Market Commentary
Stocks kicked off the week attempting to rebound from last week’s sharp losses, which saw the S&P 500 suffer its worst day of the year amid mounting concerns over slowing economic growth, persistent inflation, and lofty valuations. The market remains cautious as investors await key economic data and earnings reports that could determine the next move.
All eyes are on January’s Personal Consumption Expenditure (PCE) data, slated for release on Friday. As the Fed’s preferred inflation gauge, this report could heavily influence the central bank’s policy outlook. A hotter-than-expected print would likely quash hopes for rate cuts, potentially leading to renewed market volatility. This concern is already reflected in the bond market, with the 10-year Treasury yield edging down to 4.4%. In addition to inflation data, Nvidia’s earnings report is also in focus, as the tech giant’s performance has been a key driver of market sentiment over the past year. Consumer confidence data is another key metric to watch as it has shown signs of deterioration recently, which could signal slowing demand and pressure on corporate earnings.
Volatility is expected to remain elevated this week following last Friday’s spike in the Cboe Volatility Index (VIX) as markets sold off sharply. The tech sector is closely monitoring developments around Project Stargate, a proposed $500 billion funding initiative that could boost the industry over the next four years. However, the continued rotation out of tech is not showing signs of slowing, causing concerns for future prospects/
Meanwhile, global investors are pivoting to European and Asian equities, which have outperformed U.S. stocks in 2025. Chinese markets, however, are showing signs of slowing momentum, highlighted by Alibaba’s nearly 10% decline after announcing a $52 billion investment in AI and cloud infrastructure. European markets remain resilient, but upcoming earnings reports will be a key test of their staying power.
According to our Newton Model, U.S. Large Cap stocks are beginning to close the gap with Foreign Developed markets, although both are still trailing behind Emerging Markets. Sector-wise, Communication Services and Technology continue to lead, while Industrials are showing signs of weakness. Healthcare, Real Estate, and Energy remain laggards. In fixed income, Floating Rate and High Yield maintain their leadership positions, but the broader fixed-income market is trending downward amid ongoing volatility.
Economic Releases This Week
Monday: None
Tuesday: S&P Case-Shiller Home Price Index (20 Cities), Consumer Confidence (Feb), Fed Vice Chair of Supervision Michael Barr Speaks
Wednesday: New Home Sales, Atlanta Fed Speaks, NVDA Q4 Earnings Resultsmber FOMC Meeting, Building Permits
Thursday: Initial Jobless Claims, Durable Goods Orders, GDP (second reading), Pending Home Sales
Friday: PCE Index Results, Personal Income & Spending, Retail & Wholesale Inventories, Advanced US Trade Balance in Goods
Stories to Start the Week
Trump Says He Is in Talks With Putin About ‘Economic Development’ Deal
The U.S. Economy Depends More Than Ever on Rich People
Federal Agencies Push Back on Elon Musk’s ‘What Did You Do Last Week?’ Email
Microsoft Reiterates Plan To Invest $80 Billion In AI, But May ‘Adjust Our Infrastructure In Some Areas’
Bybit Hit by Crypto’s Worst Hack With Almost $1.5 Billion Stolen
Starbucks To Lay Off 1,100 Corporate Workers As Sales Sag