It was a story of two markets final week: Industrials surged whereas monetary and tech names buckled underneath the rising weight of synthetic intelligence fears. A combined bag of financial knowledge difficult issues additional. Though the S & P 500 bounced barely Friday following an inflation print that bolstered the longer term case for decrease rates of interest, it wasn’t sufficient to tug the index into the inexperienced for the week — or to persuade buyers {that a} Federal Reserve charges reduce is coming subsequent month. The S & P 500 shed 1.4% for the week, whereas the tech-heavy Nasdaq misplaced 2%. The Dow Jones Industrial Common instructed a unique story regardless of a 1.2% weekly loss. It hit a document excessive shut Tuesday. Dow element and Membership title Honeywell was an enormous gainer on the week, whereas Apple was amongst laggards. .SPX .IXIC,.DJI mountain 2026-02-09 S & P 500, Nasdaq, Dow efficiency since Feb. 9, 2026 We’ll see if Friday’s fledgling achieve after multi-session losses can carry into Monday. Till then, listed below are three important drivers of the inventory market over the previous 5 classes. 1. AI fears wreak havoc Wells Fargo and Capital One , each Membership financials, have been crushed final week on considerations {that a} new AI-driven tax planning function may threaten the wealth administration business. The selloff in every started in earnest on Tuesday’s announcement from wealth platform Altruist and continued for 2 extra classes . The financials sector did stabilize some on Friday after Baird upgraded Wells Fargo inventory to a hold-equivalent score from a promote. Analysts view the financial institution’s valuation as extra cheap following the pullback. Nonetheless, shares of Wells Fargo and Capital One noticed weekly declines of greater than 7.4% and almost 7%, respectively. Membership Director of Portfolio Evaluation Jeff Marks stated Friday we might purchase some extra Capital One within the classes forward on the latest weak point. AI fashions have gotten extra superior by the day, and buyers would slightly shoot first and promote than be within the crosshairs earlier than discovering out how actual the dangers really are. It is one thing to look at, however not a thesis changer but. The slide in Large Tech continued. Alphabet , technically within the communications companies sector, was among the many portfolio’s greatest decliners, down over 5% final week. Traders have been involved in regards to the agency’s elevated AI investments regardless of posting a wonderful quarter simply a few weeks in the past. Our thesis within the inventory has not modified, so we purchased extra shares on Tuesday. Membership info know-how sector names, which have been slammed the prior week on worries AI will wreck their companies, stabilized. Salesforce dropped lower than 1% final week, whereas CrowdStrike and Palo Alto Networks recovered 8.6% and 4.8%, respectively. We by no means thought cybersecurity shares must be lumped in with software-as-a-service (SaaS) shares as a result of their merchandise are so essential in at the moment’s hostile world. That is why we purchased some extra CrowdStrike on Feb. 3. Palo Alto Networks studies its earnings within the week forward, and we’ll see if the cyber shares can preserve pulling away from the SaaS names. 2. ‘Olympic-sized rally’ Shares of Eaton, Honeywell, Dover, DuPont, and GE Vernova continued their banner 2026 performances. It is a part of what Jim Cramer calls an “Olympic-sized rally” for industrials and different cyclical names. It might need to do with the comeuppance of Large Tech or maybe that this market simply loves shares tied to the economic system, which has been trying fairly darn good currently. We raised our worth targets Wednesday on Eaton to $425 per share from $410 and GE Vernova to $875 from $800. Within the following session, the Membership locked in some income on Eaton, which jumped over 4% final week and has run 22% for the reason that begin of the yr. The trim doesn’t imply we’re any much less bullish on the facility administration options maker whose merchandise, like GE Vernova’s pure fuel generators, are utilized in energy-hungry knowledge facilities. Client staples have been additionally robust final week and outperforming for the yr. The group has gained 15.6% yr to this point in comparison with the S & P 500’s flat efficiency. Our standout within the sector has been Procter & Gamble , which has gained 11.7% in 2026. We have been shopping for P & G final yr when client staples have been on the outs. We thought we would have liked a hedge in opposition to our massive tech place in case a rotation passed off. That is precisely what occurred this yr. Recognizing the rally in P & G has been abrupt, we locked in some income and are actually ready to sit down again with a hold-equivalent 2 score and see what the inventory does subsequent. 3. Combined financial indicators Final week’s financial knowledge made Wall Road much more positive that the Fed will preserve charges regular when central bankers collect in March. Traders pored over the delayed January jobs report on Wednesday, which confirmed that jobs progress was stronger than anticipated. The patron worth index , an important gauge of U.S. inflation, got here simply two days later and indicated that the price of items and companies rose lower than anticipated final month. Stronger labor knowledge and a softer inflation studying have been excellent news for either side of the Fed’s twin mandate of fostering employment and worth stability. Whereas signaling a continued pause on charges subsequent month, the cooler CPI did increase charge reduce expectations for later this yr. The market is at present favoring two to 3 reductions in borrowing prices in 2026. Jim reiterated final week that the efficiency of Membership names like Dwelling Depot is closely tied to what the Fed does subsequent. In actual fact, he referred to the house enchancment retailer as a “Warsh inventory” — firms that want decrease charges to thrive. Dwelling Depot is tied to the housing market, which has been stalled resulting from elevated mortgage charges and residential costs. President Donald Trump ‘s choose for Fed chairman, Kevin Warsh , will assume the mantle, pending Senate affirmation, when present central financial institution chief Jerome Powell ‘s time period on the helm expires in Might. Warsh, a hawk throughout his earlier stint as a Fed governor, is on board with Trump’s decrease charge mandate. Fed charge cuts final yr and in 2024 have finished little to make borrowing prices for house fairness loans or mortgages that rather more inexpensive. (See right here for a full record of the shares in Jim Cramer’s Charitable Belief.) As a subscriber to the CNBC Investing Membership with Jim Cramer, you’ll obtain a commerce alert earlier than Jim makes a commerce. Jim waits 45 minutes after sending a commerce alert earlier than shopping for or promoting a inventory in his charitable belief’s portfolio. If Jim has talked a couple of inventory on CNBC TV, he waits 72 hours after issuing the commerce alert earlier than executing the commerce. 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