U.S. equity investors are entering a week in which the interplay between artificial intelligence-driven sentiment, sector rotations and several important corporate and economic reports could produce renewed market volatility. The benchmark S&P 500 finished Thursday with a modest year-to-date decline of 0.2%, but that headline figure masks sharp divergences among individual stocks and industry groups.
In recent weeks, shares of software companies and other technology-linked names have tumbled amid fears that new AI tools could disrupt a range of industries, including insurance, wealth management and transportation. The rapid pace at which AI-related stories appear to redefine winners and losers has created a stop-and-go dynamic for traders and portfolio managers.
"It’s all this whack-a-mole game of trying to figure out what AI is going to destroy next in a world where you can invent a narrative, because this technology is so new that artificial intelligence is likely going to end up eating the whole world," said Art Hogan, chief market strategist at B. Riley Wealth. "That’s probably not the case, but that’s where we are right now in that sentiment."
Extreme single-stock moves raise concern
Market technicians and strategists have noted that the split between AI "winners" and "losers" appears to be intensifying. "AI winner and loser moves in single stocks are getting more and more extreme," Jonathan Krinsky, BTIG’s chief market technician, wrote in a note. He added that, at some point, the weakness among certain names could outweigh pockets of strength and render the broader market vulnerable.
That pressure has contributed to declines in the heavyweight technology sector, a group that has been the main engine of gains over the bull market that began in October 2022. Technology was last recorded as being down more than 4% year to date, reducing its leadership role in the benchmark indexes.
Rotation into other sectors
Investors have been redeploying capital into sectors that lagged last year, producing notable gains outside of tech. Four sectors - energy, consumer staples, materials and industrials - have each risen at least 10% in 2026, and small-cap shares have also outperformed in relative terms. These broader gains have helped offset tech's struggles and represent a palpable leadership shift in market psychology.
"We’re starting to get an embedded leadership shift that’s undeniable at this point," said Mark Hackett, chief market strategist at Nationwide. He suggested that the change in leadership is becoming more ingrained in investor thinking.
Even so, technology still carries a substantial weight in U.S. indexes, including roughly one-third of the S&P 500. Some market participants argue that a lack of a single dominant sector makes it harder for indices to repeatedly set new highs, though others see broader participation as a healthy sign.
"It’s been really difficult to make those new all-time highs because of the absence of tech leadership," said Kevin Gordon, head of macro research and strategy at Charles Schwab. "But this is not necessarily a bad thing."
Walmart results and economic calendar in focus
Corporate earnings and economic data will provide fresh inputs for investors assessing whether recent rotations are durable. Walmart’s quarterly report is the marquee corporate release in the coming week as the fourth-quarter earnings calendar winds down. The retailer's results will be watched for clues on consumer spending after data earlier in the week showed U.S. retail sales were unexpectedly unchanged in December.
Other large retailers are scheduled to report in the weeks that follow, including Home Depot, Lowe’s and Target, which will further illuminate consumer trends.
Walmart’s stock has climbed about 20% this year, and the company recently pushed its market capitalization above $1 trillion, making it the largest firm by market value within the consumer staples sector. The consumer staples group itself has risen roughly 15% in 2026.
U.S. market participants will also contend with a shortened trading week because of a Monday holiday. Several key economic reports are due, including the advance reading of fourth-quarter GDP, a monthly consumer sentiment survey and the personal consumption expenditures price index - a closely watched inflation gauge.
Recent economic releases have provided mixed signals. Earlier in the week, payroll data revealed a surprising jump in U.S. job growth in January, which some interpreted as evidence of continued labor market resilience. That development, together with sector moves, informs how investors price the outlook for growth-sensitive groups that have led the recent "catch-up trade."
"To some extent, that is pricing in maybe not a firm re-acceleration in the economy, but I think at least a stabilization," Gordon said, noting how some sectors that have rallied are sensitive to the broader economic climate.
As investors process corporate reports and incoming data, the market’s trajectory will depend in part on whether the current rotation and heightened AI-led narratives stabilize or produce further concentrated swings across industries and individual stocks.