Market Review: February 05, 2026
Closing Recap
| Index | Up/Down | % Change | Last |
|---|---|---|---|
| DJ Industrials | -593.13 | 1.20% | 48,908 |
| S&P 500 | -84.62 | 1.23% | 6,798 |
| Nasdaq | -363.99 | 1.59% | 22,540 |
| Russell 2000 | -46.89 | 1.79% | 2,577 |
Market Overview
U.S. stocks experienced a broad decline as signs of a cooling labor market emerged, alongside intensified selling in technology stocks, particularly in the software sector. The IGV index fell for the eighth consecutive day, down 12% this week alone, primarily due to concerns over AI competition. Major sectors such as Materials, Industrials, Energy, Transports, and Consumer Staples also retreated from record highs, with the tech sector suffering from weak guidance from Qualcomm (QCOM) and mixed results from Alphabet (GOOGL), which raised concerns due to increased capital expenditures.
The Nasdaq index hit a two-month low, while the CBOE Volatility Index (VIX) reached its highest level in two months, just below 23. The software sector, including major players like Microsoft (MSFT), Oracle (ORCL), and Salesforce (CRM), faced significant pressure as investors worried that advancements in AI could diminish demand for traditional software solutions. Additionally, precious metals and cryptocurrencies saw substantial declines, with Bitcoin dropping to its lowest level since November 2024.
Labor Market Data
Recent job data indicated a weak labor market, with initial jobless claims rising more than expected. Employers announced 108,000 job cuts in January, marking the highest total for the month since 2009. This figure represents a 118% increase from the previous year, with significant layoffs reported from Amazon, UPS, and Dow.
Central Bank Updates
The Bank of England maintained its interest rates but hinted at potential cuts if inflation decreases significantly. The European Central Bank also decided to keep its key interest rates unchanged, reaffirming its inflation target of 2% in the medium term.
Commodities and Economic Data
Precious metals saw sharp declines, with gold settling at $4,889.50 per ounce, down 1.24%, and silver falling 9.10%. Crude oil prices also dropped, with WTI settling at $63.29 per barrel. The U.S. job openings decreased to 6.542 million in December, significantly below expectations.
Sector Highlights
Technology
GOOGL reported strong earnings but raised concerns with its significant capital expenditure plans for 2026, which could impact its stock performance. Other tech stocks, including MSFT and ARM, faced downgrades due to market volatility and competitive pressures.
Retail and Consumer Goods
In the retail sector, companies like ELF and TPR reported strong earnings, while others like GOOS faced declines due to increased marketing expenses. The overall consumer sentiment appears to be weakening, impacting sales forecasts.
Energy and Industrials
Energy companies reported mixed results, with some missing earnings expectations due to lower crude prices. The HVAC industry is also facing challenges due to tighter consumer spending.
Conclusion
The market is currently navigating through a challenging environment characterized by rising interest rates, a cooling labor market, and significant technological disruptions. Investors are advised to remain cautious as economic indicators suggest potential volatility ahead.