Daily market snapshot

Thursday, 2/5/2026 p.m.

• Markets finish lower on continued tech weakness – Equity markets closed lower on Thursday, led by declines in materials and consumer discretionary stocks*, indicating a risk-off tone. Cryptocurrencies also traded sharply lower, with bitcoin falling below $64,000, nearly 50% off its all-time high just four months ago*. Bond yields declined, with the 10-year Treasury yield at 4.19%*. In international markets, Asian equities finished lower overnight, led to the downside by South Korea's technology-heavy Kospi index*. European markets were also down after the European Central Bank held its policy rate steady at 2.0%, as expected*. The U.S. dollar advanced versus major currencies*. In commodities, WTI oil pulled back, as the U.S. and Iran agreed to hold talks this Friday*, likely easing near-term supply concerns.
   
• Solid earnings season continues – Fourth-quarter earnings season is in full swing, as Magnificent 7 company Alphabet (Google) reported results after yesterday's market close that beat estimates*. However, the company's shares traded lower today after management raised its outlook for 2026 capital expenditures to $175 billion-$185 billion, well above forecasts of about $115 billion*. More broadly, earnings have been strong relative to expectations. With just over half of S&P companies having reported, 79% have beaten estimates, with an average upside surprise of 8.2%*. As a result, earnings growth estimates have risen to 11.4%, from 7.2% at the end of the quarter*. Earnings growth is expected to be broad-based as well, with eight of the 11 sectors forecast to report higher earnings*. We expect expansive earnings growth to support a broadening of market leadership. Robust profit growth is expected to accelerate through 2026, with estimates calling for a roughly 14% rise in earnings*. With valuations elevated relative to history*, we believe continued earnings growth will be a key element for further stock‑market gains. We believe opportunities in equities remain favorable, and we recommend a globally diversified approach to overweighting stocks relative to bonds. We see opportunities in U.S. large- and mid-cap stocks, developed international small- and mid-cap stocks, and emerging-market equities.
   
• Jobless claims edge higher – Initial jobless claims rose to 231,000 this past week — above expectations to hold roughly flat at 210,000*. Weekly readings can be volatile and not necessarily reflective of broader trends. Weekly jobless claims are averaging about 211,000 so far this year, still below last year's average of 226,000*. In addition, severe winter storms that affected a large area of the country in late January that disrupted business activity may have boosted claims*. Continuing claims, which measure the total number of people receiving benefits, increased to 1.84 million, in line with forecasts*. Job openings contracted to 6.5 million in December, compared with unemployment of 7.5 million*. We believe these data remain broadly consistent with the recent low-hiring, low-firing backdrop of recent months. We expect these labor-market conditions to persist in the near term, helping support gradual inflation moderation.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet}

Wednesday, 2/4/2026 p.m.

• Rotation away from technology continues – U.S. equity markets were mixed on Wednesday, with the Dow Jones positive, while the S&P 500 and technology-heavy Nasdaq were negative. From an S&P 500 sector perspective, leaders included energy and materials, while technology and communication sectors underperformed*. Markets continue to show signs of rotation, with investors moving away from tech and growth stocks, particularly AI and software names, and into more cyclical and defensive parts of the market*. Meanwhile, developed international and emerging-market equities continue to outpace U.S. markets, with the MSCI EAFE up about 5% and MSCI EM indexes up about 9% this year in USD terms*. Precious metals were also mixed, with spot gold lower while silver was higher on the day, although both are up over 14% for the year*. In our view, investors seem to be seeking exposure to parts of the market that have better valuations and some safe-haven potential. We believe the theme of portfolio diversification, across sectors, asset classes, and regions, remains prudent for investors in the year ahead.
   
• ISM services data points to expansion – Following the upside surprise in the U.S. ISM Manufacturing index earlier this week, the ISM Services index also delivered solid results on Wednesday. The index came in at 53.8 for January, in line with estimates of 53.5, and indicating an expansion in the services sector*. The forward-looking new orders component also was a healthy 53.1, although slightly below forecasts of 55.0*. Overall, the U.S. economy is largely driven by the services economy, which makes up about 75% of GDP*. An ongoing expansion in the services sector, combined with a rebounding manufacturing sector, in our view, underscores that the U.S. economy remains on pace for potentially above-trend growth, with few signals of downturn or recession in the data.
   
• Earnings season rolls on – Earnings remain in focus this week, with more than 100 S&P 500 companies scheduled to report, headlined by Alphabet (Google) on Wednesday and Amazon on Thursday.* With nearly 48% of the index having reported, results have been strong: fourth-quarter S&P 500 earnings are now expected to grow roughly 12%, up from about 7% at the start of the year.* Technology has been a key driver, with the sector on track for nearly 30% earnings growth in the fourth quarter.* Looking to 2026, earnings growth is expected to remain healthy, with forecasts calling for more than 14% growth for the S&P 500 and positive growth in every sector except energy.* In our view, a supportive macroeconomic backdrop should help set the stage for another year of solid profit growth and positive equity-market returns. We believe opportunities in equities remain favorable, and we recommend a globally diversified approach to overweighting stocks relative to bonds. We see opportunities in U.S. large- and mid-cap stocks, developed international small- and mid-cap stocks, and emerging-market equities.

Mona Mahajan;
Investment Strategy

^{Source: *FactSet}

Tuesday, 2/3/2026 p.m.

• Stocks trade lower on tech weakness – S. equity markets closed lower on Tuesday, with weakness in technology weighing on performance.* Software was a particular area of weakness within the technology sector, as concerns continue to grow that advances in AI models could erode market share for existing software companies.* AI spending trends are likely to remain in focus in the days ahead, with Alphabet (Google) reporting tomorrow and Amazon on Thursday.* Outside of technology, cyclical sectors such as energy and materials outperformed alongside the defensive consumer staples and utilities sectors.* Overseas, Asian markets closed higher overnight, led by a nearly 4% gain in Japan’s Nikkei, while European markets were little changed.* Bond yields were roughly flat, with the 10-year U.S. Treasury yield closing around 4.27% and the 2-year at 3.57%.* In Washington, the U.S. House of Representatives voted to pass legislation that will fund five of the six agencies whose funding lapsed over the weekend and extend Department of Homeland Security funding for two weeks to allow negotiations to continue.*
   
• Earnings take the spotlight – Earnings remain in focus this week, with more than 100 S&P 500 companies scheduled to report, headlined by Alphabet (Google) tomorrow and Amazon on Thursday.* With nearly 40% of the index having reported, results have been strong: fourth-quarter S&P 500 earnings are now expected to grow roughly 10%, up from about 7% at the start of the year.* Technology has been a key driver, with the sector on track for nearly 30% earnings growth in the fourth quarter.* Looking to 2026, earnings growth is expected to remain healthy, with forecasts calling for more than 14% growth for the S&P 500 and positive growth in every sector except energy.* In our view, a supportive macroeconomic backdrop should help set the stage for another year of solid profit growth and positive equity-market returns. Yesterday’s ISM Manufacturing PMI rose to its highest level since August 2022, potentially signaling improvement in the U.S. manufacturing sector after the index spent most of the past three years in contraction.* In addition, we expect incremental support for U.S. consumers this year from higher tax refunds related to tax legislation passed in 2025. Against this backdrop, we believe opportunities in equities remain favorable, and we recommend a globally diversified approach to overweighting stocks relative to bonds. We see compelling opportunities in U.S. large- and mid-cap stocks, developed international small- and mid-cap stocks, and emerging-market equities.
   
• What's in a start? – Despite recent headlines, the S&P 500 gained 1.4% in January and is up about 16% over the past 12 months.* Historically, a positive January has been a bullish signal for full-year returns. Since 1970, the S&P 500 has posted a positive January in 33 years (59% of the time).* In those years, the index’s average full-year return was 16.4%, with gains in 29 of 33 years (88% of the time).** By contrast, in the 23 years with a negative January, the average full-year return was -0.68%, with gains in only 12 of 23 years (52% of the time).** While there is no guarantee that history will repeat in 2026, we believe a healthy macroeconomic backdrop and strong corporate profit growth help support the case for further equity-market gains over the course of the year.

Brock Weimer, CFA;
Analyst – Investment Strategy

^{Source: *FactSet **FactSet, Edward Jones, S&P 500 Price Index.}

Monday, 2/2/2026 p.m.

• Partial government shutdown in effect – A partial government shutdown took effect Saturday morning, as funding bills for six federal agencies have yet to be signed into law.** The Senate passed a bipartisan bill Friday night to fund five of the six agencies for the full year, while extending funding for the Department of Homeland Security for two weeks to allow for further negotiations.** However, the bill will still need approval by the House of Representatives, with a vote expected to take place tomorrow.* U.S. equity markets took the news in stride, with all three major averages trading higher on Monday, supported by a better-than-expected ISM Manufacturing PMI reading for January.* The upbeat PMI reading also put modest upward pressure on bond yields, with the 10-year Treasury yield rising to 4.28% while the ICE U.S. dollar index advanced by roughly 0.7%.*
  
  The shutdown will create temporary disruptions across the affected agencies, with some federal employees furloughed for the duration of the shutdown. However, furloughed workers will receive back pay once funding resumes, thanks to the Government Employee Fair Treatment Act of 2019. Importantly, a shutdown does not affect the government’s ability to service its debt, and Social Security payments will continue. A unique aspect of the current shutdown is that it is occurring at the start of tax season, which could delay return processing and refunds—an area of particular focus for 2026, as household refunds are expected to rise due to tax legislation passed in 2025.*** Additionally, a prolonged shutdown could delay key economic releases—such as labor-market and inflation reports—as they were last fall. The Bureau of Labor Statistics announced today that the shutdown will delay the release of tomorrow’s JOLTS report as well as Friday’s Employment Situation report.*
  
  While disruptive, the effects of government shutdowns are typically temporary. During the most recent shutdown, the Congressional Budget Office estimated that the lapse reduced fourth-quarter real GDP growth by roughly 1.5 percentage points, though it also projected that activity would rebound in subsequent quarters as federal spending resumes and employees receive back pay.*** While there are no guarantees in Washington, early reports suggest the funding bill passed by the Senate on Friday could move quickly through the House, helping to avert another prolonged shutdown and limiting the economic impact, in our view.
   
• Market and economic impact of government shutdowns – Unfortunately, government shutdowns have become far too common, with three occurring over the past decade and 21 since 1976.** While shutdowns can create temporary disruptions, financial markets have tended to look through them. During the most recent shutdown—the longest on record at 43 days—the S&P 500 rose 2%, the 10-year Treasury yield was little changed (rising from 4.1% to 4.14%), and the U.S. dollar index increased by about 0.7%.* From an economic perspective, shutdowns tend to slow activity during the funding lapse, followed by a rebound in subsequent months. The Congressional Budget Office estimates that the 2025 shutdown reduced fourth-quarter annualized GDP growth by roughly 1.5 percentage points; however, a recent string of strong economic data suggests fourth-quarter growth remained robust, with the Atlanta Fed’s GDPNow tracker indicating growth of more than 4%.*
   
• Action for investors – The partial government shutdown does not alter our outlook for markets or the economy over the coming year. We continue to believe that a healthy global macroeconomic backdrop creates an attractive environment for stocks, and we maintain our overweight recommendation to equities relative to bonds. Within equities, we find U.S. large- and mid-cap stocks particularly attractive, supported by strong AI-related investment trends and resilient economic activity. In our view, the U.S. economy is also likely to receive incremental support from last year’s tax legislation during the first half of the year. Internationally, we view developed small- and mid-cap stocks and emerging-market equities as attractive opportunities as well. These segments may benefit from steady global growth and strong equity-market momentum in technology-heavy emerging-market regions. From a planning perspective, because we expect the shutdown to be short-lived, we don't anticipate meaningful financial-planning implications.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **Committee for a Responsible Federal Budget ***Congressional Budget Office}

Friday, 1/30/2026 p.m.

• Markets mixed after Fed chair announcement – President Trump has announced that he will nominate Kevin Warsh to be the next Fed chair*. The U.S. dollar moved higher after the news*, with Warsh's experience at the Fed, and hawkish stance on inflation in the past, boosting his credibility with investors, in our view. Reactions in the bond market were mixed, with shorter-dated U.S. Treasuries posting a small rally, although longer-maturity bonds were a touch softer, potentially reflecting concerns that Warsh might push to lower the Fed's holdings of government bonds*. Finally, an initial sell-off in equity markets picked up momentum over the day, with investors likely questioning the timing and extent of interest-rate cuts under Warsh's leadership of the Fed*. Against this backdrop, interest-rate-sensitive small-cap equities were among the worst performers, with the Russell 2000 finishing 1.6% lower, while the S&P 500 index dipped 0.5%. Elsewhere, commodities continue to exhibit significant volatility, with today's rebound in the dollar contributing to large declines in gold (9%) and silver prices (28%)*. WTI crude continues to move higher, rising to $66 a barrel amid escalating geopolitical tensions between the U.S. and Iran*.
   
• Warsh brings experience to the Fed – Kevin Warsh served on the Fed Board between 2006 and 2011 and his banking sector experience was seen as important in helping the Fed develop its emergency toolkit at the peak of the financial crisis*. Warsh was hawkish on inflation risks during this term, arguing for higher interest rates even amid painfully high unemployment after the financial crisis*. This stance seems to have softened in recent times, with Warsh lately making a case for lower interest rates, in part due to optimism that AI will raise potential growth and cool inflation*. For the time being, the FOMC looks happy to leave rates on hold, but Warsh could build consensus to ease policy later this year should inflation start to slow, and we expect one or two more rate cuts from the Fed*. Otherwise, Warsh opposed Fed purchases of government bonds after the financial crisis and maintains this view that the central bank should not hold large quantities of government securities*. In practice, shrinking the Fed's balance sheet could be challenging given that the withdrawal of this liquidity might spark volatility in short-term money markets, in our view.
   
• Don't lose track of fundamentals – Markets are naturally focused on the Fed chair announcement and what this might mean for U.S. monetary policy. However, we will only get a true sense of Warsh's views, leadership style, and influence over the Fed when he takes up his position in the summer, in our view. Moreover, we think that the growth and inflation backdrop will remain critical in determining the Fed's next steps. This morning's PPI data for December pointed to some ongoing pipeline pressure from tariffs in segments of goods prices, and suggest that firms are becoming more inclined to pass these on to consumers to protect margins*, both of which point to continued short-term inflation pressures, in our view. Meanwhile, earnings season remains in full swing, with markets focusing on signals around AI investment from the mega-cap technology companies and the health of earnings across broader swaths of the economy*. Finally, the government is on track to shutdown tomorrow, although signs of a deal between President Trump and Democrats suggests this is likely to be short lived, in our view*. While the news flow has been relentless, we remain focused on the fundamentals around growth and corporate earnings and continue to favor a diversified exposure to U.S. large-cap and mid-cap equities, international mid- and small-cap equities, and emerging-market stocks too.

James McCann;
Investment Strategy

^{Source: *Bloomberg}