The Week Ahead: Markets Eye Jobs, CPI, and Fed Commentary

Key Points

• Sector rotation accelerates as “old economy” stocks outpace tech, driving fresh leadership in U.S. markets.
• The Dow hits a record 50,115.68 while the Nasdaq slides 1.84%, underscoring divergent market trends.
• AI disruption fears and rising capital expenditure drive a 25% pullback in software shares over the past three months.

Market Overview

U.S. equities ended the week mixed as sector rotation accelerated. The S&P 500 slipped 0.10% to 6,932.30, the Nasdaq Composite fell 1.84% to 23,031.21, while the Dow Jones Industrial Average outperformed, rising 2.50% to a record 50,115.68. Tech weakness, particularly in software and semiconductors, weighed on growth indices, but strength in industrials, energy, and financials kept broader sentiment intact.

Investors continue to reprice large-cap technology stocks due to concerns over AI-driven disruption and surging capital expenditure plans, leading to a nearly 25% decline in software stocks over the past three months. This reflects both competitive uncertainty and higher spending across major platforms.

Sector Performance

Meanwhile, “old economy” sectors have reasserted leadership. Industrials, materials, and consumer staples are benefitting from improving demand expectations as the manufacturing cycle shows early signs of expansion. The latest ISM data confirmed the strongest U.S. factory activity since 2022, supporting the view that economic growth remains firm.

With Fed officials signaling that rate cuts may stay on hold, risk appetite in speculative assets like crypto and precious metals has cooled. However, the equity uptrend appears intact, supported by earnings resilience and a more balanced market breadth.

Economic Releases & Notable Earnings

Key economic releases and earnings reports are scheduled for the upcoming week, including:

• Monday, Feb 9: Becton Dickinson, Cleveland-Cliffs, Monday.com, Waters.
• Tuesday, Feb 10: Coca-Cola, McDonald’s, Spotify.
• Wednesday, Feb 11: Shopify, CVS Health, Hilton.
• Thursday, Feb 12: Zoetis, Restaurant Brands, Crocs.
• Friday, Feb 13: Wendy’s, Magna.

Economic releases include the NFIB Small Business Index, Retail Sales, Non-Farm Employment Change, and CPI data.

Central Bank Activity

Comments from various Fed officials will be closely monitored for insights on inflation progress and the likelihood of rate cuts later this year. The market is sensitive to any hawkish tone that may emerge from these discussions.

Technical Outlook

All major indices remain above rising 52-week SMAs, confirming an intact uptrend. The Dow Jones Industrial Average is at 50,115.68, with support levels at 45,728.93 and resistance at 50,169.65. The Nasdaq Composite is at 23,031.21, with support at 21,898.29 and resistance at 24,019.99. The S&P 500 is at 6,932.30, with support at 6,521.92 and resistance at 7,002.28.

Outlook

This week, market focus will be on Wednesday’s jobs data and Friday’s CPI report. Modest payroll growth and a steady unemployment rate should support expectations that the Fed remains patient before cutting rates. Any upside surprise in CPI could reinforce a cautious policy stance and test rate-sensitive sectors.

The rotation toward industrials and financials is likely to persist as investors seek earnings stability outside tech. Overall, the setup favors consolidation rather than correction, with no signs of recession and fundamentals still supportive of the bull market.