Weekly Market Performance — February 6, 2026

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of February 2, 2026. The first week of February brought mixed performance across global markets as U.S. equities faced pressure from tech‑sector volatility, rising AI‑related spending concerns, and soft labor data, while dip‑buyers helped stabilize sentiment late in the week. International markets were steadier, with major markets in Europe supported by easing political angst and cooling inflation, though Asia lagged amid tech weakness and thinning pre‑holiday trading. Meanwhile, core bonds traded slightly lower as credit markets wrestled with widening spreads tied to AI‑driven business model risks, and commodities saw sharp swings.

Stock Index Performance

U.S. and International Equities

U.S. Equities: February opened with a few moving pieces in play, leaving the S&P 500 and Nasdaq down over the last five days, while the Dow (which traded above 50,000 for the first time ever) and Russell 2000 small cap index posted gains. A cross-asset unwinding of crowded positions and a fresh rotation toward small caps and defensive names weighed on the S&P 500, while weakness in software and megacap tech names on growing AI competition jitters drew market attention. Losses were somewhat capped as some broadening under the surface provided a cushion. Investor angst around blowout AI spending guidance was also among major talking points after Alphabet (GOOG/L) rattled some investors by nearly doubling 2026 AI spending to $185 billion, while Amazon (AMZN) unveiled plans to spend $200 billion on data centers, chips, and other equipment — a sharp increase from its $131 billion in spending in 2025.

Risk appetite took another blow after job cuts last month reached their highest level for January in 17 years, according to data from Challenger, Gray, and Christmas released Thursday morning. Just hours before the December JOLTS job openings report fell short of forecasts, while the prior print was revised lower. These two new data points alongside a weaker-than-expected ADP employment report for January reinforced the market’s rate cut expectations.

Nonetheless, dip buyers waded back into the market Friday as Wall Street chatter to conclude the first week of February surrounded very oversold conditions in software, pushback around some of the AI fears, and commentary around elevated spending still being a positive for the secular AI trade. Plus, a bounce in consumer sentiment to a six-month high and one-year inflation expectations falling to their lowest levels since January 2025 helped stocks hold gains.

International Equities: European stocks, meanwhile, moved higher. France’s CAC 40 Index was among the outperformers with broad sentiment lifted by the removal of some political concerns as parliament adopted a 2026 budget after Prime Minister Lecornu survived two no-confidence votes Monday. The U.K.’s FTSE 100 also outperformed, receiving a boost from bolstered March rate cut expectations after the Bank of England came within just one vote of cutting rates in a closer-than-expected 5-4 decision, while also lowering inflation forecasts. Plus, on the macro front, preliminary data pointed to cooling consumer inflation in January, with Eurostat data matching consensus estimates of 1.7% year-over-year.

Multiple weak handoffs from Wall Street stifled sentiment across the Asia-Pacific region this week, leaving major exchanges mostly lower, led by tech-leaning markets. AI jitters, software weakness, and choppy metals trading weighed on South Korea and Taiwan, while a pre-holiday thinning of trade volumes in China left both mainland averages and Hong Kong lower amid weakness in telecom and internet names following a value-added tax hike. Japan bucked the trend, extending weekly gains Friday on expectations that the LDP party will comfortably win this weekend’s lower house election and provide Prime Minister Takaichi with a strong mandate. Supportive earnings takeaways also boosted Japan, highlighted by Panasonic, Renesas, and Sony. Further south, Australia reversed weekly gains Friday after central bank Governor Bullock refrained from providing forward guidance.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index moved slightly lower this week. Equity markets this week were easily defined by tech jitters and weakness in the software space but accelerating AI‑driven competitive risk is negatively impacting software leveraged credit as well, with investors repricing debt lower (yields higher) and delaying transactions as they assess how quickly AI could erode existing business models. Spreads for software-related companies have widened in recent weeks, with leveraged loans and high yield bonds most negatively impacted in the public markets. High yield spreads have widened despite the broader high yield index tightening.

Also concerning credit markets, the sector’s asset‑light profiles — shaped by a decade of leveraged buyouts — imply meaningfully lower recoveries in default, making valuations highly sensitive to even small shifts in perceived AI vulnerability. Moreover, according to Bloomberg, risk premia are widening as markets attempt to sort AI winners from losers, driving increased short positioning and prompting lenders to conduct portfolio‑level stress tests to identify exposure to AI displacement. While defaults have remained manageable, default risk is skewing higher across credit, with projections of up to low‑double‑digit defaults in private credit and elevated distress concentrations across US software — yet with limited near‑term earnings clarity on actual AI winners vs. losers.

Commodities and Currencies: After falling behind on Monday, the broader commodities complex failed to return to the weekly flatline. Elevated volatility across the metals subcomplex was in focus again, with silver the standout as the white metal fell over 30% below its January 28 peak amid widespread deleveraging and selling across financial markets. Meanwhile, gold managed to cross back above the flatline in Friday trading after swinging between week-to-date gains and losses. In energy, natural gas was the big decliner with a roughly 20% drop as the recent arctic blast across the U.S. subsided, and after last week’s storage withdrawals by U.S. energy firms were less than expected, despite marking the largest on record. Elsewhere, the dollar snapped a two-week losing streak with the nomination of Kevin Warsh as the next Fed Chair tabbed for the greenback’s strength, while the euro and yen weakened.

Economic Weekly Roundup

A busy week for the macro calendar was lightened slightly by the brief partial government shutdown as the January payrolls report slated for Friday was delayed until next Thursday. However, a lighter week does not mean an empty week. The January job cuts report from Challenger, Gray, and Christmas was among highlights as openings in the finance and insurance sectors reached the lowest since 2009, when those sectors were under historic stress. To be sure, 2026 is not like the Great Financial Crisis, but the low openings imply low demand for workers. Professional and business services also posted low openings in December as the economy is in a “low hire, low fire” scenario. The construction sector saw a rebound in openings, bucking the trend and providing an outlet for those willing to work. U.S. employers announced 108,435 layoffs in January, up 118% from the same period a year ago and could be a harbinger of more layoffs to come.

Bottom line: Given the low demand for workers, we expect average monthly job growth to hover around 50,000 and the unemployment rate to tick up as we progress through the year. Despite the low demand, the upper part of the K-shaped economy is still doing well, with low debt service and healthy balance sheets which should provide a boost to growth in 2026.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: New York Fed One-Year Inflation Expectations (Jan)

• Tuesday: NFIB Small Business Optimism (Jan), ADP Weekly Employment Change (Jan 24), Import and Export Price Indexes (Dec), Employment Cost Index (4Q), Retail Sales (Dec), Business Inventories (Nov)

• Wednesday: MBA Mortgage Applications (Feb 6), Change in Nonfarm, Private, and Manufacturing Payrolls (Jan), Average Hourly Earnings (Jan), Average Weekly Hours All Employees (Jan), Unemployment Rate (Jan), Labor Force Participation Rate (Jan), Underemployment Rate (Jan), Final Benchmark Payrolls Revision (2025), Federal Budget Balance (Jan)

• Thursday: Initial Jobless Claims (Feb 7), Continuing Claims (Jan 31), Existing Home Sales (Jan)

• Friday: Headline and Core CPI (Jan), Real Average Hourly Earnings (Jan), Real Average Weekly Earnings (Jan)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

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This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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The fast price swings of commodities will result in significant volatility in an investor's holdings.

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