What to watch this week

AI turbulence was the dominant theme in markets last week, with software, real estate, financial services, and logistics stocks all facing selling pressure on worries about the scale of AI-related disruption to their businesses.

On Friday, the tech-focused Nasdaq Composite (^IXIC) fell by 0.2% to close the week on a loss of 2.1%. Meanwhile, the S&P 500 (^GSPC) managed a gain of less than 0.1% on Friday but still finished the week down a cumulative 1.4%. The Dow Jones Industrial Average (^DJI) picked up 0.1% in the week’s final session but logged a weekly decline of 1.2%.

These moves in the index flattered what were sharp moves beneath the surface. Whether these disruptions continue will be the theme most closely tracked by investors in the week ahead.

Headlining the economic data calendar this week will be Friday’s Personal Consumption Expenditures (PCE) report, offering investors a read on consumer spending in the holiday shopping-filled month of December and a look at inflation.

The data comes after last week’s Consumer Price Index (CPI) numbers showed that inflation slowed more than expected in January.

Investors will also get a reading on market sentiment from the University of Michigan on Friday, a key indicator of how consumer vibes square with the hard spending data. Earlier this month, that measure moved to its highest level since August, but remains depressed compared to a year ago.

In the corporate world, attention is likely to focus on Thursday’s fourth quarter release from Walmart (WMT), a strong indicator of consumer spending, with the report marking the first for new Walmart CEO John Furner.

Other notable results should include Wednesday readings from DoorDash (DASH) and Molson Coors (TAP), as well as several names that will offer a signal on how AI’s power demand is changing the energy business, with Constellation Energy (CEG), Energy Transfer (ET), and Southern Company (SO) all set to report.

US markets will be closed on Monday for Presidents’ Day.

First, it was software. Then, it was financial services and retail. Eventually, the selling turned to logistics.

A steep sell-off that began in early February and sent shares of software stalwarts like Salesforce (CRM) and ServiceNow (NOW) tumbling has turned into a market headache moving from sector to sector, with stocks spiraling on any inkling that new AI tools might upset their core business.

This week, a press release saying that a karaoke machine maker had created a new AI-powered logistics platform allowing companies to “scale freight volumes by 300% to 400% without a corresponding increase in operational headcount” sent shares of CH Robinson Worldwide (CHRW) and Universal Logistics (ULH) down 12% and 10%, respectively, for the week.

“The glaring theme underneath the surface for not just Tech, but for every corner of the market right now is an aggressive shoot [first] ask questions later for any area of the market that has an AI headline,” Jefferies analyst Jeff Favuzza wrote to clients on Feb. 12.

Big Tech stocks have also sold off, with Nvidia (NVDA), Alphabet (GOOGL, GOOG), and Amazon (AMZN) all slipping on Friday, even as spending projections from the largest companies in the country have boomed.

“The AI disruption-led selloff in February” has been “driven by the legitimate belief that AI-driven change is coming faster not only to software, but to many other sectors,” UBS strategist Matthew Mish wrote.

“The timing of AI disruption remains indeterminate, and the fog of uncertainty is unlikely to dissipate quickly,” he added.

And software stocks are still in the crosshairs.

AppLovin (APP) stock fell 18% after the company’s earnings disappointed this week, and Pinterest (PINS) stock fell 21% after that company’s results.

On Wednesday, Wall Street and Main Street were greeted with a surprise as payrolls data from the Bureau of Labor Statistics showed the US economy added 130,000 jobs in January, double economists’ estimates.

And on Friday, the BLS’s monthly Consumer Price Index showed that inflation cooled more than expected in January, while “core” CPI, which excludes the more volatile categories of food and energy, rose at the slowest annual rate since December 2021.

Yet, Deutsche Bank analysts wrote in a note to clients on Friday, “every rose has its thorn,” noting this economic data was not without flaws.

For instance, January’s jobs numbers came in far ahead of expectations, but revisions cut 400,000 job additions from 2025’s total, bringing the year’s monthly average to just 15,000 or so jobs added per month.

In Friday’s CPI numbers, “the categories that surprised to the upside — non-vehicle goods and non-shelter services — are the ones that matter most for inflation persistence,” BNP analyst Gaston Dimant wrote on Friday.

The combined picture is likely to keep rates steady through the end of Jay Powell’s tenure as Fed chair, said John Kerschner, global head of securitized products at Janus Henderson Investors.

“Looking forward, we would expect this environment of relatively strong growth, juiced by higher tax refunds from the [One Big Beautiful Bill Act], an improving job market and a continued trend of lower inflation will keep interest rates in a steady range as we await Kevin Warsh’s fresh perspective at the Fed,” Kerschner wrote.

As of Friday afternoon, traders were pricing in odds of just over 50% that the Fed will cut rates by a quarter point by June, bringing the target rate down to a range of 3.25%-3.5%. Powell’s term as chair ends in May.

Economic data: No economic data.

Earnings calendar: BHP Group (BHP), Sonoco Products (SON), Otter Tail (OTTR), ReNew Energy Global (RNW)

Economic data: ADP weekly employment change, week ended Jan. 31 (6,500 previously); Empire manufacturing, February (8.7 expected, 7.7 previously); NAHB housing market index, February (37 previously)

Earnings calendar: Medtronic (MDT), Palo Alto Networks (PANW), Constellation Energy (CEG), Cadence Design Systems (CDNS), Republic Services (RSG), Energy Transfer (ET), Vulcan Materials (VMC), EQT Corporation (EQT), Kenvue (KVUE), DTE Energy Company (DTE), FirstEnergy Corp. (FE), Devon Energy (DVN), Expand Energy (EXE), Leidos Holdings (LDOS), InterContinental Hotels Group (IHG), Genuine Parts (GPC), Sunoco (SUN)

Economic data: MBA mortgage applications, week ended Feb. 13 (-0.3% previously); Durable goods orders, December, preliminary reading (-1.7% expected, +5.3% previously); Housing starts, December (1.32 million expected); Industrial production, month-on-month, January (+0.4% expected, +0.4% previously); FOMC meeting minutes released for Jan. 28 meeting

Earnings calendar: Analog Devices (ADI), Booking Holdings (BKNG), Lloyds Banking Group (LYG), CRH (CRH), Moody’s Corporation (MCO), Carvana (CVNA), DoorDash (DASH), Occidental Petroleum (OXY), Kinross Gold Corporation (KGC), Garmin (GRMN), eBay (EBAY), Nutrien (NTR), Texas Pacific Land Corporation (TPL), Edison International (EIX), American Water Works (AWK), Verisk Analytics (VRSK), Pan American Silver Corp. (PAAS), Royal Gold (RGLD), Global Payments (GPN), Reliance (RS), Western Midstream Partners (WES), Host Hotels & Resorts (HST), Jones Lang LaSalle (JLL), Equinox Gold Corp. (EQX), Figma (FIG), HF Sinclair (DINO), Molson Coors (TAP), Wingstop (WING), Wyndham Hotels & Resorts (WH)

Economic data: Philadelphia Federal Reserve business outlook, February (7.7 expected, 12.6 previously); Initial jobless claims, week ended Feb. 14 (227,000 previously); Continuing claims, week ended Feb. 7 (1.86 million previously)

Earnings calendar: Walmart (WMT), Rio Tinto (RIO), Deere & Co. (DE), Newmont Corporation (NEM), The Southern Company (SO), Quanta Services (PWR), Targa Resources (TRGP), Comfort Systems USA (FIX), Consolidated Edison (ED), Cenovus Energy (CVE), Live Nation Entertainment (LYV), Copart (CPRT), Extra Space Storage (EXR), Teck Resources (TECK), CenterPoint Energy (CNP), Alliant Energy (LNT), Fidelity National Financial (FNF), Guardant Health (GH), DT Midstream (DTM), American Homes 4 Rent (AMH), Gaming and Leisure Properties (GLPI), Texas Roadhouse (TXRH)

Friday

Economic data: PCE price index, month-on-month, December (0.3% expected, 0.2% previously); PCE price index, year-on-year, December (+2.8% expected, +2.8% previously); Core PCE price index, month-on-month, December (0.3% expected, 0.2% previously); Core PCE price index, year-on-year, December (+2.9% expected, +2.8% previously); S&P Global US manufacturing PMI, February, preliminary reading (52.4 previously); S&P Global US services PMI, February, preliminary reading (52.7 previously); University of Michigan sentiment, February, final reading (56.9 expected, 57.3 previously)

Earnings calendar: AngloGold Ashanti (AU), PPL Corporation (PPL), Lamar Advertising (LAMR), Sibanye Stillwater (SBSW), Hudbay Minerals (HBM), Portland General Electric (POR), Balchem Corporation (BCPC), Array Digital Infrastructure (AD), Western Union (WU)

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