Weekly US Market Brief (02-06 February 2026)

Executive Summary

• Markets saw sharp rotations driven primarily by earnings and guidance.
• Growth and mega-cap stocks faced sustained pressure early in the week.
• Value, defensive, small-cap, and mid-cap segments outperformed.
• The DJIA reached fresh record highs. The S&P 500 and Nasdaq finished the week lower.
• Capital expenditure plans from mega-cap companies became a central market focus.
• A strong rebound on Friday highlighted how quickly sentiment can shift when technology stabilizes.

Equity Markets

The week was defined by pronounced divergence across indices.

• S&P Mid Cap 400: +4.4%
• DJIA: +2.5%. Reached new record highs.
• Russell 2000: +2.2%
• S&P 500: -0.1%
• Nasdaq Composite: -1.8%

Small- and mid-cap stocks consistently outperformed as investors rotated away from mega-cap growth exposure. The Nasdaq and S&P 500 were weighed down by sustained selling in technology and growth-oriented names, despite a sharp rebound on Friday.

Sector Performance and Leadership

Earnings outcomes and guidance were the dominant drivers of sector moves.

Growth and Technology Pressure

• Communication Services: -4.4% for the week.
• Consumer Discretionary: -4.6%.
• Information Technology: -1.4%.
• Vanguard Mega Cap Growth ETF: -3.1%.
• iShares Expanded Tech-Software ETF: -8.7%.

Mega-cap stocks weakened following earnings and forward-looking capital expenditure disclosures. Alphabet and Amazon both moved lower after announcing multi-year spending plans, raising investor concerns around return on investment. Software stocks faced sustained pressure, with Microsoft’s post-earnings decline contributing to broader weakness.

Semiconductors showed relative resilience early in the week but experienced volatility. The PHLX Semiconductor Index finished marginally higher on the week, supported by Friday’s rebound.

Value, Defensive, and Cyclical Strength

• Consumer Staples: +6.0%.
• Industrials: +4.7%.
• Energy: +4.3%.
• Materials: +3.5%.
• Health Care: +1.9%.
• Financials: +1.5%.

Investor preference shifted toward earnings visibility, pricing power, and balance sheet stability. Consumer staples led the advance, while industrials, energy, and materials benefited from cyclical and inflation-linked positioning. Health care and financials also outperformed, reinforcing the defensive tilt.

Macro and Economic Data

Economic data released during the week was mixed but generally supportive of continued expansion.

• ISM Manufacturing Index (January): 52.6%. Prior 47.9%.
• Manufacturing activity expanded, ending an eleven-month contraction streak.
• ISM Non-Manufacturing Index (January): 53.8%. Prior revised to 53.8%.
• ADP Employment Change (January): 22K. Consensus 43K.
• Weekly Initial Jobless Claims: 231K. Prior 209K.
• University of Michigan Consumer Sentiment (February, Preliminary): 57.3. Prior 56.4.
• Consumer Credit (December): +$24.0 billion. Prior revised to +$4.7 billion.

Several reports pointed to steady services activity and resilient consumer credit growth, while labor market data showed some moderation. The December JOLTS report reflected lower job openings relative to the prior month.

Rates, Bonds, and the Dollar

Treasury yields were volatile early in the week before settling lower overall.

• 2-year Treasury yield: Ended at 3.51%. Down 3 basis points for the week.
• 10-year Treasury yield: Ended at 4.21%. Down 3 basis points for the week.

Yields declined alongside heightened equity volatility and pressure in technology stocks, particularly during midweek sessions.

Dollar performance was not specified in the draft.

Commodities and Alternatives

• Oil: Volatile. Crude oil settled the week higher, with notable midweek gains tied to geopolitical headlines.
• Gold: Experienced a sharp rebound midweek. One session saw the largest one-day gain since 2008.
• Bitcoin: Traded lower early in the week amid risk-off sentiment. Fell below $64,000 on Thursday before rebounding and reclaiming the $70,000 level on Friday.

Crypto price action tracked closely with shifts in risk appetite and volatility in mega-cap growth stocks.

Volatility and Market Structure

• The CBOE Volatility Index surged over 20% on Thursday and remained elevated near 21.6.
• Equal-weighted indices outperformed market-cap-weighted benchmarks during periods of growth stock weakness.
• The Nasdaq Composite spent much of the week below its 50-day moving average before Friday’s rebound.

Market breadth favored rotation rather than broad liquidation.

Risk Factors to Watch

• Ongoing sensitivity to earnings guidance and capital spending plans.
• Elevated volatility tied to mega-cap leadership.
• Shifts in sentiment around AI-related investment returns.
• Labor market data following recent increases in jobless claims.

What This Means for Investors

• The week reinforced a clear bifurcation between growth and value leadership.
• Earnings durability and capital allocation discipline remained central to market positioning.
• Rotation rather than outright risk-off behavior defined most sessions.
• Friday’s rebound demonstrated how quickly leadership can reassert when technology stabilizes, even after a volatile week.

Leadership remains fluid as investors continue to reassess where earnings visibility and return potential are most durable in early 2026.