Rotation out of Tech Stocks Weighs on the Broader Market

The S&P 500 Index ($SPX) (SPY) today is down -0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.05%.  March E-mini S&P futures (ESH26) are down -0.16%, and March E-mini Nasdaq futures (NQH26) are down -1.10%.

Stock indexes are mixed today, with the Nasdaq 100 falling to a 2-week low.  Investor rotation out of high-flying chipmakers and AI-infrastructure stocks today is weighing on the broader market.  Corporate earnings results today are mixed for stocks.  Super Micro Computer is up more than +13% after forecasting Q3 net sales well above expectations.  However, Advanced Micro Devices is down more than -15% after analysts said the company’s Q1 sales forecast was seen as weak.

Today’s US economic news was mixed for stocks.  The Jan ADP employment change rose by +22,000, below expectations of +45,000.  Conversely, the Jan ISM services index was unchanged at 53.8, stronger than expectations of a decline to 53.5.

Market sentiment improved today, following the end of the partial US government shutdown after President Trump signed a deal late Tuesday to fund the government.  The funding package only funds the Department of Homeland Security through February 13, while the rest of the government is funded through September 30, the end of the fiscal year.   

The Treasury today announced that next week’s quarterly refunding will total $125 billion in sales of T-notes and T-bonds, right on expectations, and said it anticipates keeping auction sizes unchanged for nominal notes, bonds, and floating-rate notes “for at least the next several quarters.”

US MBA mortgage applications fell -8.9% in the week ended January 30, with the purchase mortgage sub-index down -14.4% and the refinancing sub-index down -4.7%.  The average 30-year fixed rate mortgage fell -3 bp to 6.21% from 6.24% in the prior week.

The markets this week will focus on earnings and economic news. On Thursday, initial weekly unemployment claims are expected to increase by 3,000 to 212,000.  On Friday, the University of Michigan Jan consumer sentiment index is expected to fall -1.4 to 55.0.   

Q4 earnings season is in full swing, with 150 of the S&P 500 companies scheduled to report earnings this week.  Earnings have been a positive factor for stocks, with 80% of the 195 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 10% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up by +0.23%.  China’s Shanghai Composite closed up +0.85%.  Japan’s Nikkei Stock 225 closed down -0.78%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -2 ticks.  The 10-year T-note yield is up +1.0 bp to 4.276%.   T-notes are slightly lower today due to the stronger-than-expected Jan ISM services report.  Also, supply pressures should limit the near-term upside in T-notes as the Treasury will auction $125 billion of T-notes and T-bonds in next week’s quarterly refunding.  Losses in T-notes are limited after today’s Jan ADP report showed US companies added fewer jobs than expected, a dovish factor for Fed policy.

T-notes also have some negative carryover from last Friday when President Trump nominated Keven Warsh as the next Fed Chair.  Mr. Warsh is seen as more hawkish than other Fed Chair candidates and often emphasized inflation risks during his tenure as a Fed Governor from 2006-2011.

European government bond yields are mixed today.  The 10-year German bund yield is down -2.4 bp to 2.867%. The 10-year UK gilt yield is up +2.3 bp to 4.540%.

The Eurozone Jan core CPI was revised downward by -0.1 to +2.2% y/y from the previously reported +2.3% y/y, the smallest pace of increase in four years.

The Eurozone Jan S&P composite PMI was revised downward by -0.2 to 51.3 from the previously reported 51.5.

Eurozone Dec PPI fell -0.3% m/m and -2.1% y/y, right on expectations, with the -2.1% y/y fall the steepest year-over-year decline in 14 months.

Swaps are discounting a 1% chance of a +25 bp rate hike by the ECB at Thursday’s policy meeting.

US Stock Movers

Chip makers and AI-infrastructure stocks are falling today, weighing on the broader market.  Advanced Micro Devices (AMD) is down more than -14% to lead losers in the Nasdaq 100 after forecasting Q1 sales of $9.8 billion, plus or minus $300 million, below some projections of around $10 billion.  Also, Sandisk (SNDK) is down more than -9%, and Micron Technology (MU) and Western Digital (WDC) are down more than -7%.  In addition, Lam Research (LRCX) is down more than -5%, and Seagate Technology Holdings Plc (STX) and Applied Materials (AMAT) are down more than -4%.  Finally, ASML Holding NV (ASML) and Broadcom (AVGO) are down more than -2%. 

Cryptocurrency-exposed stocks are under pressure today with Bitcoin (^BTCUSD) down by more than -3%.  Riot Platforms (RIOT) is down more than -9%, and MARA Holdings (MARA) is down more than -6%. Also, Strategy (MSTR) and Galaxy Digital Holdings (GLXY) are down by more than -5%, and Coinbase (COIN) is down by more than -4%.

Boston Scientific (BSX) is down more than -15% to lead losers in the S&P 500 after forecasting full-year adjusted EPS of $3.43 to $3.49, the midpoint below the consensus of $3.47.

Cencora Inc (COR) is down more than -7% after reporting Q1 revenue of $85.93 billion, below the consensus of $86.18 billion. 

T Rowe Price Group (TROW) is down more than -6% after reporting Q4 adjusted EPS of $2.44, weaker than the consensus of $2.47.

Uber Technologies (UBER) is down more than -2% after forecasting Q1 adjusted EBITDA of $2.37 to $2.47, the midpoint below the consensus of $2.45. 

Silicon Laboratories (SLAB) is up more than +49% after agreeing to be acquired by Texas Instruments for $7.5 billion, or $231 in cash per share. 

Super Micro Computer (SMCI) is up more than +13% to lead gainers in the S&P 500 after forecasting Q3 net sales of at least $12.30 billion, well above the consensus of $10.25 billion.

MGM Resorts International is up more than +12% after reporting its BetMGM joint venture had $2.8 billion in net revenue for fiscal year 2025, up +33% y/y.

Eli Lilly (LLY) is up more than +10% after reporting Q4 revenue of $19.29 billion, stronger than the consensus of $18.01 billion, and forecasting full-year revenue of $80 billion to $83 billion, above the consensus of $77.71 billion.

Fortive Corp  (FTV) is up more than +9% after forecasting 2026 adjusted EPS of $2.90 to $3.00, stronger than the consensus of $2.85.

Johnson Controls International Plc (JCI) is up more than +6% after reporting Q1 net sales of $5.80 billion, stronger than the consensus of $5.64 billion. 

Amgen (AMGN) is up more than +5% to lead gainers in the Dow Jones industrials after reporting Q4 revenue of $9.87 billion, better than the consensus of $9.46 billion. 

Earnings Reports(2/4/2026)

AbbVie Inc (ABBV), Aflac Inc (AFL), Align Technology Inc (ALGN), Allstate Corp/The (ALL), Alphabet Inc (GOOGL), ARM Holdings PLC (ARM), AvalonBay Communities Inc (AVB), Avery Dennison Corp (AVY), Bio-Techne Corp (TECH), Boston Scientific Corp (BSX), Bunge Global SA (BG), CDW Corp/DE (CDW), Cencora Inc (COR), CME Group Inc (CME), Cognizant Technology Solutions (CTSH), Corpay Inc (CPAY), Crown Castle Inc (CCI), Cummins Inc (CMI), Eli Lilly & Co (LLY), Equifax Inc (EFX), Essex Property Trust Inc (ESS), Everest Group Ltd (EG), Fortive Corp (FTV), Fox Corp (FOXA), GE HealthCare Technologies Inc (GEHC), Globe Life Inc (GL), IDEX Corp (IEX), Johnson Controls International (JCI), McKesson Corp (MCK), MetLife Inc (MET), Mid-America Apartment Communities (MAA), Old Dominion Freight Line Inc (ODFL), Omnicom Group Inc (OMC), O’Reilly Automotive Inc (ORLY), Phillips 66 (PSX), PTC Inc (PTC), QUALCOMM Inc (QCOM), Stanley Black & Decker Inc (SWK), STERIS PLC (STE), T Rowe Price Group Inc (TROW), Uber Technologies Inc (UBER), Yum!  Brands Inc (YUM).