Markets delivered a roller‑coaster week as a sharp midweek tech‑led selloff gave way to a powerful rebound that pushed the Dow Jones Industrial Average above 50,000 for the first time. The S&P 500 narrowly avoided its worst weekly decline since October, reflecting investor unease over rising rate expectations and growing concerns about stretched AI‑driven valuations.

The turbulence in growth and technology stocks stemmed largely from renewed inflation worries and a repricing of lofty expectations. With fresh macro data delayed by a brief government shutdown, traders focused more heavily on sector positioning, Federal Reserve policy expectations, and corporate earnings reports to guide sentiment.

Market Performance

  • The S&P 500 slipped 0.10%.
  • The Nasdaq 100 fell 1.87%.
  • The Dow Jones Industrial Average jumped 2.50%.

Policy Tensions and Data Developments

Fed Leadership Uncertainty

President Trump’s nomination of Kevin Warsh to succeed Jerome Powell in May became a major focal point. Warsh, long a critic of past liquidity injections and the size of the Fed’s balance sheet, has more recently aligned with lower‑rate preferences. However, the current Fed board remains cautious, projecting policy rates in the low‑to‑mid 3% range by year‑end.

This divergence prompted markets to price in a more dovish shift, even as internal Fed dynamics point to a more measured approach.

Shutdown‑Related Data Delays

The short government shutdown postponed several key data releases, including the January jobs report (now due Feb. 11) and December’s JOLTS report. Other indicators sent mixed signals: ADP reported just 22,000 new private‑sector jobs in January, while University of Michigan consumer sentiment jumped to its highest level since August and long‑term inflation expectations eased to 3.5%.

The Week Ahead

The compressed data calendar has concentrated both the January jobs report and the Consumer Price Index (CPI) into one highly consequential week on Feb. 11 and Feb. 13 — offering the first clear picture of 2026’s economic trajectory.

Economists expect:

  • Payroll gains: 50,000 to 90,000
  • Monthly inflation: ~0.3%
  • Annual inflation: ~2.5%

These outcomes could significantly influence expectations about the Fed’s next moves. Softer jobs and cooler inflation would strengthen the case for earlier rate cuts. Conversely, hotter‑than‑expected inflation would revive concerns that rates may need to stay elevated for longer.

Political Tensions Add Complexity

Warsh’s nomination has become an active political fight, with pushback from Democrats and at least one Republican senator. A prolonged confirmation process may add uncertainty to the policy outlook, especially with critical data hitting simultaneously.

This combination — uncertain leadership, compressed data releases, and shifting expectations — makes this week’s macro updates particularly important for markets attempting to reassess risk and valuation.

Looking Ahead

Despite the volatility, the broader economy continues on a steady but slowing path. The central question remains whether corporate earnings can justify current valuations and support further gains in the major indexes.

If you’d like to discuss these developments or what they may mean for your financial plan, our team is always here to help.