The Week Ahead: Markets Eye Jobs, CPI, and Fed Commentary

• Jobs data Wednesday forecasts +70K payrolls with 4.4% unemployment; Friday's CPI expected +0.3% monthly with core CPI at +0.3%, while annual CPI forecast to ease to +2.5% from +2.7%
• Software stocks have plunged nearly 25% over three months due to AI disruption concerns and surging capital expenditure, while 'old economy' sectors benefit from the strongest U.S. factory activity (ISM) since 2022
• Fed speakers throughout the week (Waller, Bostic, Logan, Hammack) will be parsed for signals on rate cuts, with markets sensitive to hawkish tones as officials signal rates may stay on hold longer

Market Summary: Jobs, CPI, and Fed Commentary in Focus

Market Performance

U.S. equities closed mixed last week, reflecting significant sector rotation. The S&P 500 dipped 0.10% to 6,932.30, while the Nasdaq Composite fell 1.84% to 23,031.21, pressured by tech weakness in software and semiconductors. The Dow Jones outperformed, rising 2.50% to a record 50,115.68, driven by strength in industrials, energy, and financials.

Key Themes

Sector Rotation Intensifies: Technology stocks, particularly software, have declined nearly 25% over three months due to AI disruption concerns and elevated capital expenditure pressures. Meanwhile, "old economy" sectors—industrials, materials, and consumer staples—are benefiting from improving manufacturing demand, with ISM data showing the strongest U.S. factory activity since 2022.

Fed Policy Stance: With Fed officials signaling rate cuts may remain on hold, risk appetite in crypto and precious metals has cooled. Multiple Fed speakers are scheduled throughout the week, including Governors Waller and Hammack, with markets sensitive to hawkish commentary on inflation progress.

Critical Economic Data

Wednesday, Feb 11: Non-Farm Payrolls forecast at +70K (prior +50K), unemployment rate expected to hold at 4.4%, and average hourly earnings forecast at +0.3% month-over-month.

Friday, Feb 13: CPI data takes center stage with monthly CPI forecast at +0.3%, Core CPI at +0.3%, and annual CPI expected to decline to +2.5% from +2.7%. Any upside surprise could reinforce cautious Fed policy and pressure rate-sensitive sectors.

Earnings Watch

Key reports include Coca-Cola, McDonald's, Spotify, Cisco, Shopify, CVS Health, and Airbnb, offering insights into consumer spending and technology trends.

Outlook

The bull market remains intact, supported by expanding sector breadth and steady economic growth, with consolidation more likely than correction near-term.