Market Recap - Tuesday February 3, 2026
Tech Slides While Cyclicals and Precious Metals Make a Comeback
U.S. stocks finished mostly lower today, led down by technology and software shares, though markets recovered from their worst levels of the day. The Dow slipped 0.34%, the S&P 500 fell 0.84%, and the Nasdaq dropped 1.43%, while small caps managed a gain with the Russell 2000 up 0.31%.
Software stocks were the biggest drag, and weakness spilled into areas tied to tech financing like private credit and business development companies. Semiconductor stocks, AI-related names, crypto-linked stocks, and retail-trader favorites also struggled. In contrast, several cyclical sectors held up well, including homebuilders, industrial metals, chemicals, building materials, airlines, and logistics companies. Defensive areas such as utilities, consumer staples, and energy also showed relative strength, helping cushion the broader market.
Commodities and currencies told a very different story. Precious metals surged sharply, with gold jumping more than 6% and silver rising over 8%, rebounding after last week’s historic selloff. Copper and other industrial metals also moved higher, reflecting optimism tied to global growth and infrastructure demand. Oil prices climbed nearly 2% amid renewed geopolitical tensions after reports that the U.S. Navy shot down an Iranian drone. The U.S. dollar edged lower, while the Australian dollar strengthened following a rate hike by Australia’s central bank. Bitcoin continued to slide, falling about 3% and briefly touching its lowest level since late 2024, showing that risk appetite remains fragile in crypto markets.
Technology weakness was the dominant theme despite some standout earnings winners. Software stocks continued to sell off as investors worried about rising competition from artificial intelligence tools that could disrupt traditional business models, particularly in legal, data, and consulting services. There was also renewed scrutiny around AI funding commitments, especially tied to OpenAI and its partners, which added pressure to Nvidia and related stocks. Still, rotation into economically sensitive sectors helped prevent a broader market rout, supported by Monday’s strong manufacturing data that signaled continued economic momentum.
Earnings and corporate news drove sharp moves in individual stocks. Palantir and Teradyne surged on strong results and upbeat guidance tied to accelerating AI demand. Several industrial and defense-related companies also posted solid reports, pointing to strength in aerospace and government spending. On the downside, PayPal plunged after missing expectations, issuing weak guidance, and announcing a surprise CEO change. Gartner and LegalZoom dropped sharply on disappointing outlooks and growing fears of AI disruption. Novo Nordisk slid after warning that 2026 sales could decline due to intensifying competition in weight-loss drugs. Outside earnings, Disney named a new CEO, and homebuilders rallied after reports of a proposed housing initiative tied to affordability.
On the macro front, Federal Reserve officials sent mixed signals. Governor Miran suggested the economy may need more than 100 basis points of rate cuts this year, while others emphasized that inflation remains above target. Key labor data was delayed again due to the partial government shutdown, leaving investors without clarity on job openings and payroll trends. Markets now turn to upcoming data releases later this week, including private payrolls, services-sector activity, and consumer confidence.
Here’s Our Take
Today’s market showed a clear split between struggling tech and software stocks and a more resilient group of cyclical and value-oriented sectors. The sharp rebound in gold and silver suggests last week’s crash was more about investors unwinding crowded trades than a sudden shift in the economic outlook. At the same time, fears around AI disruption are putting heavy pressure on software and data-driven businesses, while companies tied to real-world infrastructure, manufacturing, and travel are holding up better. With key labor data delayed and earnings still rolling in, markets are likely to remain choppy, driven by rotation rather than a single clear direction.
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