Overview
The tape came in hot at the finish. After a bruising stretch dominated by “AI capex anxiety,” software stress, and crypto whiplash, U.S. equities staged a broad rebound into Friday’s close. The move had the feel of pressure releasing, not euphoria returning. Big upside, yes, but it landed like a market exhaling after holding its breath for too long.
By the bell, the bounce was visible across the major index ETFs: SPY closed at 690.60 versus 677.62 prior, QQQ at 609.63 versus 597.03, DIA at 500.99 versus 488.91, and IWM at 264.995 versus 255.83. In plain English, the rally wasn’t narrowly concentrated. It was a reset bid, with smaller, more rate sensitive and economically linked areas participating.
That matters because the week’s narrative has not been subtle. Investors have been wrestling with the price of the next wave of AI infrastructure, the credibility of earnings power behind that spending, and the fragile psychology that comes with crowded leadership. Friday’s action did not erase those questions. It just repriced the immediacy of the fear.
Macro backdrop
The rates backdrop did not deliver fireworks, but it delivered context. The latest Treasury curve snapshot showed the long end still sitting notably above the front end. As of 2026-02-04, the 2-year yield was 3.57%, the 10-year was 4.29%, and the 30-year was 4.91%. The 5-year was 3.83%. In other words, this is not a market screaming imminent cuts. It is a market that is still charging term premium, still demanding compensation for time, inflation uncertainty, and fiscal noise.
Inflation readings available were level-based CPI prints rather than year-over-year rates. CPI for 2025-12-01 was 326.03, with core CPI at 331.86. The direction and pace are not provided here, but the message from the curve is clear enough: the bond market is not acting like inflation risk has been fully defeated, and it is not acting like growth is collapsing either.
Inflation expectations add a second layer. The market-implied 5-year expectation (2026-01-01) was 2.39% and the 10-year was 2.31%, with the 5-to-10 forward at 2.22%. The models were in the same neighborhood, with model 10-year at 2.32%. The combination, relatively anchored expectations with a still-elevated long-end yield, is a familiar tension. It points to a world where inflation psychology is contained, but the price of capital is not cheap, and that friction shows up fastest in long-duration equity multiples and “spend now, monetize later” stories.
Equities
Friday’s rebound was loud enough to drown out a lot of week-long noise, but it did not rewrite the script. The broad market ETF SPY finished at 690.60, up from 677.62 the prior close. The tech-heavy QQQ ended at 609.63, up from 597.03. The industrial-leaning DIA closed at 500.99, up from 488.91, while IWM ended at 264.995, up from 255.83.
Even without intraday change figures, the closes versus prior closes show a market that rotated into “re-risking,” at least for the day. The crucial nuance is that the rebound did not require a major collapse in yields. This was equity positioning and sentiment adjusting, not a macro “all-clear” from the bond market.
Under the hood, several mega-cap tech names reflected the crosscurrents investors have been living with. NVDA finished at 185.41 versus 171.88 prior, after trading as high as 187.00 and as low as 174.60 on the day, with volume of 224,694,553. That is a real, high-participation reversal. MSFT closed at 400.82 versus 393.67 prior, with a 401.79 high and 392.92 low, volume 51,032,270. AAPL ended at 278.04 versus 275.91 prior, after touching 280.905 on the high, volume 48,674,056.
But the rally wasn’t a straight “tech is back” story. GOOGL closed at 322.92 versus 331.25 prior, with a 330.33 high and 320.03 low, volume 54,746,277. META closed at 661.34 versus 670.21 prior, with a low of 646.5001. AMZN was the bruiser, closing at 210.31 versus 222.69 prior, despite an intraday recovery from an opening print of 202.69 and a low of 200.31, with volume a hefty 178,916,203.
That split is the day’s tell. The market rallied, but investors still made distinctions inside “Big Tech.” The capex debate is forcing a hierarchy: proven earners and near-term cash flow get a better reception than open-ended spending narratives, especially when the curve remains steep and the long end stays expensive.
Sectors
If the indices were the headline, the sectors were the plot. Friday looked like a rotation day that also happened to be a rebound day. Financials, industrials, healthcare, and energy all participated, while tech did bounce but with scars still visible via single-name dispersion.
Sector ETFs told the story cleanly at the close:
- XLF closed at 54.26 versus 53.29 prior, a solid financials rebound.
- XLI closed at 173.11 versus 168.37 prior, industrials stayed in command.
- XLK closed at 141.06 versus 135.63 prior, tech snapped back, but the single-name tape inside tech remains selective.
- XLV closed at 157.65 versus 154.84 prior, healthcare caught a bid.
- XLE closed at 53.235 versus 52.21 prior, energy participated even without a surge in oil.
Defensives were not abandoned, but they were not the center of gravity either. XLP ended at 87.935 versus 86.92 prior, and XLU finished at 43.35 versus 43.10 prior. That combination, cyclicals up strongly while defensives still hold ground, is typical of a day when investors want exposure but still keep one hand on the railing.
Consumer discretionary looked more complicated. XLY closed at 117.93 versus 117.51 prior, barely higher. Underneath, discretionaries were split between strength in some cyclicals and damage in capex-sensitive retail and platform stories. AMZN is the obvious example, and the day’s “discretionary is fine” message gets murkier when one of the sector’s largest weights is digesting major spending guidance skepticism.
Bonds
The bond market’s posture was almost provocative in its calm. While equities rallied hard, long-duration Treasurys did not scream “growth shock” or “policy panic.” TLT ended at 87.505 versus 87.48 prior, essentially unchanged. IEF closed at 96.06 versus 96.07 prior, also flat. SHY finished at 82.855 versus 82.86 prior.
Put that next to the yield curve. With the 10-year at 4.29% and 30-year at 4.91% in the latest available yield set, the message is that the bond market is still comfortable charging a premium for long-term money. Equities can rally in that world, but the winners tend to be different. When long rates are sticky, markets often prefer cash flow, balance-sheet clarity, and pricing power. It is a tougher environment for stories that require a lot of future-perfect execution.
There was also a separate bond-market narrative circulating in headlines about a steepening curve potentially putting long-term borrowers on edge. The numbers in hand already show a material upward slope from 2-year to 30-year. That slope is not theoretical, it is present. The downstream impact is that “rate cuts” do not automatically equal “cheap long-term funding,” especially if term premium remains firm.
Commodities
Commodities did not take a back seat. They were part of the risk reset, but again, selectively.
Precious metals led. GLD closed at 455.35 versus 441.88 prior, a sizable jump. SLV ended at 70.199 versus 66.69 prior, also higher. That’s a notable twist given the week’s narrative in precious metals coverage, with volatility and sharp moves in silver highlighted in the news cycle. Friday’s close suggests the complex found its footing, at least for the day, and that investors were willing to keep hedges on even while they re-risked equities.
Energy was steadier. USO closed at 76.985 versus 76.69 prior, modestly higher. Natural gas leaned the other way, with UNG at 13.26 versus 13.52 prior. Broad commodities via DBC closed at 24.01 versus 23.76 prior.
The cross-asset picture is worth sitting with. Equities ripped, gold ripped, and long Treasurys did not sell off. That combination happens, but it is not the “everything is fine” cocktail. It reads more like portfolio rebalancing after a shock, not the start of a one-way risk chase.
FX & crypto
In FX, the euro was firmer against the dollar. EURUSD marked at 1.18070398078251, with a high of 1.18165722333708, a low of 1.17718441301808, and an open of 1.17904580815678. The move was not extreme, but it leaned toward a softer dollar tone on the day.
Crypto, meanwhile, tried to stabilize after a brutal week. Bitcoin’s mark was 70071.91184525, up from an open of 64842.419431755, with a high of 71513.2447532 and a low of 64403.6584761. Ether’s mark was 2054.56146264 versus an open of 1907.285989295, with a high of 2093.27620538 and a low of 1863.87.
That intraday range is the point. Even on a rebound day, crypto is trading like a high-volatility risk asset. Headlines about bitcoin crashing below $70,000 and then rising after heavy selling fit the tape’s personality. The market is still working through leverage, conviction, and the practical reality of forced selling when collateral values move too fast.
Notable headlines
Several storylines shaped how traders framed the day’s rebound and the week’s scars:
- Big Tech spending and the price of AI infrastructure: A key thread running through the week is investor skepticism about whether massive AI capex translates into defensible returns quickly enough. That skepticism showed up starkly in AMZN, which closed at 210.31 versus 222.69 prior, even as much of the market bounced.
- Tech rout and the bounce: Coverage framed Friday as a rebound after a sharp tech-led drawdown, echoing dot-com era lessons in market psychology. The close supported the “rebound” portion of that framing via QQQ at 609.63 versus 597.03 prior, and a sharp reversal in NVDA to 185.41 from 171.88.
- Crypto’s myth-testing moment: Multiple pieces leaned into the idea that bitcoin has been trading like a speculative tech proxy rather than a hedge, especially amid a rapid selloff. Even with Friday’s bounce, the day’s low of 64403.6584761 versus a high of 71513.2447532 underscores how unstable the footing remains.
- Weight-loss drug competition gets messy: Headlines highlighted legal and regulatory tension around compounded Wegovy copycats involving Hims & Hers and Novo Nordisk. While those tickers were not quoted here, the story adds to the broader theme of price competition colliding with high expectations in healthcare growth pockets.
- Yield curve focus: Another headline theme highlighted curve steepening and the impact on borrowers. The latest yields show a clear slope from 2-year (3.57%) to 30-year (4.91%), reinforcing why long-term financing costs can stay elevated even if policy expectations drift.
Risks
- AI capex fatigue remains a live wire, especially where spending plans are large and monetization timelines are uncertain, highlighted by the divergence between AMZN down on the day’s close versus the broader index rebound.
- Curve steepness keeps long-term money expensive, with the 30-year yield at 4.91% versus the 2-year at 3.57% in the latest reading, a headwind for long-duration valuations.
- Crypto volatility is still extreme, with bitcoin trading between 64403.6584761 and 71513.2447532 today, a setup that can transmit risk sentiment shocks back into equities.
- Single-name landmines remain common even on green days, as expectations resets can produce air pockets (the broader news cycle highlighted sharp drops in specific healthcare and tech stories).
- Gold strength alongside an equity rally, GLD at 455.35 versus 441.88 prior, hints that hedging demand has not disappeared.
What to watch next
- Whether Friday’s breadth holds, particularly if IWM leadership persists after closing at 264.995 versus 255.83 prior.
- Tech’s internal repair job, watching if rebounds in names like NVDA (185.41 close, 224,694,553 volume) can coexist with weakness in capex-heavy platforms like AMZN.
- The long end of the curve, with the 10-year at 4.29% and 30-year at 4.91% in the latest yield set, and whether that term premium stays firm.
- Health care’s crosscurrents, with XLV closing at 157.65 versus 154.84 prior, against a backdrop of competitive and regulatory headlines in GLP-1s.
- Gold and silver follow-through after a sharp rebound, GLD at 455.35 and SLV at 70.199, given the week’s volatility focus in metals.
- Crypto stabilization, with BTC and ETH holding gains after wide ranges, and whether that reduces the risk of spillover into broader risk sentiment.
- Discretionary health beneath the surface, with XLY barely higher at 117.93 versus 117.51, and the sector’s heavyweights pulling in different directions.