Overview
The tape is leaning risk-off into the open. The big index ETFs are marked lower in premarket indications, led by tech and cyclicals, with a defensive undertow that has utilities and staples holding green. Long-duration Treasurys are firm again, a continuation of Thursday’s safety bid, and that combination is pressing equities at the bell even after a cooler January inflation print hit the headlines.
At 9:25 a.m. ET, the broad benchmarks sit below Thursday’s closes. SPY is quoted around 681.25 versus a prior 691.96, QQQ around 600.01 versus 613.11, and DIA near 494.63 versus 501.33. Small caps are tracking the slump, with IWM around 260.44 against 264.95. Traders are stepping back, not leaning in, even as bond markets extend their rebound.
The proximate driver is still the tech-led shakeout. Memory cost inflation and AI capex angst continue to spill across hardware, software, and adjacent supply chains. Cisco’s margin scare was a spark, but it tapped into something broader: valuations that need earnings acceleration to stick and an upgrade cycle that is running into input-cost gravity. That stress is front and center in premarket leadership and laggards.
Macro backdrop
Inflation remains the fulcrum. Headlines this morning flagged a January consumer price reading that came in slightly cooler than expected. Without getting tangled in decimal points, the macro takeaway is straightforward: disinflation is not dead, and the latest reading nudged rate-cut hopes back from the ledge after a bumpy few sessions. That matters for duration and for equity multiples that have been wobbling under higher real-rate assumptions.
Even so, the last official yield marks still capture a market wrestling with range, not collapse. The 2-year sits most recently at roughly 3.52%, the 5-year 3.75%, the 10-year 4.18% and the 30-year 4.82%. Those levels are elevated enough to keep financial conditions honest. Inflation expectations remain anchored near the low-2s across the curve, with model-based one-year views just under 2.6% and market-implied five- and ten-year breakevens near 2.3%. Anchored expectations plus a cooler print help explain the bid in long bonds and the relief in rate-sensitive pockets.
Jobs are the other pole. Earlier in the week, stronger-than-expected hiring pushed the 10-year up and stirred volatility. Today’s setup is the mirror image: bonds are firming into the bell and equities are trying to find their footing. The push and pull is familiar. When the growth data prints hot, rates pressure multiples. When inflation cools, duration rallies and cyclicals often lag. Rotation follows the weather.
Equities
The major ETFs are pointing lower, tactically in line with Thursday’s selloff and with the composition that mattered most. SPY sits about 1.5% below its last close in premarket quotes, QQQ near 2% below, DIA down a little over 1%, and IWM off closer to 1.7%. The relative damage is still skewed to tech growth and to hardware tied to AI infrastructure.
Single-name cues echo that posture. The mega-cap cohort is heavy: AAPL trades well below its previous close after headlines highlighted renewed AI product delays and a large market-cap drawdown yesterday. MSFT, NVDA, GOOGL, META and AMZN are indicated lower against Thursday’s levels as investors reassess the cost side of the AI buildout and the timing of returns. TSLA is also tracking down premarket amid a softer EV tape and competitive headlines out of China.
There is also a classic late-cycle feel in the green shoots. Managed care and pharma are firmer, with UNH, LLY, and JNJ either higher or better supported versus peers. Defense is bid, with RTX, LMT and NOC holding up in early indications. Consumer staples like PG are also catching a safety bid. That internal rotation, paired with a rally in long bonds, is the day’s clearest signal set.
Underneath the surface, a few micro narratives are shaping flows. Memory pricing is moving sharply higher, which helped semicap equipment sentiment late Thursday after upbeat commentary from a key supplier and buoyed shares of memory makers on indications that high-bandwidth parts are shipping at scale. On the flip side, software has been in the crosshairs as investors weigh AI disruption risk to incumbents and margin compression from cloud spend. The push-pull is visible in the split between semis, hardware, and application software.
Volatility is likely to remain elevated. Recent sessions have delivered wider intraday ranges even as the year-to-date path for the S&P has been more sideways than headline-making. Today’s premarket pattern fits that mold, with index-level weakness masking pockets of strength in defensives and a modest bid under long duration.
Sectors
Sector ETFs are setting up for a decisive rotation at the open. Technology is still the fulcrum, and it is negative. XLK is marked below its prior close as investors continue to digest hardware cost pressures and the capex arms race. Financials, via XLF, are also soft premarket, consistent with the curve’s shape and an equities risk-off tone. Industrials, tracked by XLI, are indicated lower as the cyclicals trade fades with yields slipping.
Energy, which has been the year’s best sector performer, is starting the day on the back foot. XLE is quoted below its last close alongside a weaker crude tape. That does not negate the year-to-date leadership argument built on supply risks and improved downstream margins, but it tells you how today’s session is skewed. When bonds rally and growth concerns flare, crude-linked equities often pause.
Defensives are the morning’s relative winners. XLU and XLP are firmer in premarket indications. Health care, via XLV, is a touch better as well. In a market probing for stability after a tech drawdown, those pockets tend to attract flows first. The pattern is familiar and, for now, it is intact.
Consumer discretionary, XLY, is indicated lower as the group digests a mix of softer EV headlines, shifting retail preferences into Valentine’s week, and the hangover from high-multiple internet names. The defensive tilt within consumer is more visible than any broad-based appetite for cyclical exposure.
Bonds
The most consistent message this morning is from fixed income. Long-duration ETFs are up in early trading. TLT is trading above its prior close in premarket prints, with IEF and SHY also firmer. Thursday already saw one of the better sessions for long Treasurys in months as equities dumped, and today’s continuation suggests investors are still seeking safety or duration at these yield levels.
This move lines up with the cooler inflation headline and with inflation expectations that remain contained. The important nuance, however, is that while bonds are catching a bid, absolute yield levels are still not low. That keeps equity valuations sensitive and index rallies conditional on sector mix. The bond-equity correlation has been shifting session to session, but today’s premarket correlation is the classic one: bonds up, cyclicals down, defensives steady.
Commodities
Commodities are soft across the board. Gold and silver are both indicated below Thursday’s closes, with GLD and SLV weaker premarket. The size of the pullback in silver stands out, consistent with the higher beta in precious metals when macro positioning flips. Crude is also trading lighter, with USO below its previous mark, and broad commodities, via DBC, are pointing down. Natural gas, through UNG, is a touch softer as well.
Two cross-currents are at work. First, the bond rally cools the dollar’s impulse to spike, but it also signals slower nominal growth at the margin, which weighs on cyclicals and broad commodity baskets. Second, positioning in precious metals had built into the risk wobble, and some of that safety premium is bleeding as investors prefer duration over gold this morning. In short, the commodity complex is not confirming an inflation scare. It is leaning toward slower nominal demand and a tactical re-risking into bonds instead of metals.
FX & crypto
On the currency side, the euro is quoted around 1.186 against the dollar. There is not enough context here for a strong directional call, but the level is consistent with a market that is not sprinting into or out of the greenback on this morning’s data.
Crypto is steadier than equities at the margin. Bitcoin is hovering near 67,000 on the USD pair, having traded an overnight range between roughly 66,000 and 67,600. Ether is near 1,967 after a similar two-way session. The resilience is notable given a recent loss reported by a major exchange and a sharp drawdown in crypto earlier this week. For today’s equity session, crypto looks like a sideshow, not the main plot.
Notable headlines
Three clusters of news are framing sentiment at the open:
- Inflation and rates. A January CPI reading printed slightly cooler than expected, easing some pressure built up after a strong jobs report. That mix supports the premarket rally in long Treasurys.
- AI capex and cost friction. Hardware and software remain under scrutiny after Cisco flagged margin pressure from memory pricing, a theme that bled into broader tech. Meanwhile, chip equipment optimism got a lift from upbeat revenue outlooks tied to AI, and a large memory maker reiterated that advanced parts are shipping at scale.
- Rotation and defensives. Energy’s year-to-date leadership is running into a softer crude tape this morning, while utilities, staples, and managed care are attracting flows. The move is consistent with a session defined by lower yields and tech fatigue.
Company-specific headlines add color. Pinterest is lower after a tepid revenue outlook and renewed questions about AI-driven ad disruption. Coinbase swung to a surprise loss amid a crypto flight but tried to reframe growth vectors. DraftKings slid as investors balked at the cost of a push into prediction markets. FedEx talked up an “exceptional” peak season and flagged an earnings beat, an outlier of strength in transport. Waymo’s reliance on human help for robotaxi operations was a small reminder that autonomy still needs a hand on the door.
There is also an ongoing narrative around Europe’s industrials and AI order books, with a major German conglomerate lifting its outlook on data-center demand. That international backdrop matters for U.S. multi-nationals in software, chips, and power systems, especially as data-center infrastructure themes broaden beyond a narrow set of U.S. names.
Risks
- AI investment cycle mismatch, where rising input costs and capex outlays precede monetization, pressuring margins across hardware and software.
- Policy uncertainty around climate rules and energy, with potential swings in regulatory stance affecting autos, utilities, and fossil-fuel producers.
- Deficit and supply risk in Treasurys, which could re-steepen yields despite cooler inflation prints.
- Crypto market fragility feeding back into risk sentiment, especially if exchange outages or losses recur.
- Geopolitical flashpoints that could disrupt energy and shipping lanes, undermining today’s softer commodity tone.
What to watch next
- How the opening dip is absorbed in SPY and QQQ once cash trading begins and liquidity normalizes.
- Follow-through in long-duration ETFs TLT and IEF. A fade there would undercut the defensive rotation.
- Sector breadth within defensives. Do XLU, XLP, and XLV hold gains through the first hour.
- Energy’s response to softer crude. If XLE can stabilize, it signals rotation not liquidation.
- Memory and semicap commentary in the wake of higher memory pricing and AI equipment demand. Watch NVDA-adjacent suppliers via the hardware complex.
- Single-name price discovery in mega-cap tech, especially AAPL, MSFT, AMZN, META and GOOGL. Their intraday pivots will dictate index tone.
- Crypto stability relative to equities. If BTCUSD and ETHUSD can stay range-bound, it removes a potential volatility amplifier.
- Any incremental reads on consumer behavior around the holiday weekend that might color discretionary vs staples performance.
Equity and ETF levels reference the most recent premarket indications versus prior closes. Moves can change quickly at the open.