Overview
The tape is trying to reset after an AI-rattled stretch. The latest prints show the big equity benchmarks a touch higher into the weekend, while bonds keep their bid and metals extend gains. That mix reads like a market distributing risk, not dumping it, with investors leaning on duration and hard assets after a tech-heavy shakeout.
On the equity side, broad proxies ticked up in the last session, with SPY, QQQ, and DIA all finishing marginally stronger and small caps, via IWM, out front. Under the surface the leadership has shifted. Energy, industrials, health care, and utilities carried more of the load, while large-cap tech absorbed a week of doubts about AI spending paths and business-model stress in software and hardware.
The bond market set the day’s tone. Long-end yields slipped again last session, taking the 10-year near 4.09% and the 30-year to roughly 4.72%. That move aligned with a broadly positive session for long-duration bond ETFs and a firming precious-metals complex. When duration rallies and gold climbs together, it signals a bid for ballast. That matters.
Macro backdrop
Pressure eased across the Treasury curve late in the week. Compared with the prior day, the 10-year yield stepped down to about 4.09% and the 30-year to roughly 4.72%. The 2-year and 5-year yields, at approximately 3.47% and 3.67% respectively, rounded out a curve that is less tense than it was midweek. It is not a dramatic collapse, but it is enough to stabilize rate-sensitive pockets that were wobbling.
Inflation readings for January nudged higher at the headline and core levels, with the latest CPI around 326.588 and core near 332.793. That is not a reversal of progress, yet it reminds the market that disinflation is uneven. Counterbalancing that, modeled inflation expectations remain anchored in a narrow band. One-year expectations sit close to 2.59%, the 5-year near 2.37%, and the 10-year around 2.36%. That pairing, slightly firmer realized inflation with steady-forward expectations, is the kind of backdrop that lets bonds breathe without forcing a wholesale change in the growth narrative.
Policy and macro narratives did their part to stir volatility this week. A series of reports and commentary linked AI’s economic riptides to potential spillovers into central-bank thinking and even housing dynamics. At the same time, the deficit debate returned to the fore with fresh projections, and headlines pointed to the risk of a partial government shutdown. Put it together and the market found reasons to buy duration, hedge with metals, and rotate within equities rather than take down gross risk broadly.
Equities
Index-level action finished the last session in the green. SPY last traded around 681.63 versus a previous close of 681.27. QQQ printed 601.81 against 600.64. DIA ended near 495.29 versus 494.67. The standout was IWM, closing about 262.92 compared with 259.54. Small caps leaning higher while the Nasdaq nudged up only slightly is a rotation tell. It is not a stampede, but it breaks the one-factor trade feel that dominated much of the past year.
Mega-cap tech remains a pressure point. Within the widely watched names, AAPL eased to roughly 255.79 from 261.73, MSFT slipped to 401.16 from 401.84, and NVDA backed off to 182.79 from 186.94. GOOGL and META also finished lower than their prior closes. AMZN hovered just below its previous mark, while TSLA managed a modest uptick.
That split tracks the week’s newsflow. Investors digested a cascade of AI-linked headlines that pulled on multiple threads at once: rising memory prices pressured networking margins at a major incumbent, software names wrestled with questions about displacement versus enablement, and chip-equipment makers countered the gloom with stronger outlooks. The result was whiplash trading, with the S&P 500 essentially flatlining in trend terms even as single-stock and sector-level swings accelerated.
Outside tech, several bellwethers steadied the tone. Defense and industrial leaders leaned higher, with LMT, NOC, and CAT closing above prior levels. Health care was mixed to firmer, led by LLY, MRK, and UNH, while JNJ and PG edged lower. In energy, CVX ticked up even as XOM dipped. Financials were balanced, with GS up slightly, BAC basically flat to fractionally higher, and JPM a touch softer. The picture is not of a market losing its footing. It is a market reassigning it.
Sectors
Leadership broadened in the sector ETFs. Technology, via XLK, edged higher to about 139.57 versus 139.21. That was tentative, especially given the drawdowns among the heaviest single names. Energy, through XLE, built on recent relative strength at roughly 54.35 versus 53.98, a move consistent with the ongoing conversation that has energy on many radar screens this year. Industrials, via XLI, pushed up to 174.18 from 172.75. Health care, using XLV, climbed to 157.67 from 156.00, and utilities, via XLU, advanced to 46.50 from 45.25.
Defensives also showed. Staples, XLP, firmed to 89.49 from 89.21. Discretionary, XLY, improved slightly to 116.16 from 116.13. Financials, XLF, slipped marginally from 51.69 to 51.66, keeping their footing amid the rate pullback.
Two cross-currents defined the day. First, chip-equipment optimism versus networking and software angst. A fresh post-earnings outlook from a top semiconductor-equipment company flagged more than 20% revenue growth in 2026 and framed AI as a durable capacity build. At the same time, a major networking name’s worst session since 2022 highlighted cost pressure from higher memory prices and visibility questions in traditional hardware. Software remained in the penalty box as investors weighed disruption risk against long-term switching costs and platform entrenchment. The tape adjudicated that debate by rewarding the upstream capacity providers while discounting parts of the downstream stack. Classic market triage.
Second, a defensive overlay appeared in utilities and health care, with metals rallying alongside. That pairing is familiar late in volatile weeks, when investors keep equity risk but snap on a seatbelt. The move does not scream recession or panic. It reads like portfolio weatherproofing.
Bonds
Duration was the day’s cleanest trend. Long Treasurys rallied with TLT up to around 89.70 from 89.23. The belly joined in, with IEF rising to 97.23 from 96.83. Front-end exposure, via SHY, also nudged higher, 83.05 from 82.93.
The yield backdrop supports the move. Compared with midweek, the 10-year eased to approximately 4.09% and the 30-year to roughly 4.72%, with the 2-year near 3.47% and the 5-year about 3.67%. That softening squared with a heavy risk session in tech and a modest risk-off rotation elsewhere. Reports described long Treasurys logging their best day in months as equities sagged. That sequence can be self-correcting in equities, but in bonds it often builds upon itself until a new macro catalyst interrupts. For now, the signal is that the market is comfortable paying for time.
Commodities
Precious metals seized the momentum. GLD jumped to roughly 462.58 from 451.39. SLV advanced to about 69.71 from 67.73. A bid for metals alongside a rally in duration is a familiar protective posture when earnings dispersion is high and policy headlines are noisy.
Energy was mixed to softer in the benchmarks. Crude exposure, via USO, slipped a touch to 76.21 from 76.38. Natural gas, through UNG, was essentially unchanged to fractionally lower at 12.42 from 12.43. The diversified commodities proxy DBC ticked up to 23.875 from 23.80.
Rotation within energy equities, however, leaned constructive. XLE strengthened alongside selective gains in integrateds. Recent commentary has emphasized why the sector has led year-to-date. Whether that edge persists will depend on the interplay of geopolitical risk, supply discipline, and the trajectory of global growth. The equity market, for now, is giving energy the benefit of the doubt.
FX & crypto
In currencies, EURUSD hovered near 1.1846 within a tight intraday range. No directional shock emerged there to drive cross-asset volatility.
Crypto steadied after a bruising stretch. Bitcoin marked around 69,699, above its session open, while Ether was near 2,081, also above its open. That stabilization came as a major U.S. exchange highlighted a surprise quarterly loss and the sector juggled a temporary platform disruption, plus fresh discussion around prediction markets and new tax forms. Price action showed resilience, but equity proxies tethered to crypto had already repriced lower earlier in the week.
Notable headlines
- AI stress tests new corners of the market. Headlines chronicled a heavy session for a big networking incumbent after margin pressure tied to memory prices, while software remained under scrutiny. Meanwhile, a leading chip-equipment supplier projected more than 20% revenue growth this year on AI-driven capacity build. That divergence defined semis and tech hardware trading.
- Retail-advertising sensitivity stung a major social platform. Pinterest’s weak revenue outlook and tariff-linked advertiser pullback hit the stock hard, even with record user growth. The market’s message was simple: engagement without monetization leverage does not pay the bills.
- Streaming showed both sides of the volatility coin. Roku ripped after a record quarter for premium-subscription adds, while broader media and streaming narratives wrestled with M&A speculation and strategic pivots.
- Transportation and logistics absorbed an AI scare. Shares of a top freight broker suffered a historic drop as investors extrapolated automation risk, even as some analysts pushed back on the thesis. The move was sentiment, not a change in the company’s business overnight.
- Bonds rallied hard as equities buckled. Reports flagged the best day in months for long Treasurys as investors rotated toward safety. That aligned with the drop in the 10-year to roughly 4.09%.
- Policy and macro kept a low thrum of risk. Discussion ranged from AI’s potential footprint in policy settings to deficit trajectories and the prospect of a partial government shutdown, all providing a backdrop where gold and bonds looked useful.
Risks
- AI capex and disruption risk, especially for software, networking, and services exposed to automation headlines.
- Policy volatility, including the possibility of a partial U.S. government shutdown and evolving regulatory approaches to climate and autos.
- Deficit and supply risk in Treasurys, with new forecasts sharpening attention on long-term debt dynamics.
- Earnings concentration risk in megacap tech, where single-company headlines have outsized index impact.
- Inflation path uncertainty. January CPI nudged higher, and goods components like memory prices are moving sharply.
- Crypto market structure risk, from platform disruptions to tax and reporting changes that can affect flows.
What to watch next
- Retail read-throughs: Walmart reports its first quarter under a new CEO in the coming week. Consumer health and pricing commentary will set tone for staples and discretionary.
- Semiconductor follow-through: Does upbeat equipment guidance continue to offset hardware and software angst tied to AI costs and memory inflation?
- Long-end yields: After a strong rally in TLT and a 10-year near 4.09%, watch whether duration demand persists into the next data catalyst.
- Earnings volatility pockets: Options markets flagged outsized expected moves for names like Akamai, DoorDash, and Alibaba. Single-stock swings can spill into sectors.
- Energy’s staying power: With XLE climbing again, monitor crude proxies like USO and any supply headlines that could test sentiment.
- Crypto stabilization: After a surprise loss at a major exchange and brief trading interruptions, watch whether on-chain assets can build a base into next week.
- Defensives and metals: The pairing of XLU, XLV, and GLD strength often tracks volatility regimes. A sustained bid would confirm risk management is still in focus.
Equities detail
For context within widely held names, the last prints showed AAPL at 255.79 versus 261.73, MSFT at 401.16 from 401.84, NVDA at 182.79 from 186.94, GOOGL at 305.74 from 309.00, and META at 639.76 from 649.81. AMZN eased to 198.77 from 199.60. TSLA rose to 417.45 from 417.07.
Defensives and cyclicals mixed in some strength. UNH improved to 293.14 from 284.37. LLY and MRK posted gains, 1040.21 from 1038.27 and 121.41 from 119.24, respectively. CAT climbed to 774.66 from 758.29. Among energy majors, CVX rose to 183.73 from 182.40 while XOM dipped to 148.42 from 149.93. Financials were a mixed bag with GS at 904.93 from 904.55, BAC essentially flat at 52.52, and JPM at 302.52 from 302.64. In consumer, HD edged to 391.00 from 390.22, PG eased to 160.03 from 161.21, and media was split with NFLX up to 76.86 from 75.86 and DIS to 105.44 from 102.38 while CMCSA softened to 31.58 from 31.82.
The day’s character is rotation, not capitulation. Investors are still in the arena, but they are no longer crowd-surfing on one theme. In markets, that change in posture can last longer than the news cycle that prompted it.