Market Insights - February 6, 2026
Market Overview
On February 6, 2026, stock markets experienced a significant rebound, with the S&P 500 index recovering from a 1% decline in overnight futures trading to gain 2% during the session. The Dow Jones Index surged by 2.5%, reaching a new record high above 50,000, while the small-cap Russell 2000 index jumped by 3.5%. This positive sentiment followed a volatile week, particularly for technology stocks, amid concerns regarding the impact of artificial intelligence (AI) on software services and the substantial spending plans of major tech companies.
Bond and Currency Markets
As risk sentiment improved, bond prices fell, leading to a slight increase in the yield on the U.S. 10-year Treasury note by two basis points. The U.S. dollar remained stable against a trade-weighted basket of currencies, while West Texas Intermediate (WTI) oil prices held steady. Investors continued to monitor geopolitical tensions, particularly between the U.S. and Iran. Gold and silver prices increased but remained below their peaks for 2026.
Amazon's Investment Plans
Amazon announced plans to invest $200 billion in 2026 on data centers, chips, and other equipment, contributing to a total of $650 billion in AI-focused investments from major tech firms including Meta, Alphabet, and Microsoft. This represents a 60% year-over-year increase in spending, raising concerns about the scale of these investments and their potential returns. Following the announcement, Amazon's shares fell by 10% in after-hours trading, as the market became more selective in identifying potential winners and losers in the tech sector.
Market Rotation Trends
The prevailing theme in 2026 has been a rotation away from high-priced tech stocks that have previously led market performance. The Nasdaq index is down approximately 1% year-to-date, while the Russell 2000 index has risen by about 7.5%. International developed-market equities have also increased by around 7%. This shift in market leadership is supported by solid economic fundamentals, as indicated by the University of Michigan consumer sentiment survey, which showed rising confidence and lower inflation expectations for February.
Earnings Growth
Corporate earnings growth is broadening, with 79% of S&P 500 companies exceeding earnings estimates this season, averaging an upside surprise of 8.2%. Consequently, earnings growth estimates have risen from 7.2% to 11.4%, reflecting growth across eight of the eleven sectors. This trend supports recommendations for a diversified allocation across domestic mid- and large-cap stocks, international equities, and emerging-market equities.