{"id":78498,"date":"2026-02-06T08:28:52","date_gmt":"2026-02-06T11:28:52","guid":{"rendered":"https:\/\/tech.einnews.com\/article\/889959533"},"modified":"2026-02-06T08:28:52","modified_gmt":"2026-02-06T11:28:52","slug":"tech-stock-shakeout-clouds-market-ahead-of-economic-data-deluge","status":"publish","type":"post","link":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/2026\/02\/06\/tech-stock-shakeout-clouds-market-ahead-of-economic-data-deluge\/","title":{"rendered":"Tech stock shakeout clouds market ahead of economic data deluge"},"content":{"rendered":"
<\/div>\n
\n

By Lewis Krauskopf<\/p>\n

NEW YORK, Feb 6 (Reuters) – An artificial intelligence-driven shakeout in the heavyweight technology sector is set to keep stock investors on edge in the coming week while a barrage of data could shift focus to the health of the economy.<\/p>\n

A deepening rout among software stocks has commanded Wall Street’s \u200battention this week, as investors worried about the extent to which AI would upend business models throughout the industry. Further weakness in the tech sector, which holds massive \u200cweights in the major U.S. equity indexes, dragged the benchmark S&P 500 lower, erasing its gains for 2026.<\/p>\n

Below the surface, investors have been encouraged about a rotation from tech to other parts of the market that underperformed for \u200cmost of the bull market that began more than three years ago. While tech has struggled, energy, consumer staples and industrials have shined so far this year.<\/p>\n

“Rotation is the dominant theme this year and continues to be as we see these old-economy sectors and stocks really get some love,” said Angelo Kourkafas, senior global investment strategist at Edward Jones. “At the same time, the bar of expectations seems to be so high for tech that no matter what companies report, it seems like the natural inclination from investors is to take some profits.”<\/p>\n

The tech sector has slid more than \u206012% since it peaked for the year in late October. Over \u200cthat period, most of the other 11 S&P 500 sectors have posted gains, including three with double-digit percentage rises.<\/p>\n

But the overall S&P 500 (^GSPC<\/a>) has fallen over 1% in that time. With the tech sector still accounting for about one-third of the weight in the S&P 500, investors fear \u200dthe index will struggle if tech continues to falter.<\/p>\n

“A market can absorb a prolonged rotation with large sector winners without obvious index-level stress for quite some time,” Jim Reid, head of macro and thematic research at Deutsche Bank, said in a note. “However, the longer and deeper the selloff in a dominant sector becomes, the harder it can be for the broader index to withstand the drag.”<\/p>\n

Stress is centering on software, with the S&P 500 software and services index tumbling 17% in a little over a week. Fears about AI disruption were compounded by disappointing earnings \u200creports including from software giant Microsoft<\/a> (MSFT<\/a>).<\/p>\n

The fallout for software underscores how investors are increasingly trying to determine winners and losers from AI.<\/p>\n

“Before it was, AI lifted all ships,” said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments. “Now there are concerns that this massive acceleration in the technology space could cause other businesses to not see the kind of growth rate they did before.”<\/p>\n<\/p><\/div>\n

\n

The coming week will see reports in the software industry from AppLovin and Datadog. Results are also due from high-profile companies including Coca-Cola (KO<\/a>), Cisco Systems and McDonald’s as fourth-quarter earnings season winds down.<\/p>\n

Monthly reports on employment and consumer prices will be released after both were pushed back slightly due to the recently ended three-day government shutdown.<\/p>\n

January’s nonfarm \u2060payrolls report, out on Wednesday, is expected to show an increase of 70,000 jobs, according to a \u200bReuters poll. Investors are trying to assess whether weakening in the labor market has tapered off. While the Federal \u200bReserve cited stabilization in the jobs market as it held interest rates steady last month, a survey on Thursday showed layoffs announced by U.S. employers surged in January.<\/p>\n

Meanwhile, inflation remains “somewhat elevated” in the view of the Fed, with the January consumer price index due on Friday offering the latest insight \u200dinto such trends.<\/p>\n

With the Fed describing diminished risks \u2060to both inflation and employment, markets are expecting the central bank to hold off on further interest rate cuts until its June meeting. By that point, President Donald Trump’s newly nominated Fed chair, Kevin Warsh, could be in charge.<\/p>\n

After the central bank cut rates at the end of last year, Fed fund futures have continued to \u2060price in roughly two further quarter-percentage-point cuts by December, expectations that generally held in the wake of the announcement of Warsh’s nomination late last month.<\/p>\n

<\/section>\n

“Rate expectations have been remarkably stable over the last couple of weeks,” Kourkafas said. “We’ll \u200csee if any either weakness in the labor market data or any surprising cool down in inflation accelerates a bit the timeline for when the \u200cmarket thinks the next rate cut may be delivered.”<\/p>\n

(Reporting by Lewis Krauskopf; Editing by David Gregorio)<\/p>\n<\/p><\/div>\n

<\/a><\/strong> <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

… industry. Further weakness in the tech<\/span> sector, which holds massive … than three years ago. While tech<\/span> has struggled, energy, consumer … that time. With the tech<\/span> sector still accounting for about … massive acceleration in the technology<\/span> space could cause other …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-78498","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/posts\/78498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/comments?post=78498"}],"version-history":[{"count":0,"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/posts\/78498\/revisions"}],"wp:attachment":[{"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/media?parent=78498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/categories?post=78498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new7.shop\/zerocostfreehost\/index.php\/wp-json\/wp\/v2\/tags?post=78498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}