Software Stocks Retreat and Drag the Broader Market Lower

The S&P 500 Index ($SPX) (SPY) today is down -0.35%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.94%.  March E-mini S&P futures (ESH26) are down -0.38%, and March E-mini Nasdaq futures (NQH26) are down -0.95%.

Stock indexes are mixed today, with the Dow Jones Industrials posting a new record high and the Nasdaq 100 falling to a 1.5-week low.  Data service and software stocks are retreating today, dragging the broader market lower, following the release of an automation tool for lawyers by artificial-intelligence firm Anthropic.  Also, chip makers and AI-infrastructure stocks gave up an early rally and turned lower as investors rotated out of tech stocks into more economically sensitive industries.

Stocks initially moved higher today after robust earnings from Palantir Technologies and Teradyne sparked a rally in technology stocks. Palantir Technologies is up more than +5% after forecasting 2026 revenue that significantly exceeded expectations. Also, Teradyne is up by more than +13% after forecasting Q1 revenue well above consensus. 

Mining stocks are also climbing today, with the price of gold up more than +6% and silver prices soaring more than +13%.  Precious metals are rebounding after the sharp selloff seen over the past two sessions. 

Higher bond yields today are also undercutting stocks after strong US manufacturing data on Monday, and hawkish Fed comments have curbed expectations for additional rate cuts.  The 10-year T-note yield climbed to a 1.5-week high today at 4.30%. 

Richmond Fed President Tom Barkin said today that the US economic outlook is improving as uncertainty fades, but risks remain, with hiring concentrated in a few sectors and inflation still running above the Fed's goal.

The partial US government shutdown, now in its fourth day on Tuesday, has dampened investor sentiment as markets await the House's approval of a funding deal President Trump worked out with Democrats.  The funding lapse may be short-lived, however, with the House possibly voting on the spending bill later today.  The partial shutdown has already prompted the Bureau of Labor Statistics to delay the release of today’s Dec JOLTS job opening report and Friday’s Jan nonfarm payrolls report.

The markets this week will focus on earnings, economic news, and the passage of a spending bill to end the partial government shutdown.  On Wednesday, the Jan ADP employment change is expected to increase by +45,000.  Also, the Jan ISM services index is expected to fall by -0.3 to 53.5. 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 -1.5 to 54.9.   

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 78% of the 167 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 9% 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 fell from a new all-time high and is down by -0.45%.  China’s Shanghai Composite rebounded from a 4-week low and closed up +1.29%.  Japan’s Nikkei Stock 225 climbed to a new record high and closed up sharply by +3.92%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -2 ticks.  The 10-year T-note yield is up +0.8 bp to 4.286%.  Mar T-notes fell to a 1.5-week low today, and the 10-year T-note yield rose to a 1.5-week high of 4.298%.  T-notes are under pressure today on negative carryover from Monday, after the Jan ISM manufacturing index expanded by the most in more than 3.25 years, and after Atlanta Fed President Raphael Bostic said he doesn't project any rate cuts for 2026, dampening expectations of further Fed rate cuts.

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 moving higher today.  The 10-year German bund yield rose to a 1-week high of 2.903% and is up +2.4 bp to 2.892%.  The 10-year UK gilt yield is up +1.0 bp to 4.516%.

The French Jan CPI (EU harmonized) fell -0.4% m/m and rose +0.4% y/y, weaker than expectations of -0.2% m/m and +0.6% y/y.

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

US Stock Movers

Data service and software stocks are retreating today following the release of an automation tool for lawyers by artificial intelligence firm Anthropic.  Thomson Reuters Corp (TRI) is down by more than -17%, and Intuit (INTU) and FactSet Research Systems (FDS) are down by more than -9%.  Also, EPAM Systems (EPAM) is down more than -8%, and ServiceNow (NOW) is down more than -7%.  In addition, Salesforce (CRM) and Adobe (ADBE) are down more than -6%.

Gold and silver mining stocks are moving higher today, with gold up more than 6% and silver up more than 13%.  Freeport McMoRan (FCX) and Hecla Mining (HL) are up more than +6%. Also, Coeur Mining (CDE) is up more than +5%, and Newmont Corp (NEM) and Barrick Mining (B) are up more than +4%.

Gartner (IT) is down more than -25% to lead IT stocks lower and losers in the S&P 500 after reporting Q4 consulting segment revenue of $133.6 million, weaker than the consensus of $157.9 million.  Also, International Business Machines (IBM) is down by more than -8% to lead the Dow Jones Industrials' losers. 

PayPal Holdings (PYPL) is down more than -18% to lead losers in the Nasdaq 100 after reporting Q4 net revenue of $8.68 billion, weaker than the consensus of $8.79 billion and announcing that CEO Chriss will be replaced by HP Inc CEO Lores. 

Fabrinet (FN) is down more than -12% after the company’s results showed component constraints pressuring the datacom business, with Q2 datacom revenue down -7% y/y at $278 million.

TransDigm Group (TDG) is down more than -11% after forecasting full-year EBITDA of $5.14 billion to $5.28 billion, with the midpoint below the consensus of $5.24 billion.

NXP Semiconductors NV (NXPI) is down more than -7% after reporting Q4 automotive revenue of $1.88 billion, below the consensus of $1.89 billion.

Archer-Daniels-Midland (ADM) is down more than -3% after reporting Q4 revenue of $18.56 billion, well below the consensus of $21.05 billion.

Pfizer (PFE) is down more than -3% after forecasting full-year revenue of $59.5 billion to $62.5 billion, the midpoint below the consensus of $61.02 billion.

DaVita (DVA) is up more than +25% to lead gainers in the S&P 500 after reporting Q4 total revenue of $3.62 billion, above the consensus of $3.51 billion.   

Woodward Inc (WWD) is up more than +14% after reporting Q1 adjusted EPS of $2.17, stronger than the consensus of $1.65. 

Teradyne Inc (TER) is up more than +13% after reporting Q4 net revenue of $1.08 billion, stronger than the consensus of $964.2 million, and forecasting Q1 revenue of $1,15 billion to $1.25 billion, well above the consensus of $929.8 million.

AES Corp (AES) is up more than +9% after Bloomberg reported that BlackRock Inc.’s Global Infrastructure Partners has teamed up with EQT AB in a bid to acquire the company.

Western Digital (WDC) is up more than +7% to lead gainers in the Nasdaq 100 after its board authorized an additional $4 billion of share repurchases.

Palantir Technologies (PLTR) is up more than +5% to lead gainers in the Nasdaq 100 after reporting Q4 revenue of $1.41 billion, better than the consensus of $1.33 billion, and forecasting 2026 revenue of $7.18 billion to $7.20 billion, well above the consensus of $6.27 billion. 

FedEx (FDX) is up more than +4% after Bernstein upgraded the stock to outperform from market perform with a price target of $427.

Merck & Co (MRK) is up more than +2% after reporting Q4 sales of $16.40 billion, better than the consensus of $16.17 billion.

Earnings Reports(2/3/2026)

Advanced Micro Devices Inc (AMD), Amcor PLC (AMCR), AMETEK Inc (AME), Amgen Inc (AMGN), Archer-Daniels-Midland Co (ADM), Atmos Energy Corp (ATO), Ball Corp (BALL), Broadridge Financial Solutions (BR), Chipotle Mexican Grill Inc (CMG), Chubb Ltd (CB), Clorox Co/The (CLX), Corteva Inc (CTVA), Eaton Corp PLC (ETN), Electronic Arts Inc (EA), Emerson Electric Co (EMR), Gartner Inc (IT), Hubbell Inc (HUBB), Illinois Tool Works Inc (ITW), Jack Henry & Associates Inc (JKHY), Jacobs Solutions Inc (J), Marathon Petroleum Corp (MPC), Match Group Inc (MTCH), Merck & Co Inc (MRK), Mondelez International Inc (MDLZ), PayPal Holdings Inc (PYPL), Pentair PLC (PNR), PepsiCo Inc (PEP), Pfizer Inc (PFE), Prudential Financial Inc (PRU), Skyworks Solutions Inc (SWKS), Super Micro Computer Inc (SMCI), Take-Two Interactive Software (TTWO), TransDigm Group Inc (TDG), Veralto Corp (VLTO), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW).