DFG Navigator Archives | February 2026

Your Capital Markets Snapshot: A Market Rotation Amid Tech Turbulence

Markets saw a sharp pickup in volatility last week as weakness in technology, especially software stocks, dragged major indices. The rotation into real-asset industries has continued, as oil & gas, chemicals, transportation, consumer staples, and regional banks continue to outperform since tech stocks began to lose momentum late last year. The S&P 500 gave back its year-to-date gains amid a nearly 25% three-month decline in software and broader concerns about AI-driven disruption to existing business models. Despite this, the Dow Jones hit a fresh all-time high, supporting the rotation narrative. AI-related capital spending announcements from Alphabet and Amazon surprised to the upside, reinforcing confidence in long-term infrastructure demand but also raising questions about returns and elevated valuation pressure across tech. Risk appetite fell sharply, with bitcoin dropping to $60,000 before rebounding toward $70,000 and precious metals swinging widely. Economic data showed signs of labor market weakening with softer payroll gains, higher layoffs, and falling job openings. Though, manufacturing activity and consumer sentiment improved. Overall, the week illustrated a market undergoing repricing and rotation rather than fundamental deterioration, while ongoing volatility keeps near-term direction uncertain.

Your Capital Markets Snapshot: Volatility, Fed on Hold, and Earnings Strength

Capital markets were volatile last week as major stock indices swung between early week gains and a late week pullback driven largely by mixed mega-cap technology earnings. The Federal Reserve held rates steady at 3.50%–3.75%, signaling a slightly more hawkish stance while acknowledging solid economic activity and a stabilizing labor market. The stock market reacted sharply on Friday after President Trump nominated Kevin Warsh as the next Fed chair, a move perceived as modestly dovish relative to Chair Powell. Earnings season remained strong, with more than 90 S&P 500 companies reporting and showing broad-based revenue and earnings growth that reflects continued economic strength. Meanwhile, inflation data surprised to the upside, particularly the PPI report, suggesting potentially stickier price pressures. Small-cap equities underperformed during the week, marking a brief slowdown after an otherwise strong start to the year. Commodities saw significant fluctuations, with gold and silver swinging lower following the Fed chair nomination on Friday, while crude oil pushed to a four-month high. On balance, the week highlighted a market navigating mixed signals yet still showing steady resilience amid elevated volatility.

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