WEEKLY MARKET SUMMARY
Global Equities: Investors continued to rotate out of Technology stocks and into defensive sectors such as Consumer Staples and Utilities. Concerns over potential artificial intelligence disruption to traditional business models triggered selling in software industry stocks, while mega-cap hyperscalers also faced continued scrutiny over the return on investment from their aggressive AI spending. The S&P 500 ended the weekly session -1.4% lower while the Nasdaq fell -2.1%. The value-tilted Dow Jones Industrial Average slipped after breaching the historic 50,000 level the week prior, ending the week down -1.2%. US small cap stocks rebounded Friday on better-than-expected inflation news but still ended the week down -0.9%. Shares of foreign stocks outperformed their domestic peers, with developed market shares up 1.6% and emerging markets gaining 1.7%.
Fixed Income: The 10-Year Treasury Yield plummeted as Fed rate cut odds for June rose sharply, ending the week at 4.06%. Google-parent company Alphabet (GOOG) issued a rare 100-year bond offering during the week, attracting massive demand that was nearly ten times the amount of $1.4 billion offered. The proceeds will go towards Alphabet’s planned $185 billion in AI-related capital expenditures in 2026.
Commodities: US West Texas Intermediate Crude prices slipped during the week to end at $62.75. Prices softened after the International Energy Administration lowered its global oil demand forecast for 2026, while tensions over Iran also eased. Gold prices fell sharply on Thursday but rebounded to finish the week back above $5,000 at $5,053.
WEEKLY ECONOMIC SUMMARY
Inflation Cools: January’s Consumer Price (CPI) Index showed the headline inflation measure eased to 0.2% for the month, bringing CPI down to an annual rate of 2.4%. The Core CPI (excluding food and energy) was in line with forecasts at 0.3%, equivalent to 2.5% annually. A decrease in shelter costs along with -1.5% deflation in energy were the main drivers, along with a -1.8% decline in the cost of used cars and trucks. The good data boosted odds of a June rate cut.
Mixed Jobs Picture: The market celebrated a strong January employment report which showed 130,000 jobs created during the month, nearly double the 70,000-job estimate. The unemployment rate eased from 4.4% to 4.3%. The good news was tempered by revisions to the prior year (measured from March 2024-2025) from 584,000 to just 181,000 which is the worst annual job growth rate since the pandemic year of 2020.
Earnings Update: Roughly three-quarters of the companies in the S&P 500 have reported fourth quarter 2025 earnings, with 74% beating analysts’ expectations on EPS and 73% beating on revenue. During the week, Ford (F) posted an $8 billion net loss but offered optimistic 2026 guidance, while Coca-Cola (KO) disappointed after results showed shrinking demand. Online brokerage Robinhood (HOOD) shares were sharply lower on mixed results, while cryptocurrency exchange Coinbase (COIN) sold off sharply ahead of a big earnings miss but recovered some of the damage after reporting.
CHART OF THE WEEK
The Chart of the Week shows monthly job growth and the unemployment rate since 2021, updated to reflect this week’s revisions to the 2025 data which removed 403,000 previously reported jobs. Excluding the recession years of 2008, 2009, and 2020, 2025 was the weakest year for job growth since 2003. Senior counselor to the White House on trade Peter Navarro warned that low jobs numbers will likely be the new norm as the Bureau of Labor Statistics revises its methodology, so January’s 130,000 added jobs could also be revised downward when those changes take effect in February.
Commentary from VestGen Investment Management.