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February 2, 2026
Good morning,
Markets
For the week ending 1/30/2026:
- The S&P 500 increased 0.3% to close at 6,939.03.
- The yield of the 10-year Treasury bond increased from 4.239% to 4.241%.
- Oil increased from $61.07 to $65.21.
- The CBOE Volatility Index (VIX) increased from 16.09 to 17.44.
- U.S. dollar currency exchange rates were:
- EUR/USD: 1.19 (USD weaker from a week ago)
- GBP/USD: 1.38 (USD weaker from a week ago)
- USD/JPY: 154.78 (USD weaker from a week ago)
Market Headlines
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Fed Holds Rates: After three consecutive rate cuts of 0.25%, the Federal Reserve announced on Wednesday that they decided to hold rates steady during their January 27-28 meeting. In their policy statement, Fed officials stated that “inflation remains somewhat elevated” while acknowledging that “the unemployment rate has shown some signs of stabilization.” Fed Chair Jerome Powell signaled that future rate cuts are not imminent and will be determined on a meeting-by-meeting basis.
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Divided Tech Sector: A slew of corporate earnings was released this week across the tech sector. Meta shares surged more than 10% on Wednesday after its Q4 2025 earnings and Q1 2026 revenue projections beat analyst expectations. Meanwhile, Microsoft also beat analyst earnings expectations, but its stock plummeted 10% on Thursday due to investor concerns over slowing cloud growth and heavy spending on AI infrastructure. Tesla stock was volatile on Thursday, dipping more than 3% after reporting its first-ever decline in annual revenue. And while Apple reported record-breaking earnings, investors have raised concern regarding the company’s AI strategy moving forward, which caused shares to slip in pre-market trading on Friday before recovering to close 0.46% higher.
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Precious Metal Volatility: Gold and silver extended their early-2026 rally for most of the week, climbing above $5,500 and $120 per ounce, respectively, on Thursday. Prices reversed sharply on Friday, however, after the announcement that Federal Reserve Governor Kevin Warsh would succeed Jerome Powell as Fed Chair. Based off Warsh’s history as a Fed governor, the nomination initially fueled expectations of a more hawkish Federal Reserve, sending the U.S. dollar sharply higher. As a result, gold and silver suffered their worst single-day performance since 1980, with silver futures plunging more than 30% and gold falling over 11%.
Key Takeaways
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Markets reacted sharply to Kevin Warsh’s nomination as Federal Reserve Chair. Following President Trump’s announcement on Friday, investors reassessed the outlook for monetary policy and future interest rates. U.S. stocks declined, precious metals sold off sharply, and the U.S. dollar rallied. Over the past year, investor concerns that the Fed could lose some of its independence under a Trump administration have contributed to a rally in precious metals and a weakening U.S. dollar. While the question of Fed independence remains a concern, Warsh’s prior experience as a Fed governor (2006-11) appears to have given investors some confidence that the Fed will continue to operate independently.
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After a packed week of tech earnings reports, investors appear to be looking beyond earnings headlines. While several of the Magnificent 7 companies (Apple, Meta, Microsoft, and Tesla) reported earnings that beat estimates, underlying concerns regarding capital expenditures (Microsoft) and future margins (Apple) contributed to pressure on stock prices. Microsoft experienced its worst week since March 2020 as investors reacted to the scale of capital spending required to support its AI initiatives. Historically, markets have responded to better-than-expected earnings with stock rallies; however, this week suggests that earnings alone may no longer be sufficient to drive prices higher, as investors increasingly focus on whether underlying costs and investments are becoming excessive.
The Week Ahead: February 2-6
- Monday: Palantir earnings
- Tuesday: Job openings report
- Wednesday: ISM services PMI, ADP employment report
- Thursday: Initial jobless claims
- Friday: U.S. employment report & unemployment rate
Until next week,
Weller Financial Group
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