Broader Market Falls Ahead of Wednesday’s US Jobs Report

The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.33%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.10%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.56%.  March E-mini S&P futures (ESH26) fell -0.30%, and March E-mini Nasdaq futures (NQH26) fell -0.50%.

Stock indexes gave up early gains on Tuesday and settled mixed, with the Dow Jones Industrials climbing to a new all-time high.  The broader market initially found support from Tuesday’s weaker-than-expected reports on Dec retail sales and the Q4 employment cost index, which knocked bond yields lower and reinforced the case for the Fed to resume its interest rate cuts this year.  The 10-year T-note yield fell to a 3.5-week low on Tuesday at 4.13%.

Gains in stocks were limited as US retail sales unexpectedly stagnated in December, suggesting some weakness in consumer spending.  Also, the weakness in retail sales could lead to a downward revision in Q4 GDP. 

Stock indexes fell back from their best levels on Tuesday and traded mixed after hawkish Fed comments dampened speculation of imminent Fed interest rate cuts. Cleveland Fed President Beth Hammack said, “Rather than trying to fine-tune the funds rate, I’d prefer to err on the side of patience as we assess the impact of recent rate reductions and monitor how the economy performs.  Based on my forecast, the Fed could be on hold for quite some time.” Also, Dallas Fed President Lorie Logan said it would take “material” weakness in the US labor market for her to support more interest rate cuts.

The US Q4 employment cost index rose +0.7% q/q, weaker than expectations of +0.8% q/q and the smallest increase in 4.5 years.

US Dec retail sales were unchanged m/m, weaker than expectations of +0.4% m/m.  Dec retail sales ex-autos were also unchanged m/m, weaker than expectations of +0.4% m/m.

The markets this week will focus on corporate earnings results and economic news.  On Wednesday, Jan nonfarm payrolls are expected to climb +68,000, and the Jan unemployment rate is expected to remain unchanged at 4.4%.  Also, Jan average hourly earnings are expected to rise by +0.3% m/m and +3.7% y/y.  On Thursday, initial weekly unemployment claims are expected to fall by -7,000 to 224,000.  Also, Jan existing home sales are expected to decline by -4.3% m/m to 4.16 million.  On Friday, Jan CPI is expected to be up +2.5% y/y, and Jan core CPI is expected to be up +2.5% y/y.

Q4 earnings season is in full swing, as more than half of the S&P 500 companies have reported earnings results.  Earnings have been a positive factor for stocks, with 78% of the 319 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 23% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets settled mixed on Tuesday.  The Euro Stoxx 50 fell from a new record high and closed down -0.20%.  China’s Shanghai Composite rose to a 1-week high and closed up +0.13%.  Japan’s Nikkei Stock 225 rallied to a new all-time high and closed up sharply by +2.28%.

Interest Rates

March 10-year T-notes (ZNH6) on Tuesday closed up by +10.5 ticks.  The 10-year T-note yield fell -6.1 bp to 4.141%.  Mar T-notes rallied to a 1-month high on Tuesday, and the 10-year T-note yield fell to a 3.5-week low of 4.133%.  T-notes found support on Tuesday’s weaker-than-expected reports on the Q4 employment cost index and Dec retail sales, which were dovish for Fed policy.  T-notes maintained their gains on strong demand for the Treasury’s $58 billion auction of 3-year T-notes that had a bid-to-cover ratio of 2.62, above the 10-auction average of 2.61.

European government bond yields moved lower on Tuesday.  The 10-year German bund yield fell to a 1-month low of 2.800% and finished down -3.2 bp to 2.808%.  The 10-year UK gilt yield fell to a 2-week low of 4.485% and finished down by -2.1 bp to 4.506%.

An ECB blog post today said that lower interest rates can reduce the drag on inflation and economic growth caused by higher US tariffs. 

ECB Vice President Luis de Guindos said, “We believe that risks are balanced and the current level of interest rates is appropriate in the Eurozone.”

Swaps are discounting a 2% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

AI-infrastructure stocks were under pressure on Tuesday, weighing on the broader market.  Western Digital (WDC) closed down more than -7% to lead losers in the Nasdaq 100.  Also, Seagate Technology Holdings Plc (STX) and Intel (INTC) closed down more than -6%, and Micron Technology (MU) closed down more than -2%.  In addition, Advanced Micro Devices (AMD), ASML Holding NV (ASML), Broadcom (AVGO), and Lam Research (LRCX) closed down more than -1%.

Wealth-management stocks tumbled on Tuesday after an AI tool unveiled by Altruist Corp that helps financial advisers personalize strategies for clients and create documents sparked concerns that AI could disrupt the financial advice and wealth-management model.  Raymond James Financial (RJF) and LPL Financial Holdings (LPLA) closed down more than -8%.  Also, Charles Schwab (SCHW) closed down more than -7%, and Stifel Financial (SF) closed down more than -4%.

Homebuilding stocks and building suppliers moved higher on Tuesday after the 10-year T-note yield dropped to a 3.5-week low, which lowers mortgage rates and supports housing demand.  Toll Brothers (TOL) closed up more than +6%, and D.R. Horton (DHI) and KB Home (KBH) closed up more than +5%.  Also, Lennar (LEN) closed up more than +4%, and PulteGroup (PHM) and Builders FirstSource (BLDR) closed up more than +3%. 

Goodyear Tire & Rubber Co (GT) closed down more than -14% after reporting Q4 adjusted EPS of 39 cents, below the consensus of 49 cents. 

Amentum Holdings (AMTM) closed down more than -12% after reporting Q1 revenue of $3.24 billion, below the consensus of $3.32 billion. 

S&P Global Inc (SPGI) closed down more than -9% to lead losers in the S&P 500 after forecasting full-year adjusted EPS of $19.40 to $19.65, weaker than the consensus of $20.00. 

Incyte (INCY) closed down more than -8% after forecasting dull-year total net product revenue of $4.77 billion to $4.94 billion, the midpoint below the consensus of $4.87 billion.

Xylem Inc (XYL) closed down more than -7% after forecasting 2026 revenue of $9.1 billion to $9.2 billion, below the consensus of $9.33 billion. 

WESCO International (WCC) closed down by more than -5% after reporting Q4 adjusted EPS of $3.40, weaker than the consensus of $3.88. 

Ichor Holdings Ltd (ICHR) is up more than +34% after forecasting Q1 adjusted EPS of 8 cents to 16 cents, well above the consensus of 6.1 cents.

Spotify (SPOT) is up more than +17% after reporting a record 38 million monthly active users in Q4, well above the consensus of 32 million. 

Datadog (DDOG) is up more than +15% to lead gainers in the S&P 500 and Nasdaq 100 after reporting Q4 revenue of $953.2 million, stronger than the consensus of $917.2 million. 

Credo Technology Group Holding Ltd (CRDO) is up more than +10% after forecasting preliminary Q3 revenue of $404 million to $408 million, well above the consensus of $341.2 million. 

Masco (MAS) is up more than +9% after forecasting full-year adjusted EPS of $4.10 to $4.30, the midpoint above the consensus of $4.19. 

Marriott International (MAR) is up more than +8% after forecasting 2026 adjusted EPS of $11.32 to $11.57, the midpoint above the consensus of $11.42. 

Shopify (SHOP) is up more than +8% after ATB Capital upgraded the stock to outperform from sector perform with a price target of $250.

Cintas (CTAS) is up more than +2% after Bloomberg reported that UniFirst Corp. is in active discussions to be acquired by Cintas.

Earnings Reports(2/11/2026)

Albemarle Corp (ALB), Ameren Corp (AEE), AppLovin Corp (APP), Cisco Systems Inc (CSCO), Equinix Inc (EQIX), Generac Holdings Inc (GNRC), Hilton Worldwide Holdings Inc (HLT), Humana Inc (HUM), International Flavors & Fragrances (IFF), Kraft Heinz Co/The (KHC), Martin Marietta Materials Inc (MLM), McDonald’s Corp (MCD), Motorola Solutions Inc (MSI), NiSource Inc (NI), Paycom Software Inc (PAYC), Rollins Inc (ROL), Shopify Inc (SHOP), Smurfit Westrock PLC (SW), T-Mobile US Inc (TMUS), Westinghouse Air Brake Technol (WAB).