Market Recap - Thursday February 5, 2026
Weak Jobs Data Jolts Markets as Tech and Crypto Lead the Selloff
U.S. stocks sold off sharply on today as a fresh batch of weak labor-market data rattled investor confidence. The Dow fell 1.2%, the S&P 500 dropped 1.2%, the Nasdaq slid 1.6%, and small caps were hit even harder. While the decline was broad, the equal-weight S&P held up a bit better, reinforcing that mega-cap tech was again doing much of the damage.
Technology and software were at the center of the weakness. Big tech names like Microsoft and Amazon led the decline, and software stocks sank again as fears around AI competition continued to weigh on the sector. Crypto-related stocks and high-growth, high-beta names also saw heavy losses, with Bitcoin plunging to its lowest level since late 2024. Chip stocks held up slightly better, helped by Alphabet’s massive AI spending plans, but that wasn’t enough to offset the broader risk-off tone. On the brighter side, more defensive and less crowded areas such as insurance, healthcare distributors, hospitals, rails, and homebuilders outperformed.
The main driver of today’s selloff was a sudden cooling in labor market data. Job openings fell to their lowest level since 2020, weekly jobless claims jumped more than expected, and announced layoffs surged to the highest January level since the financial crisis. Bond markets reacted quickly, with Treasury yields falling sharply as investors once again priced in two rate cuts this year. The dollar strengthened, while gold and silver fell hard, and oil prices dropped after recent gains as geopolitical tensions eased slightly.
Earnings added to the volatility. Alphabet reported strong growth in both Search and Cloud, but its eye-popping increase in capital spending spooked investors already nervous about how much money Big Tech is pouring into AI. Qualcomm fell on concerns around memory shortages, while Workday announced layoffs. Outside of tech, healthcare distributors like McKesson and Cardinal Health jumped on strong results, Hershey rallied on better-than-expected guidance, and insurers like Allstate posted solid earnings. On the downside, Fluence Energy collapsed after a big miss, Peloton slid on weak revenue outlook, and several consumer and tech-adjacent names fell sharply despite beating estimates.
Here’s Our Take
Today was a reminder of how quickly market narratives can shift. After weeks of “run-it-hot” optimism and rotation into cyclical stocks, investors were forced to confront signs that the labor market may be losing momentum. That hit risk assets hard — especially crowded tech, software, and crypto trades — while bonds rallied on renewed expectations for rate cuts.
The bigger picture hasn’t fully changed: earnings are still generally strong, and parts of the economy remain resilient. But softer employment data adds a new layer of uncertainty. Expect continued volatility as markets balance slowing job growth, aggressive AI spending, and the Fed’s next move. This environment favors diversification, selectivity, and a focus on fundamentals rather than momentum.
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