Market Wrap 2026-02-08

Market Wrap 2026-02-08

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Today's US Market Wrap — Key Points

• Stocks surge, led by Tech & Industrials. Russell 2000 outperforms.
• Treasuries flat. Focus shifts to US NFP, CPI, & Treasury issuance next week.
• Dollar weakens amid risk-on sentiment. AUD & NZD outperform.
• Crude oil rises amid US-Iran talks. Gold also gains.
• Amazon's increased CapEx outlook raises concerns, impacting stock.

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MARKET SNAPSHOT

• Equities: Up
• Treasuries: Flat
• Crude: Up
• Dollar: Down
• Gold: Up

REAR VIEW

• US and Iran agreed to continue discussions.
• The University of Michigan Sentiment Index exceeded expectations.
• Canada's unemployment rate decreased.
• Fed's Jefferson stated that monetary policy is appropriately positioned.
• Fed's Daly anticipates one or two rate cuts this year.
• China has reportedly approved some rare earth exports to Japan.
• Amazon (AMZN) increased its FY26 capital expenditure outlook, raising concerns about overspending.
• The Trump administration is reportedly considering initiating an antitrust investigation into homebuilders.

WEEK AHEAD

• Key events include US Non-Farm Payroll (NFP) and Consumer Price Index (CPI) data, the Japanese Election, UK Gross Domestic Product (GDP), and China Inflation figures. Click here for the full report.

CENTRAL BANK WEEKLY

• Preview of Bank of Canada (BoC) Minutes; Review of Bank of England (BoE), Reserve Bank of Australia (RBA), European Central Bank (ECB), Reserve Bank of India (RBI), Banxico, and Riksbank Minutes. Click here for the full report.

WEEKLY US EARNINGS ESTIMATES

• The earnings season continues, with notable reports expected from CVS, Cisco (CSCO), and Applied Materials (AMAT). Click here for the full report.

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MARKET WRAP

Stocks experienced a surge on Friday, recovering some of their recent losses. This occurred despite weakness in Amazon (AMZN) shares following the company's increased FY26 CapEx outlook. The gains were primarily driven by the Technology and Industrials sectors, with semiconductor stocks performing particularly well, as they are generally seen as beneficiaries of increased capital expenditure plans from major technology companies. The Russell 2000 outperformed, followed by the Dow Jones Industrial Average, which surpassed 50,000 for the first time. Large-cap stocks such as Google, Meta, and Amazon underperformed on Friday, impacting the Communication Services and Consumer Discretionary sectors. The Health Care sector also saw gains, although Medicare providers were negatively affected by Molina Healthcare's (MOH) earnings report (-30%), which also weighed on Centene (CNC) and initially on UnitedHealth Group (UNH), Humana (HUM), and Elevance Health (ELV), although the latter three stocks managed to reverse their losses. The risk-on sentiment supported cyclical currencies, with the Australian Dollar (AUD) and New Zealand Dollar (NZD) outperforming, along with gains for the British Pound (GBP) and Canadian Dollar (CAD), while safe-haven currencies such as the Japanese Yen (JPY), US Dollar (USD), and Chinese Yuan (CNH) underperformed. The Canadian Dollar was also supported by the jobs report, while Japanese Yen traders were cautious ahead of the election on Sunday. Treasury notes (T-Notes) showed little overall change across the curve, with a slightly flatter bias, as attention shifts to next week's events, including the US NFP and CPI data, as well as Treasury issuance. The University of Michigan (UoM) sentiment data released today exceeded expectations, while inflation expectations were revised downward for the 1-year horizon but slightly upward for the 5-10 year horizon. Crude oil prices settled higher in volatile trading, with focus on the outcome of US-Iran talks, which appear to have started positively, but further discussions are planned. Cryptocurrency prices rebounded from their recent decline, and gold and silver also increased.

US

JEFFERSON:

• Federal Reserve Vice Chair Jefferson stated that the current monetary policy is well-positioned and roughly neutral, providing flexibility for supply-side developments, with future decisions dependent on data. He is cautiously optimistic about the economic outlook, projecting 2.2% growth in 2026, and sees the job market as stabilizing in a low-hire, low-fire environment, with recent softness linked to reduced demand and immigration issues. Regarding inflation, Jefferson reaffirmed the Fed's strong commitment to price stability, viewing tariffs as a one-time factor driving inflation in 2025, with pressures expected to ease in 2026. He noted that increased productivity could help moderate inflation, and while upside risks remain, inflation should moderate, with the December Personal Consumption Expenditures (PCE) index estimated at 2.9% year-over-year, aligning with Fed Chair Powell's view.

DALY (2027 Voter, Dove):

• Stated that she maintains a "very open mind" regarding interest rates and currently leans toward more rate cuts in 2026, though it is uncertain whether that would mean one or two cuts. She supported the Fed's recent decision to hold rates steady but noted that a case could have been made for a cut. Daly emphasized that to justify easing, the Fed would need either greater confidence that inflation is sustainably declining or see more signs of weakness in the labor market, which she views as more vulnerable than inflation at present. She observed that many workers feel they are walking a "knife's edge," and if the labor market shifts from a "no firing" to a "some firing" environment, the Fed may need to respond with rate cuts. However, she also stated she would be comfortable holding rates steady for longer if inflation were to reaccelerate.

MICHIGAN:

• The University of Michigan's preliminary report for February showed an unexpected increase in sentiment to 57.3 from 56.4, despite the forecasted drop to 55. Current conditions also unexpectedly improved, printing 58.3 (expected 54.9) from 55.4. Expectations fell more than expected to 56.6 from 57.0 (expected 56.7). Inflation expectations were mixed. The 1-year expectation fell to 3.5% from 4.0%, while the 5-year expectation ticked higher to 3.4% from 3.3%. UoM Director Hsu noted that sentiment surged for consumers with the largest stock portfolios, while it stagnated and remained at dismal levels for consumers without stock holdings. "Concerns about the erosion of personal finances from high prices and elevated risk of job loss continue to be widespread."

FIXED INCOME

T-NOTE FUTURES (H6) SETTLED HALF A TICK LOWER AT 112-03+

• T-Notes flatten ahead of supply and key macro data next week. At settlement, 2-year +1.5bps at 3.498%, 3-year +1.2bps at 3.569%, 5-year +0.3bps at 3.755%, 7-year -0.1bps at 3.973%, 10-year -0.4bps at 4.206%, 20-year -0.8bps at 4.796%, 30-year -0.8bps at 4.855%.

THE DAY:

• T-Notes flatten in quiet trade, as price action was likely profit taking from the upside seen on Thursday following the soft labour market data, which saw 10-year yields fall by 7bps - the largest move in the 10-year this year so far. Attention next week turns to supply with 3, 10 and 30-year issuance due from the Treasury, while corporate supply may also pick up following a busy few weeks of earnings. Next week also sees key data from the US, including the delayed January NFP report, now scheduled for Wednesday, with US CPI on Friday. The focus today was largely on geopolitics, particularly around the US and Iran talks - which are seemingly off to a good start but with more discussions to follow. Meanwhile, data saw the preliminary February UoM report, where headline sentiment rose to 57.3 from 56.4 and above the 55 forecast. The upside was led by current conditions rising to 58.3 from 55.4, above the 54.9 forecast, while forward-looking expectations eased to 56.6 from 57.0, marginally below forecasts. The inflation expectation saw the 1-year drop to 3.5% from 4.0%, while the 5-year rose to 3.4% from 3.3%. Meanwhile, we saw Fed speak from Vice-Chair Jefferson, San Francisco Fed's Daly and outgoing Atlanta Fed President Bostic. Jefferson largely toed a neutral stance, noting policy is roughly neutral. Daly highlighted how businesses are more optimistic than consumers, while Bostic said sentiment in his district is one of cautious optimism, noting they need to keep policy restrictive to get inflation to 2%. Looking ahead, and when trade reopens after the weekend, attention might reside around the reaction in JGBs following the Japanese election.

SUPPLY

Bills

• The US will sell USD 90 billion of 6-week bills on February 10th; will sell USD 89 billion of 3-month bills and USD 77 billion of 6-month bills on February 9th; all to settle on February 12th.

Notes

• The US will sell USD 58 billion in 3-year notes on February 10th, USD 42 billion in 10-year notes on February 11th, and USD 25 billion in 30-year bonds on February 12th.

STIRS/OPERATIONS

• Market Implied Fed Rate Cut Pricing: March 1.3bps (previous 1bps), April 5.3bps (previous 5.3bps), June 16.8bps (previous 16.8bps), December 49.2bps (previous 49.2bps).
• NY Fed RRP op demand at USD 3.11 billion (previous 1.75 billion) across 6 counterparties (previous 6)
• EFFR at 3.64% (previous 3.64%), volumes at USD 110 billion (previous 109 billion) on February 5th
• SOFR at 3.65% (previous 3.65%), volumes at USD 3.228 trillion (previous 3.310 trillion) on February 5th.

CRUDE

WTI (H6) SETTLED USD 0.26 HIGHER AT 63.55/BBL; BRENT (J6) SETTLED USD 0.50 HIGHER AT 68.05/BBL

• The crude complex ended a choppy day with gains amid broad-based risk-on sentiment, despite US-Iranian talks. On the day, WTI and Brent moved lower throughout the duration of the EU session to hit troughs of USD 62.20/bbl and 66.56, respectively, before rebounding through the US afternoon to settle off highs, as benchmarks were seemingly tracking risk-on sentiment, amid the rebound in US stocks and tech. US/Iran talks did not yield much new, although in conclusion of the meeting in Muscat, delegations returned to their capitals for further consultations, with the Iranian foreign minister noting the two agreed on continuous negotiations and the wall of mistrust should, and must, be overcome. In more recent reports, a regional diplomat briefed by Iran remarked that Tehran insists on its right to enrich uranium during talks with US, and believes US negotiators seemed to understand Iran's stance on enrichment. Meanwhile, on the parties present, Axios sources noted Trump’s advisers Witkoff and Kushner met directly with Iran’s foreign minister Abbas Araghchi in Oman. Note, this saw energy come off highs. For the record, the weekly Baker Hughes rig count saw oil rigs rise by 1 to 412, natgas lift 5 to 130, leaving the total up 5 at 551.

EQUITIES

CLOSES:

• SPX +1.90% at 6,927, NDX +2.15% at 25,076, DJI +2.52% at 50,140, RUT +3.53% at 2,669

SECTORS:

• Technology +4.13%, Industrials +2.86%, Energy +1.88%, Real Estate +1.84%, Materials +1.80%, Financials +1.79%, Health +1.78%, Consumer Staples +1.34%, Utilities +0.54%, Consumer Discretionary -0.64%, Communication Services -1.49%.

EUROPEAN CLOSES:

• Euro Stoxx 50 +1.20% at 5,997, Dax 40 +0.93% at 24,720, FTSE 100 +0.59% at 10,370, CAC 40 +0.43% at 8,274, FTSE MIB +0.13% at 45,877, IBEX 35 +1.11% at 17,943, PSI +1.27% at 8,890, SMI +0.34% at 13,512, AEX +1.04% at 995.

EARNINGS:

• Amazon (AMZN): Profit missed and alarmed investors by forecasting a sharply higher CapEx driven by aggressive investment in AI infrastructure. For a full Newsquawk sell-side piece, please click here.
• Bloom Energy (BE): EPS and revenue beat with strong FY outlook.
• Coty (COTY): EPS light, withdrew FY26 guidance and warned of a weaker-than-expected next quarter, citing a leadership transition and challenging beauty market backdrop.
• Doximity (DOCS): Adj. EBITDA light alongside weak next and FY revenue view.
• Fortinet (FTNT): Strong Q4 metrics with solid FY and next quarter revenue view.
• Molina Healthcare (MOH): Dismal FY outlook and will exit MAPD product for 2027; weighed on other healthcare names.
• Reddit (RDDT): Top and bottom-line surpassed Wall St. consensus.
• Roblox (RBLX): Revenue topped with strong guidance.
• Under Armour (UAA): Surprise profit per share, revenue beat accompanied by solid FY EPS outlook.

STOCK SPECIFICS:

• Apple (AAPL) is scaling back plans for an AI-based virtual health coach.
• GE Aerospace (GE) raised quarterly dividend c. 30% to USD 0.47/shr (prev. 0.36).
• Stellantis (STLA): Will take a EUR 22.2 billion charge as part of a business reset.
• Williams Companies (WMB) is said to explore potential natural gas agreements for data centers, according to reports.
• The Department of Justice (DoJ) is investigating in merge probe whether Netflix (NFLX) has engaged in anticompetitive tactics, according to WSJ. Also of note for Warner Bros (WBD) and Paramount Skydance (PSKY).
• H&F reportedly in talks for a buyout of Bill Holdings (BILL), according to Bloomberg.
• US FDA Commissioner Makary recently said the FDA will be taking action against Cos. producing "illegal copycat drugs". Of note for Hims & Hers Health (HIMS).
• US President Trump's admin is reportedly exploring opening an antitrust probe into homebuilders, according to reports. Of note for Toll Brothers (TOL), Lennar (LEN), KB Home (KBH), and D.R. Horton (DHI).

FX

The Dollar weakened on Friday amid broader risk-on sentiment, as US equities, and in particular tech, try to recoup some of the week’s heavy losses. For the Greenback specifically, there wasn’t too much headline-driven newsflow, as Fed speak (Jefferson, Bostic, Daly) added little new and as traders await the delayed US payrolls report next Wednesday. We did get prelim UoM for February, which saw sentiment and conditions rise and top analyst forecasts, although expectations did fall marginally short. 1yr ahead inflation expectations tumbled to 3.5% from 4.0%, while the longer-term 5-10yr ticked higher to 3.4% from 3.3%.

G10 FX was more-or-less firmer across the board and benefitted from the selling in the Dollar, although the Yen, flat, underperformed given the risk tone and ahead of the Japanese election on Sunday. Sentiment was also weighed by weak Japanese Household Spending data overnight, while BoJ’s Masu reiterated the Bank would raise rates if economic and price conditions align with its outlook. USD/JPY traded between 156.51-157.15.

As expected in risk-on trade, Antipodeans, Pound and the Loonie, saw outperformance, with the Aussie and Kiwi clear gainers as they were also supported by gains in precious metals. AUD/USD hit a peak of 0.7025 and NZD/USD of 0.6027. As mentioned, GBP firmed to see Cable hit a peak of 1.3624, although sentiment around the Pound remains cautious as calls continue to intensify for PM Starmer to resign following mounting political pressure.

USD/CAD saw a knee-jerk lower to a trough of 1.3624 following the Canadian jobs report, whereby Employment in January fell 24.8k (exp. 7k, prev. 8.2k), alongside the unemployment rate tumbling to 6.5% (exp. 6.8%, prev. 6.8%.). Although the headline missed, the jobs lost were due to part-time workers, with full-time employment rising in January.

In Europe, there was a slew of ECB commentary following the non-event ECB on Thursday, which had little market impact, while the Survey of Professional Forecasters showed inflation expectations largely unchanged and only a slight 2026 GDP upgrade. SEK saw weakness after Swedish CPIF Y/Y Prelim for January rose 2%, shy of the expected, and previous, 2.1%.

In EMFX, overnight, the RBI kept rates unchanged at 5.25%, as expected, via a unanimous decision, and also voted to maintain its policy stance. RBI stated that the current policy rate is appropriate, and underlying inflation remains low, while the Indian economy is on a steady and improving trajectory, but noted that external headwinds intensified since the last meeting.

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