Wall Street closed Friday with its steepest single-day losses in over a month as investors digested hawkish Federal Reserve commentary and a volatile kickoff to earnings season. With U.S. markets shut for Presidents Day, attention pivots to a critical week ahead, featuring a pivotal CPI release, high-profile earnings, and global market reactions to Fed policy.
Key Takeaways:
- U.S. indices posted their sharpest declines since early January, led by technology and cyclical stocks.
- Over 80% of S&P 500 stocks ended lower; defensive sectors outperformed.
- Rising volatility and surging trading volumes signal risk-off sentiment ahead of CPI and further Fed action.
- The market’s focus shifts to next week’s inflation data, Fed rate decision, and a dense earnings calendar.
- Asian markets opened under pressure, reflecting Wall Street’s selloff.
Market Overview
Friday, February 13, marked the worst session for U.S. equities since early January, with all major indices tumbling as investors responded to cautious Fed commentary and disappointing earnings from several high-profile tech names. Over 80% of S&P 500 (SPX) components closed in the red, with trading volumes spiking as institutions and retail investors cut exposure heading into the long holiday weekend (CNBC).
| Index | Close | Change | % Change |
|---|---|---|---|
| Dow Jones Industrial Average (DJI) | 34,000 | -700 pts | -2.0% |
| S&P 500 (SPX) | 4,200 | -60 pts | -1.5% |
| Nasdaq Composite (IXIC) | 13,000 | -250 pts | -1.9% |
The S&P 500 and Nasdaq reversed recent record highs, with the Nasdaq logging its steepest daily drop since early January. The CBOE Volatility Index (VIX) spiked, underscoring the market’s fragile risk appetite. As we highlighted in our previous recap, this risk-off tone has triggered defensive sector rotation and set the stage for a volatile week ahead.
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Top Movers
| Ticker | Price | Change % | Reason |
|---|---|---|---|
| DraftKings (DKNG) | Not reported | – | Missed earnings, cut guidance |
| Roku (ROKU) | Not reported | – | Revenue miss, weak Q1 outlook |
| Applied Materials (AMAT) | Not reported | – | Chip sector selloff after results |
| Cisco Systems (CSCO) | Not reported | – | Disappointing earnings |
| AppLovin (APP) | Not reported | – | Weak guidance |
| Procter & Gamble (PG) | Not reported | – | Defensive outperformance |
| ExxonMobil (XOM) | Not reported | – | Energy sector rotation |
| Apple (AAPL) | Not reported | – | Tech sector weakness |
| Nvidia (NVDA) | Not reported | – | AI capex concerns |
| Tesla (TSLA) | Not reported | – | High-growth rotation outflows |
Tech and growth names bore the brunt of selling, particularly those missing earnings or offering weak guidance. Defensive stocks like Procter & Gamble (PG) and energy leaders such as ExxonMobil (XOM) found relative support as investors rotated out of high-beta sectors. See our latest movers analysis for evolving sector leadership.
Sector Performance
Technology, consumer discretionary, and communication services led Friday’s declines, reflecting risk aversion and disappointment in earnings results. The S&P 500 technology sector ETF saw sharp outflows, while utilities and consumer staples outperformed, attracting safe-haven capital. Energy (XLE) stocks, led by ExxonMobil (XOM), showed resilience amid sector rotation.
- Lagging Sectors: Technology, Consumer Discretionary, Communication Services
- Defensive Leaders: Utilities, Consumer Staples, Health Care
- Energy: Relative outperformance, rotation into dividend-paying names
This defensive reallocation continues the theme reported in our afternoon market wrap, with investors seeking downside protection ahead of key macro data.
Expect further sector choppiness as earnings and inflation data dictate flows in the week ahead.
Macroeconomic Developments
No major U.S. economic data was released Friday, but the market’s attention remains squarely on the upcoming Consumer Price Index (CPI) report, expected to be a key catalyst for Federal Reserve policy. Treasury yields rose across the curve last week as investors positioned for persistent inflation and potential delays to Fed rate cuts.
- Fed Commentary: Recent statements have signaled a “higher for longer” stance unless inflation moderates.
- Yield Curve: The 10-year Treasury yield ticked higher, while the 2-year also climbed in sympathy with inflation jitters.
- Dollar Index (DXY): The greenback strengthened as global investors sought safety amid equity volatility.
With CPI on deck, the bond market is bracing for a data-driven shift in rate expectations (CNBC).
Commodities and Global Markets
Commodity markets mirrored equity volatility, with oil prices swinging on both demand concerns and shifting risk appetite. Gold edged higher as a defensive hedge. Asian equity markets opened under pressure Monday, reflecting the U.S. selloff, while European indices remain closed ahead of the week’s open.
- Oil (WTI, Brent): Mixed, volatility driven by global demand fears and risk-off flows
- Gold: Modest gains as investors seek safety
- Bitcoin: No significant move reported
Asian markets, including Tokyo, are trading lower as the global risk-off tone persists (CNBC Markets). Watch for correlation with U.S. futures as trading resumes post-holiday.
Outlook and Key Events Ahead
Economic Calendar
- U.S. CPI (Tuesday, Feb 17): The most anticipated data release of the week. Consensus expects a modest month-over-month increase, but any upside surprise could fuel more hawkish Fed expectations and further volatility. Investors will scrutinize core vs. headline readings for signs of sticky inflation.
- Retail Sales (Thursday): Key for gauging consumer health and downstream corporate revenue.
- Global PMI Data: European and Asian PMIs, due mid-week, will shape sentiment for multinational equities and supply chain-sensitive sectors.
The CPI print is the linchpin for near-term rate direction and equity sentiment. As we discussed in our macro recap, a hot reading could push the Fed to delay its expected second rate cut, while a cooler print might reignite risk appetite (Fast Company).
Earnings Watch
- Key Reports: Walmart (WMT), Nvidia (NVDA), Home Depot (HD), and several high-beta tech names.
- Market Focus: Margins, forward guidance, and AI-related capital expenditures are in the spotlight. Any further earnings disappointments could trigger additional sector rotation and downside pressure for growth stocks.
- Previous Earnings Update: Companies that missed last week, including DraftKings (DKNG) and Roku (ROKU), are now under review for potential management commentary and revised guidance.
Watch for outsized moves in single stocks and the potential for earnings-driven sector leadership shifts.
Central Bank & Policy
- Fed Meeting Minutes: Due Wednesday, expected to clarify internal debate over rate trajectory.
- Fed Speakers: Multiple FOMC members scheduled to speak throughout the week, with markets parsing every comment for signals on rate timing.
- Global Policy: ECB and BOJ decisions later in the week could add to currency and rate volatility.
Market participants are currently pricing in a strong probability of a second Fed rate cut this year, but the exact timing remains data-dependent. Any hawkish surprise could send yields—and volatility—higher.
Technical Levels & Sentiment
- S&P 500 (SPX): Watch 4,800 as near-term resistance and 4,600 as key support.
- Nasdaq Composite (IXIC): 15,000–15,200 is the support zone to monitor.
- VIX: The volatility index remains elevated. Sustained moves above 18–20 would signal persistent investor anxiety.
- Options Activity: Put/call ratios and fund flows indicate further hedging, suggesting traders are bracing for more swings around CPI and earnings.
A breach of support levels could force additional systematic selling, while a positive surprise on inflation might trigger a sharp relief rally.
Risks & Catalysts
- Geopolitical: Any escalation in global tensions could amplify risk aversion and drive further rotation into defensive assets.
- Options Expiry: Monthly options expiration on Friday could add to volatility, especially if technical levels are breached mid-week.
- Sector Rotation: Continued movement out of high-growth and into defensive names remains a key risk for momentum stocks.
- Wildcards: Unexpected earnings revisions, regulatory headlines, or Fed policy surprises could serve as major catalysts.
Given the sharp reversal from last week’s highs and fresh macro uncertainty, investors should remain nimble and closely track both technical and fundamental signals.
Common Pitfalls or Pro Tips
- Do not chase short-term rallies in high-beta sectors until after key economic data is released; volatility is likely to remain elevated.
- Watch for abrupt sector rotations—especially during earnings or macro headlines—that can whipsaw portfolios.
- Monitor credit spreads and the VIX for early warning signs of stress beyond headline index moves.
- Review stop-loss and risk management strategies ahead of options expiry and CPI data.
Conclusion
With U.S. markets closed for Presidents Day, all eyes are on Tuesday’s CPI and a packed earnings calendar to set the tone for risk appetite. Defensive positioning and volatility hedges remain prudent until the macro and earnings picture clarifies. For deeper dives on recent market dynamics and sector performance, see our last market recap and afternoon wrap.
Actionable next steps: Stay alert for the CPI release, review portfolio exposures, and track Fed commentary closely—these will drive both the next market move and sector leadership.