Weekly Markets & Risk Wrap — Week Ending February 6, 2026

(1) Executive Summary

U.S. markets ended the week with a rotation rather than a broad break: the Dow outperformed while large-cap tech lagged, and volatility stayed elevated versus January’s calmer regime.  Policy signaling remained a primary driver—Fed officials reinforced a data-dependent posture with divergent emphasis on risks, keeping rates-sensitive assets headline-reactive.

Cross-asset moves were more dramatic than equities: precious metals and crypto experienced sharp two-way volatility, and credit spreads widened modestly into week’s end, consistent with a mild “risk premium rebuild,” not acute stress.  Geopolitics re-entered the energy narrative via U.S.–Iran talks, keeping crude sensitive to incremental headlines.

(2) Markets & Rates This Week (no curve analysis)

Equities & volatility (weekly)

• S&P 500: down about 0.1% on the week.

• Dow: up about 2.5% on the week.

• Nasdaq: down about 1.8% on the week.

• Russell 2000: up about 2.2% on the week (notable snapback after prior weakness).

  
  

Treasury yields (levels and moves only)

• Friday close context: 2-year around 3.49%; 10-year around 4.21%.

• Yields traded in headline-driven increments through the week, with the front end especially sensitive to Fed commentary cadence.
  

(3) Policy & Liquidity Signals

Fed communication: “steady policy, risk-aware”

• Fed Vice Chair Philip Jefferson struck a cautiously optimistic tone but emphasized that policy adjustments remain contingent on how risks evolve.

• San Francisco Fed President Mary Daly highlighted labor-market fragility risks in qualitative terms and left room for future easing if conditions warrant, underscoring ongoing internal balance-of-risks debate.
  

Regulatory/financial system signal

• The Fed indicated it would keep large-bank capital buffers steady for the 2026 stress-testing cycle as it considers process changes to the stress tests—relevant for bank capital planning and broader credit transmission.
  

(4) Corporate, Credit & Real‑Economy Signals

Earnings & guidance: AI capex scrutiny rises

• Big Tech’s quarter reinforced a key theme: accelerating AI infrastructure investment alongside heightened investor focus on returns and cloud growth durability.

• Amazon became a focal point after outlining a very large 2026 capex plan tied to AI buildout, intensifying debate about near-term profitability vs. long-horizon positioning.
  

Credit market tone

• High-yield spreads widened through the week, with ICE BofA U.S. High Yield OAS rising to ~2.97 by Feb 5 (latest update).

• The magnitude looks incremental—a repricing of risk rather than broad dysfunction—but worth monitoring if volatility persists.
  

Layoffs / workforce actions (selected headlines)

• Amazon layoffs continued to surface at the state/region level in reporting tied to corporate restructuring.

• Walmart disclosed plans affecting about 100 corporate roles tied to consolidation/restructuring.

• T‑Mobile reported workforce reductions in Washington state via filings, reflecting ongoing cost and operating-model adjustments.
  

(5) The Week’s Defining Theme

“Return on investment” replaced “AI adoption” as the marginal driver.

The market is no longer debating whether AI is transformative; it’s pricing the path from spending to returns. That shift showed up in earnings reactions, sector dispersion, and modest credit spread widening even as headline index moves stayed contained.

(6) What to Watch Next Week (calendar and scenario framing only)

Calendar lenses (high level)

• Continued earnings and guidance focus—especially where capex, margins, and monetization timelines intersect.

• Ongoing Fed speak: watch for consistency (or lack thereof) across officials on patience vs. downside-risk insurance.

• Energy/geopolitics watch: developments around U.S.–Iran diplomacy and its implications for supply risk premia.
  

Scenario framing

• Constructive: earnings guidance holds up, spreads stabilize, and volatility fades—supporting a “soft landing for risk premia.”

• Cautionary: further capex/ROI anxiety triggers broader tech de-rating, spreads continue widening, and volatility remains sticky.
  

(7) Call to Action

For the slower-moving macro framework that anchors these weekly cross‑currents, see the current Monthly U.S. Economic Report: [Monthly Report Link Placeholder].

Upcoming events to track into mid‑February

• The next wave of earnings prints and guidance updates (capex, margins, demand durability).

• Additional Fed communications shaping the market’s policy-path narrative.

• Geopolitical/energy headlines that can reprice risk quickly.
  

(8) Brief disclaimer

This publication is provided for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. Nothing herein should be construed as a recommendation to buy, sell, or hold any security or to engage in any particular investment strategy. Views reflect conditions as of the week-ending date above and are subject to change.