What We Learned Last Week
“Take it easy, take it easy, Don’t let the sound of your own wheels drive you crazy. Lighten up while you still can, Don’t even try to understand. Just find a place to make your stand.” – Jackson Browne, Take it Easy
The three major stock indexes, S&P 500, Dow Jones Industrial Average, and Nasdaq, endured their largest weekly loss of 2026. The tech-heavy Nasdaq was hit the hardest, down more than 2% for the week.
While there were positive headlines for several tech stocks, unemployment and inflation data the sentiment around growth stocks has furthered soured.
Underscoring this shift in sentiment was a downgrade to the U.S. technology sector to neutral on Tuesday from the chief investment office of UBS. The financial services firm cited pervasive uncertainty in the software industry and the likelihood that AI infrastructure spending will moderate soon.
Others see the negative sentiment towards software companies as potentially overdone and fear over AI threats to the industry as premature.
Changing our focus over to the economy, last week both the health of the labor market and prices came into focus.
The nonfarm payroll report for January was reported Wednesday and the headline numbers surprised to the upside. According to the BLS 130,000 jobs were added during January, above the estimate for 55,000, and the unemployment rate decreased to 4.3%.
Sticking with the labor market, a weekly report, initial jobless claims was 227,000 for the week ended February 7, the Labor Department said on Thursday. Investors watch this data for early indications of an unhealthy labor market; the report went on to show those staying on unemployment has fallen to its lowest level since October 2024.
Wrapping up with prices, we have a summary of the consumer price index (CPI), which rose less than expected in January. CPI in January grew 2.4% from the same time year ago, down 0.3 percentage points from the prior month and the lowest level since May 2025.
This lower-than-expected reading helped boost the outlook for Federal Reserve interest rate cuts.
This week will likely continue to push ahead with higher volatility as investors digest new information around the ai theme and ‘K-shaped’ economy. Portfolio diversification helps mitigate risk and provide a more stable experience for investor assets.
What’s Ahead This Week
Economic Events
- Durable-goods orders will be a check on the health of the consumer and manufacturers
- January’s Fed meeting minutes will be released, where the Fed announced no change to the policy rate after lowering rates in previous meetings
- Jobless claims will get attention of investors as the health of the labor market is important signal right now.
- The big event is likely Friday when PCE (the Fed’s preferred measure of inflation) is released. PCE measures change in consumer spending along with change in price of goods and services
Earnings
- Retailer Walmart reports late in the week.
- DoorDash will be looked at for its fiscal year outlook as borrowing to grow has come under scrutiny since their last report
- Medical device company Medtronic will report Tuesday
- Close to the AI theme is cybersecurity company Palo Alto and utility company Constellation Energy
My goal is for you to feel educated and informed about variables we do and don’t have control over and find ourselves working within. I hope to do it in an informative and relatable way. As always, I value your relationship and planning objectives – my door is always open for conversation.
