Last week was a tale of two markets. While industrial stocks soared, financial and technology stocks slumped as concerns about artificial intelligence weighed on. Mixed economic data further complicates matters. On Friday, the S&P 500 rebounded slightly on inflation reports that supported the possibility of lower interest rates in the future, but it wasn’t enough to push the index into the green this week, and it wasn’t enough to convince investors that the Federal Reserve will cut interest rates next month. The S&P 500 index fell 1.4% for the week, and the tech-heavy Nasdaq fell 2%. Despite falling 1.2% for the week, the Dow Jones Industrial Average had a different story. Tuesday’s closing price hit a record high. While Dow constituents and club name Honeywell rose significantly this week, Apple lagged. .SPX .IXIC,.DJI Mountain 2026-02-09 Performance of the S&P 500, Nasdaq, and Dow since February 9, 2026 We’ll see if Friday’s fledgling gains can carry over into Monday after falling for multiple sessions. Until then, here are the three key drivers for the stock market over the past five sessions. 1. Concerns about AI-driven disruption Club finance firms Wells Fargo and Capital One folded last week over concerns that new AI-powered tax planning capabilities could threaten the wealth management industry. The respective market declines began in earnest with wealth platform Altruist’s announcement on Tuesday and continued for two more sessions. On Friday, the financial sector received some stability after Baird upgraded its rating on Wells Fargo’s stock from sell to the equivalent of hold. Analysts believe the bank’s valuation has become more reasonable following the exit. Still, Wells Fargo and Capital One shares fell more than 7.4% and nearly 7%, respectively, for the week. Jeff Marks, the club’s director of portfolio analysis, said Friday that he may buy more Capital One in coming sessions after the recent weakness. AI models are getting better by the day, and investors would rather be the first to attack and sell than be zeroed in on the risk before they know how real it actually is. It’s a noteworthy piece of work, but it’s not one that will change the paper yet. Big Tech’s decline continued. Alphabet, which technically belongs to the communications services sector, was one of the worst-performing companies in the portfolio, dropping more than 5% last week. Investors were concerned about the company’s increased AI spending despite posting a strong quarter just a few weeks ago. Our thesis on the stock hasn’t changed, so we bought more shares on Tuesday. The club information technology sector, which had been criticized the previous week over concerns that AI would disrupt business, stabilized. Salesforce was down less than 1% last week, while CrowdStrike and Palo Alto Networks rebounded 8.6% and 4.8%, respectively. I never thought cybersecurity stocks should be lumped together with software-as-a-service (SaaS) stocks because their products are so important in today’s hostile world. That’s why we bought more Crowdstrike on February 3rd. Palo Alto Networks reports earnings next week, which will tell whether the cyber stock can continue to outshine the SaaS name. 2. “Olympic-sized gathering” Eaton, Honeywell, Dover, DuPont, and GE Vernova stocks continued their banner performance in 2026. This is part of what Jim Cramer calls an “Olympic-sized rally” for industrials and other cyclical stocks. It could have something to do with the rise of Big Tech, or it could be that this market simply likes stocks tied to an economy that’s been looking very strong lately. The firm on Wednesday raised its price target for Eaton from $410 to $425 per share and for GE Vernova from $800 to $875. In the next trade, the club secured a portion of its profits in Eton, which has soared more than 4% in the last week and is up 22% since the beginning of the year. This adjustment does not mean we are bearish on power management solutions makers whose products, like GE Vernova’s natural gas turbines, are used in energy-intensive data centers. Consumer staples also performed well last week, exceeding the annual rate. The group has gained 15.6% year-to-date compared to the S&P 500’s flat performance. Our standout stock in this space is Procter & Gamble, up 11.7% in 2026. We had acquired P&G last year when consumer staples were not selling well. We believed we needed a hedge against our large technology position in case of rotation. That’s exactly what happened this year. Recognizing that P&G’s rise was sudden, we have secured some profits and are now ready to wait and see what happens next with the stock, with a rating of 2, the equivalent of a hold. 3. Mixed Economic Data Last week’s economic data gave Wall Street more confidence that the Fed will keep interest rates on hold when central bankers meet in March. Investors on Wednesday focused on the delayed January jobs report, which showed job growth was stronger than expected. The Consumer Price Index, a key measure of U.S. inflation, was released just two days later and showed the cost of goods and services rose less than expected last month. Strong employment data and slowing inflation are good news for the Fed’s dual mandate of promoting employment and stabilizing prices. While hinting at a continuation of rate cuts next month, a drop in the consumer price index raised expectations for rate cuts later this year. The market currently supports two to three borrowing cost reductions in 2026. Jim reiterated last week that the performance of club names like Home Depot will have a lot to do with the Fed’s next actions. In fact, he referred to home improvement retailers as “Warsh stocks” — companies that need low interest rates to grow. Home Depot is tied to a housing market that has stalled due to soaring mortgage rates and home prices. Kevin Warsh, nominated by President Donald Trump to chair the Federal Reserve, will take office, subject to Senate confirmation, when current central bank chief Jerome Powell’s term expires in May. Mr. Warsh was a hawk when he last served on the Fed’s board and supported Mr. Trump’s orders to lower policy. The Fed’s interest rate cuts last year and in 2024 did little to make home equity loans and mortgages more affordable. 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