would suggest investors are making a more fundamental reassessment of valuations and growth expectations.

We continue to emphasize diversification across sectors and styles, maintaining discipline in volatile markets, and staying focused on long-term investment objectives rather than short-term market fluctuations.

As always, please reach out with any questions or concerns.

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 Disclosures This material is for informational purposes only and is not investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including loss of principal. Asset allocation and diversification do not ensure a profit or protect against loss. Please review your specific circumstances with us before making any changes to your portfolio.