Market Recap - Wednesday February 4, 2026
Tech Drags, Cyclicals Lead as the Market Rotation Continues
Stocks finished mixed on today as gains in traditional, economically sensitive sectors were offset by continued weakness in big tech and semiconductors. The Dow rose 0.5%, helped by banks and industrial companies, while the S&P 500 slipped 0.5% and the Nasdaq fell a sharper 1.5% as tech-heavy names dragged the market lower. Small caps also declined modestly. A key theme was rotation: the equal-weight S&P 500 hit a fresh record, showing that many stocks outside of mega-cap tech were actually doing quite well.
Technology stocks struggled again, especially chipmakers and AI-related names, even as software recovered somewhat from earlier lows. Apple stood out as a relative safe haven within big tech, while other laggards included defense, managed care, media, and China-linked stocks. On the positive side, banks, machinery, energy, chemicals, homebuilders, travel and leisure stocks, and retailers all saw solid gains. This reinforced the idea that investors are moving money out of crowded tech trades and into more traditional “real economy” sectors tied to growth and consumer spending.
Economic data sent mixed signals. The services sector remained in expansion mode, but new orders and hiring slowed. Private payroll growth came in weaker than expected, with most job gains coming from healthcare and education while business services and manufacturing lost jobs. Treasury borrowing plans came in as expected, and interest rates edged slightly higher at the long end of the curve. With several key reports delayed by the government shutdown, investors are left waiting for clearer signals on jobs and inflation later this month.
Earnings continued to drive big individual stock moves. Eli Lilly surged after strong results in its diabetes and weight-loss drugs. Enphase Energy jumped on higher U.S. solar demand, and Super Micro rallied after beating expectations and raising guidance on strong AI server demand. Johnson Controls, Old Dominion Freight, and CDW also posted upbeat results. On the downside, AMD fell despite beating expectations as investors worried about high expectations and competition. Boston Scientific dropped on weaker guidance, and several software names slid again as fears grow that AI tools could disrupt traditional business models. A major headline of the day was Texas Instruments’ agreement to acquire Silicon Labs in a deal that sent Silicon Labs shares soaring nearly 50%.
Outside of earnings, oil prices rose after renewed uncertainty around U.S.–Iran nuclear talks, while gold and silver remained volatile. Bitcoin slipped back below $74,000 as risk appetite faded in tech and crypto-linked names.
Here’s Our Take
Today’s market action was less about fear and more about rotation. Investors are increasingly favoring banks, industrials, energy, and consumer-driven companies while trimming exposure to tech and AI names that had become crowded and expensive. Earnings remain broadly strong, and the economy still looks resilient, even if job growth is slowing at the margins.
The message from the market is clear: leadership is broadening beyond mega-cap tech. That’s a healthy sign for long-term market stability — but it also means stock picking matters more than ever. Volatility in tech and AI is likely to continue, while opportunities are emerging in sectors tied to real economic activity and consumer demand.
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