Overview
The tape is tilting risk-on at midday, and it is tech doing the heavy lifting. Broad benchmarks are higher with SPY, QQQ, and DIA all in the green, while small caps, via IWM, lag but still edge up. The leadership is narrow, the pattern familiar. Big platforms and AI-linked names are attracting flows, even as the macro backdrop looks a touch tighter.
Under the surface, two crosscurrents are obvious. First, rates have edged up across the curve since midweek, and long-duration bonds are bleeding. Second, haven appetite is crowding into metals, with gold and silver pressing higher, while crude, after a pop on geopolitical risk earlier in the week, is giving some back today. That disconnect stands out and it matters.
Into the afternoon, investors are juggling a hawkish-leaning Fed minutes, strong jobless-claims signals, and a flurry of trade-policy headlines, including a Supreme Court ruling complicating tariffs. Add fresh signs of AI capex commitment, and the result is a market leaning into growth stories while trimming exposures that need a weaker-dollar or lower-yield tailwind.
Macro backdrop
Rates have firmed since Tuesday. The 10-year sits near 4.09%, up from roughly 4.05% the prior day, with the 2-year around 3.47% and the 30-year near 4.71%. The curve is still kinked, but the takeaway is straightforward: the market is nudging term premia higher and testing risk appetite in the rate-sensitive corners. That aligns with the Fed minutes that entertained the possibility of a rate hike if inflation fails to cool, a line that keeps the ceiling in focus even if the consensus path is “long hold, then optional cuts.”
On prices, the latest readings keep the narrative muddled. Headline CPI and core CPI in early 2026 are elevated relative to pre-pandemic norms, and reporting around the Fed’s preferred gauge pointed to price growth running close to 3% last year. Inflation expectations models cluster in the mid-2s across one to ten years, which helps the case for patience but not complacency. In short, the Fed can wait. Markets, less so.
Growth signals are mixed. A recent look-back on 2025 GDP shows a 2.2% full-year expansion with a weather-and-shutdown-bent soft patch in Q4. Jobless claims fell to the lowest level of the year, hinting the labor market remains resilient. Meanwhile, S&P’s survey work flagged a February chill from Winter Storm Fern and tariff-linked price bumps. That cocktail keeps consumption steady enough for earnings while preserving the debate over margins if input costs flare again.
Trade policy is another wild card. The Supreme Court’s curbs on tariff authority, and the potential for hefty refund liabilities, cloud the path forward. Even if alternative legal levers exist, companies must now handicap what gets unwound and on what timeline. That introduces uncertainty into pricing plans, inventory decisions, and capital allocation just as supply chains had begun to normalize.
Equities
Indexes show a classic growth-led advance. SPY trades above its prior close, QQQ outperforms, and DIA grinds higher. The small-cap proxy IWM is positive but lags, a sign that quality balance sheets and secular growth are drawing incremental dollars while cyclicals take cues from firmer yields and the trade-policy fog.
Within megacap tech, the bid is visible. AAPL rises, MSFT edges up, and NVDA advances. GOOGL is the standout, jumping sharply, and META rallies as well. AMZN gains. The narrative thread is consistent with the week’s news flow: hyperscalers and platforms are reinforcing multi-year AI spend, whether through chip commitments or ecosystem investments. That augments a “strong get stronger” tone and concentrates leadership even as broader participation remains hesitant.
TSLA is modestly lower midday. Counterintuitively, defensives are mixed. Household and personal care via PG is up, but healthcare heavyweights such as JNJ, PFE, LLY, MRK, and UNH are softer. That divergence telegraphs allocation decisions that favor cash-generative consumer stalwarts over policy-sensitive health names on a day when inflation and rate chatter is loud.
Financials are split. JPM and GS tilt higher, while BAC is slightly lower. The sector’s intraday path looks like a function of curve dynamics and credit sentiment: higher long-end yields can aid net interest margins at the margin, but any whiff of macro slowing tempers that enthusiasm quickly.
Energy is the weak link. XOM and CVX slip alongside an oil ETF pullback, a notable reversal from earlier in the week when geopolitical risk put a bid under crude. Defense is mixed, with LMT and NOC lower while RTX holds a fractional gain.
Sectors
Sector rotation is clear, if not broad. Technology, represented by XLK, leads with a healthy advance. Consumer discretionary via XLY is positive, echoing the strength in high-traffic platforms. Industrials, tracked by XLI, are modestly higher, while financials, XLF, are essentially flat to slightly up.
On the back foot, healthcare XLV is lower and staples XLP are softer. Energy XLE is down despite elevated geopolitical risk, which hints at position squaring after a run and skepticism that supply disruptions will materialize imminently. Utilities XLU are higher, an unusual pairing with rising yields that signals some defensive hedging mixed into today’s growth chase.
- Leaders: XLK, XLY, XLI, XLU
- Laggards: XLE, XLV, XLP
That pattern, tech up with energy and healthcare down, reads like investors are endorsing secular growth while fading cyclical and reimbursement risk. It also underscores a concentration risk that has defined much of the past year: when tech runs, the index can levitate even if participation is patchy.
Bonds
The Treasury complex looks heavy. With the 10-year drifting near 4.09% and the long bond close to 4.71%, price action in duration is soft. That shows up directly in ETFs, where TLT is down and IEF is lower. Short paper is stable, with SHY a hair higher. The message from fixed income is that the “higher for longer” drumbeat is still audible, and any near-term cut hopes remain a story for later in the year, contingent on further disinflation.
Importantly, inflation expectations models nestled between roughly 2.3% and 2.6% reinforce that long-run credibility is intact. That allows equities to look through some of today’s rate pressure, but it also caps how far duration can rally without harder evidence of a downshift in core prices.
Commodities
Metals are where the heat is. GLD is sharply higher and SLV is jumping even more in percentage terms. The bid makes sense against two backdrops: geopolitical stress that keeps insurance premium in the tape and a policy environment where the next big move is not guaranteed to be an immediate cut. Even modest rate firmness has not dislodged the haven flow, which says a lot about positioning and psychology.
Crude has cooled. USO is lower midday, a reversal from the six-month highs flagged earlier this week as U.S.-Iran tensions escalated and traders war-gamed supply disruption scenarios. Today’s giveback looks like a classic “buy-the-rumor, fade-the-pop” sequence after the geopolitical spike, with the market reluctant to price in a direct hit to physical supply before policy actions are clearer.
The broader commodity basket, via DBC, is up, helped by metals strength. Natural gas, tracked by UNG, is higher as well, a reminder that winter weather and storage dynamics can still stir that market even when crude is directionless.
FX & crypto
Currency markets have leaned toward a firmer dollar this week, a theme highlighted by analysis pointing to multi-week strength. Midday, EUR/USD hovers near 1.178. Without a direct day-over-day print, the takeaway is simply that the foreign exchange tape is not bailing out U.S. multinationals, which makes today’s tech-led rally more notable on its own merits.
Crypto is steady to firmer. Bitcoin marks around 67,700 intraday with a session range that cleared 68,000, and Ethereum trades near 1,967 after pushing above 1,980. The tone is calm, risk-on adjacent rather than euphoric, which mirrors the equity session’s preference for large, liquid vehicles over speculative tails.
Notable headlines
- Policy and trade: The Supreme Court curbed the administration’s tariff authority, and estimates suggest potential tariff refunds could run north of $175 billion. The ruling injects uncertainty into pricing power and supply-chain planning, even if alternative authorities remain on the table.
- Fed signaling: Minutes from the January meeting included discussion of a possible rate hike if inflation fails to cool. That hawkish risk skew keeps a lid on duration and explains why long bonds are heavy despite steady inflation expectations.
- Commodities and geopolitics: Reporting highlighted a six-month high in Brent and a midweek oil jump tied to U.S.-Iran tensions. Today’s crude pullback, with USO lower, looks like digestion rather than a regime change.
- Gold’s momentum: A push back above big round-number levels in bullion has been a recurring theme this week. With GLD and SLV both up sharply, the haven trade is asserting itself.
- AI spend cadence: Meta’s multibillion-dollar commitment to Nvidia gear underscored ongoing AI infrastructure investment, helping sentiment in NVDA and peers, and fueling the megacap-led tone midday.
Risks
- Policy ambiguity around tariffs and potential refund liabilities that complicates corporate pricing and inventory decisions.
- Sticky inflation prints that keep the Fed leaning hawkish, pressuring long-duration assets.
- Escalation in Middle East tensions that forces a sustained crude supply premium rather than a headline-driven spike.
- Concentration risk as leadership narrows to AI-adjacent megacaps, increasing fragility to single-stock or single-theme shocks.
- Labor-market resilience that extends the “higher for longer” rate path and compresses multiples at the index level.
What to watch next
- Bond market reaction into the close with 10-year near 4.09% and the long bond around 4.71%. Further backup could challenge equity multiples even with strong tech flows.
- Follow-through in XLK leadership versus breadth measures. A durable rally needs participation beyond a handful of megacaps.
- Energy’s response after today’s pullback in USO. Whether XLE stabilizes will signal how traders handicap geopolitical risk from here.
- Healthcare stabilization with XLV down. If the group continues to lag while defensives like PG rise, expect the market to lean more heavily on secular growth to carry the tape.
- Gold’s bid as GLD and SLV charge higher. Sustained inflows would confirm a broader risk-hedging posture.
- Any fresh trade-policy guidance after the tariff ruling. Corporate commentary could hint at pass-through decisions and inventory adjustments.
- High-frequency labor and inflation indicators for confirmation that expectations around mid-2% inflation are holding.
Equities detail and sector color
Tech strength is not abstract today. GOOGL is powering ahead, and NVDA is higher on the heels of reports that reinforce multi-year AI infrastructure demand from hyperscalers. META is up, aided by the same theme of scale and spend. MSFT grinds higher, and AAPL participates, keeping QQQ well bid.
Consumer platforms are split but biased higher. AMZN advances as retail, ads, and cloud continue to anchor its diversified profit engine. NFLX is also higher midday. Elsewhere in discretionary, TSLA slips slightly, a reminder that not every growth story is moving in lockstep even on a risk-on day.
Within defensives, staples are mixed as noted, but PG is up, providing ballast to investors wary of rate sensitivity. The divergence with healthcare is instructive: JNJ, PFE, LLY, and MRK are all lower, and managed care via UNH is down too. The group looks like a source of funds today.
Industrials are mixed. CAT is little changed to slightly lower, while defense contractors trade unevenly with LMT and NOC down and RTX slightly higher. The market is not leaning into geopolitically sensitive exposure beyond metals hedges.
Energy weakness is the clearest outlier. XOM and CVX are both down with XLE underperforming. The sector had an opportunity to extend on crude’s spike, and the failure to do so flags skepticism that the situation will evolve into a sustained supply event.
Bonds and the policy channel
The translation from policy to pricing is direct today. With policymakers signaling readiness to push if inflation re-accelerates, the term structure is absorbing a bit more premium. TLT and IEF are down, while SHY is flat to slightly up as front-end rates stay anchored. Equities can live with this backdrop as long as growth remains decent and expectations remain well behaved. If yields lurch higher from here, duration-sensitive corners will feel it quickly.
Commodities nuance
Today’s split screen in commodities deserves emphasis. Precious metals are surging, with GLD and SLV outperforming. Oil, via USO, is off, despite a week of headlines that ordinarily would keep a bid under crude. The message: traders are buying insurance against policy and geopolitical tail risks via metals, but they are unwilling to price a supply shock as a base case in energy.
Natural gas’s bounce via UNG is a reminder that weather and regional balances can still matter in February even when the broader macro conversation is dominated by rates and AI.
FX and crypto check-in
FX tells a quiet but important story. EUR/USD near 1.178 does not hand a clear tailwind to multinationals or commodities. Earlier in the week, analysis pointed to a stronger dollar tone, which fits with rising U.S. yields. Today’s risk bid is therefore coming from equities themselves rather than currency translation effects.
Bitcoin and Ethereum are firm within their session ranges. The lack of a dramatic impulse from crypto underscores how equity leadership has refocused on cash-flowing growth rather than speculative froth. That is a healthier construction for now.
Bottom line
Midday belongs to tech and to the metals. Rates are firmer, bonds are struggling, and energy cannot hang onto its geopolitical premium. The market is rewarding scale, balance sheets, and the AI capex path while trimming exposures that need cheaper money or immediate demand catalysts. If that sounds familiar, it is. The cycle keeps returning to the same playbook until something forces it to change.