Technology names also struggled. Alphabet dropped more than 5% as market participants questioned whether stepped-up spending on generative AI might compress margins, even though the company recently reported strong quarterly results. Earlier weakness that had hit software-as-a-service companies eased: Salesforce slipped less than 1%, while cybersecurity firms CrowdStrike and Palo Alto Networks rebounded 8.6% and 4.8%, respectively. Traders appeared to differentiate between firms vulnerable to AI disruption and those seen as essential to protecting increasingly digital infrastructure.
Driver 2: Industrials Extend “Olympic-Size” Run
In sharp contrast to the tech retreat, industrial and cyclical shares continued a rally that has characterized the new year. Eaton, Honeywell, Dover, DuPont and recently spun-off GE Vernova all added to double-digit year-to-date gains. Eaton alone climbed about 4% over the week and is up roughly 22% since Jan. 1, prompting some investors to lock in profits even after raising price targets.
The rotation into economically sensitive groups also lifted consumer-staples stocks. The sector has advanced 15.6% in 2026, far outpacing the flat S&P 500. Procter & Gamble has risen 11.7% this year, benefiting from demand for defensive exposure as money moved out of mega-cap technology shares.
Driver 3: Mixed Economic Data Shapes Rate Expectations
A delayed January employment report released Wednesday showed job creation exceeding forecasts, underlining resilience in the labor market. Two days later, the Labor Department’s consumer price index indicated that headline inflation increased less than anticipated last month. The combination satisfied both sides of the Fed’s dual mandate—supporting employment while moderating price pressures—yet offered little clarity on timing for policy easing.
Imagem: Internet
Futures markets now imply overwhelming odds that the Federal Open Market Committee will keep its benchmark rate unchanged at its March meeting, while still pricing two to three reductions later in 2026. Investors will scrutinize upcoming speeches from central-bank officials for confirmation. Background on the Fed’s policy goals can be found on the Federal Reserve’s official site.
Rate-sensitive shares reflected that uncertainty. Home Depot, closely tied to housing activity, sees growth prospects hinge on lower mortgage costs. The home-improvement retailer’s outlook could also be influenced by leadership changes at the Fed. President Donald Trump has nominated former governor Kevin Warsh—known for a comparatively hawkish stance during his prior tenure—to succeed Chair Jerome Powell when the current term expires in May. Warsh has signaled support for the administration’s call for lower rates, but confirmation hearings have yet to be scheduled.
Looking Ahead
Whether Friday’s tentative rebound can extend into the new week may depend on forthcoming corporate results from Palo Alto Networks and other technology firms, as well as fresh data on retail sales and producer prices. With Wall Street still weighing the disruptive potential of AI against the momentum in traditional industrial businesses, further volatility appears likely.
Crédito da imagem: original source
