MARKET COMMENTARY

Last week, U.S. stocks suffered a sharp tech-led selloff midweek before roaring back to push the Dow above 50,000 for the first time. The S&P 500 narrowly avoided its worst weekly drop since October as investors grappled with rising rate fears and AI-bubble anxiety.

The volatility in growth and tech stocks has reflected a repricing driven by inflation concerns and excessive valuations. And with the January jobs report and other key data delayed by a brief government shutdown, traders leaned on sector positioning, Federal Reserve expectations, and earnings reports instead of fresh macro signals. 

Here's what happened and what to watch.

Stock Index Performance 

• The S&P 500 slipped 0.10%.
• The Nasdaq 100 fell 1.87%.
• The Dow Jones Industrial Average outperformed, jumping +2.50%.

Policy Tensions and Data Update 

• Fed Policy Tensions - President Trump's nomination of Kevin Warsh to succeed Jerome Powell in May drove analysis last week. Warsh, who criticized past liquidity injections and the •bloated• Fed balance sheet, now aligns with lower rates, yet inherits a cautious Fed board signaling rates in the low-to-mid-3s by year-end. Markets priced a dovish shift, while policymakers• dynamics suggest otherwise.
• Macro Data Paused Again - The brief government shutdown pushed back key economic data releases. The January jobs report moved to Feb. 11, and December•s Job Openings and Labor Turnover Survey (JOLTS) was also postponed. 
• Other Data Was Mixed: While ADP reported just 22,000 private payrolls in January, University of Michigan sentiment jumped to its highest since August and inflation expectations fell to 3.5%.

The Week Ahead 

• The shutdown concentrated both January jobs and Consumer Price Index (CPI) reports into one week (Feb. 11 & 13) • the first clean read on 2026 growth and inflation. Economists expect modest payroll gains (50,000-90,000) and inflation rising about 0.3% monthly and about 2.5% yearly. How do these prints reshape Fed cuts with rates already at 3.5-3.75%? Weak jobs plus tame CPI support earlier easing; higher inflation surprises revive •higher for longer• fears.
• Warsh•s Fed nomination is turning into a fight, with Democrats and at least one Republican (Sen. Tillis) pushing to delay or withhold support, raising odds of a drawn‑out confirmation that may unsettle markets by clouding the policy‑rate path and Fed independence just as key jobs and CPI data hit. This political uncertainty adds weight to this week's data, making it unusually important for recalibrating expectations on both the path of policy rates and the credibility of the institution setting them.

Looking forward, the economy continues on a steady path as we continue through 2026.