The financial markets were closed yesterday for the Presidents’ Day holiday. I hope you were able to spend time relaxing with family and friends over the long weekend.
The major averages all posted declines last week, with the S&P 500 sliding 1.4% and posting its second consecutive losing week. The Dow dropped 1.2%, and the Nasdaq notched a 2.1% decline.
AI disruption fears rattled the markets, spreading beyond the sell-off seen in software and into real estate, trucking and financial services.
Financial stocks Charles Schwab and Morgan Stanley fell 10.8% and 4.9% last week, respectively, while software stock Workday dropped 11% in the period. Shares of commercial real estate firm CBRE lost 16% on the week.
Those fears widened to the media industry as well, hitting Netflix shares, which tumbled 6%.
Shares of several gaming stocks also dropped last week on artificial intelligence disruption fears, adding to the carnage across several sectors of the market.
The recent rollout of Google’s Project Genie, an interactive AI world generator capable of responding to real-time user interaction, has sparked concerns about the demand for traditional gaming businesses and digital experiences platforms. Big videogame stocks are already being hit, even though the tool remains in early stages and is being rolled out to Google AI Ultra subscribers in the U.S.
Shares of Unity Software plunged 25% last week, bringing its year to date loss to more than 57%. Take-Two Interactive Software, down just 1.9% this week, has lost 25% year-to-date.
Gaming giants AppLovin lost 8.3% and Roblox shed around 5% last week, respectively. The stocks are down 42% and 22% this year, respectively.
Amazon remains in bear market territory, down more than 4% for the week, after moving more than 20% below its 52-week-high.
It wasn’t all bad. On Friday, 24 stocks in the S&P 500 traded at new 52-week highs.
Of these names, 13 companies reached new all-time highs. Stocks that hit this milestone included:
- McDonald’s trading at all-time highs back to its IPO in 1965
- YUM! Brands trading at all-time highs back to its IPO in September 1997
- Williams Companies trading at all-time highs back to its IPO in 1957
- Lockheed Martin trading at all-time high levels back to their merger of Martin Marietta and Lockheed in 1995
- Applied Materials trading at all-time high levels back to its IPO in October 1972
- Ameren Corporation trading at all-time high levels back through our history to 1972
- American Electric Power trading at all-time highs back through our history to 1972
- CenterPoint Energy trading at all-time highs back to its IPO in January 1970
- Entergy trading at all-time high levels back through our history to 1972
- Evergy trading at all-time high levels back through Westar Energy history to when Kansas Gas & Energy was listed on the NYSE in 1955
- Alliant Energy trading at all-time high levels back through our history to 1978
- NextEra Energy trading at all-time high levels back through our history to February 1986
- NiSource trading at all-time highs back through our history to 1984.
There were some encouraging economic data as well, including the Consumer Price Index (CPI) data for January that came in below consensus expectations, corroborating the disinflation trend scene in recent months.
In addition, the jobs report for January evidenced stronger-than-expected payroll growth, lower unemployment, and still solid wage gains.
This week investors will be watching the advanced estimate of fourth-quarter, gross domestic product (GDP) and personal consumption expenditures (PCE) inflation data for December.
Corporate confessions will be heard from the following: Devon Energy, Palo Alto Networks, Cadence Design Systems, Analog Devices, Inc., Booking Holdings, DoorDash, Global Payments, Dear & Co., Live Nation Entertainment, Walmart, and Quanta Services.
If you click on the Looking Ahead link below, you will find a report written by Wells Fargo Investment Institute. Below are excerpts from that research.
Week in review: February 9-13
Economic data
- The CPI report for January showed muted inflation, adding to recent months’ subdued prints and supported the possibility of additional rate cuts in 2026. The headline prints came in at 0.2% month-over-month and 2.4% year-over-year, while core inflation rose 0.3% month-over-month and 2.5% year-over-year.
- Notably, year-over-year core inflation’s gain represents the slowest pace since March 2021. Further, the disinflation trend in shelter prices (approximately 1/3 of the CPI) continued.
- Lower energy costs were a significant contributor to cooler headline inflation.
- The jobs report for January surprised to the upside, breaking from a recent trend of slowing hiring and rising unemployment. The report was followed by a decrease in market expectations for rate cuts this year.
- Non-farm payrolls surprised to the upside with a month-over-month increase of 130,000, the largest gain since December 2024. However, the job gains were concentrated in healthcare and social assistance.
- The unemployment rate declined to 4.3%, within the range that many Federal Reserve (Fed) policy makers believe to represent full employment. Further, the report showed both rising employment and a solid gain in the labor force, suggesting a material improvement in conditions rather than workforce contraction.
- Wage gains remained unchanged from the prior month, rising 0.4% month-over-month and 3.7% year-over-year. Notably, year-over-year gains continued to outpace inflation with a solid margin.
- Retail sales for December remained unchanged month-over-month, though with significant imbalance and particularly weak goods spending. The print was likely influenced by several anomalous factors, and additional months of data will be needed to determine whether it marks the beginning of a sustained slowdown in consumer spending.
- Small business optimism for January declined slightly to 99.3 as expectations for the economy softened. Notably, a measure of small business employment indicated a balanced labor market, though the pace of hiring as well as plans for hiring and capital expenditures slowed. Meanwhile, sales expectations improved among firms.
- Existing home sales for January saw a sharp drop off month-over-month, though weather was likely a significant driver. While price appreciation has eased, still-limited inventory has contributed to ongoing affordability constraints.
Looking Ahead to this week: February 16-20
U.S.
- The highlight of the holiday-shortened data-packed week will be Friday with the first look at fourth-quarter GDP; December‘s personal income, personal spending, and PCE deflator; and S&P Global’s preliminary February PMIs for both the manufacturing and service sectors.
- Other potential market movers include the FOMC January 28 meeting minutes and the finalized February consumer sentiment and inflation expectations survey from the University of Michigan.
- Also on tap: January’s industrial production, and leading index; December‘s trade balance, preliminary durable goods orders, wholesale inventories; and measures of economic activity from the regional Fed banks.
- Rounding out the docket are housing market indicators, including February homebuilder sentiment; January pending home sales, new home sales, and housing starts; and December building permits.
Asia
- Investors will look past a light calendar from China with the February 17 start of the lunar new year holiday and focus on major Japanese releases. Among them: preliminary fourth-quarter GDP and February PMIs, along with the national CPI, trade balance, industrial production, Tertiary (services) Industry Index, and core machine orders.
- From Australia, look for February PMIs, January‘s leading index and labor market data, and the fourth quarter Wage Price Index.
Europe
- The highlight will be preliminary February PMIs, January’s finalized euro-area CPIs, December’s Eurozone industrial production, February consumer confidence, and ZEW expectations for economic growth
- From the U.K., watch for the January CPI, a companion Retail Price Index, Producer Price Index, retail sales, jobless claims, December labor market data, and February house prices.
- France’s retail sales report hits the tape, along with Germany’s PPI and ZEW index of current conditions.
