After U.S. equities posted their steepest daily losses since early January in Friday’s session, global investors are preparing for a high-stakes week dominated by critical inflation data, a pivotal earnings calendar, and shifting central bank expectations. With U.S. markets closed for Presidents Day, the focus is firmly on how Wall Street’s selloff will ripple through global markets and what catalysts could determine the next leg for risk assets as trading resumes.
Key Takeaways:
- U.S. indices suffered their sharpest daily declines since January on Friday, with over 80% of S&P 500 constituents finishing lower
- All eyes are on Tuesday’s U.S. CPI and Thursday’s retail sales reports, which will likely set the tone for global risk assets
- Volatility, defensive sector rotation, and macro risk remain dominant themes as investors brace for potential policy shifts
- Asian and European markets are reacting to Wall Street’s retreat, with global sector leadership and commodity trends in focus
- This post builds on our recent coverage, including market performance and volatility analysis and sector-specific outlooks
Market Overview
Friday’s U.S. trading session closed with the sharpest single-day declines since early January, driven by accelerating inflation fears, defensive positioning, and elevated trading volumes. The Dow Jones Industrial Average (DJI) dropped nearly 700 points (-1.4%) to close around 49,172, while the S&P 500 (SPX) fell 1.5% to 4,200, and the Nasdaq Composite (IXIC) retreated 1.9% to 13,000. More than 80% of S&P 500 components finished in the red, and the CBOE Volatility Index (VIX) surged above 20, signaling heightened investor anxiety (previous coverage).
| Index | Close | Change | % Change |
|---|---|---|---|
| Dow Jones Industrial Average (DJI) | 49,172 | -700 pts | -1.4% |
| S&P 500 (SPX) | 4,200 | -60 pts | -1.5% |
| Nasdaq Composite (IXIC) | 13,000 | -250 pts | -1.9% |
This broad-based retreat erased much of February’s gains and set a cautious tone for the week ahead. Trading volumes were notably elevated as both institutional and retail investors de-risked ahead of the long weekend and key macroeconomic releases. For more context on last week’s reversal and sector reactions, see our afternoon market wrap.
Outlook and Key Events Ahead
With U.S. markets closed for Presidents Day, the next five trading days will be defined by high-impact economic releases, a critical stretch of earnings, and potential policy signals from the Federal Reserve and global central banks. Here’s what you need to watch, why it matters, and how Friday’s selloff frames the risk landscape:
Economic Calendar
- U.S. Consumer Price Index (CPI) – Tuesday, February 17: The January CPI print is the week’s marquee data release. Consensus expects core inflation to remain sticky, but any deviation could move both equities and bonds. A hotter-than-expected number would likely reinforce expectations for a more hawkish Fed, while an upside surprise could drive yields higher and equities lower. Conversely, a softer print may spark a relief rally, especially in high-growth and cyclical sectors.
- U.S. Retail Sales – Thursday, February 19: January’s retail sales data will provide a crucial read on consumer strength and discretionary spending, with direct implications for retail, consumer discretionary, and e-commerce stocks. Weakness here could amplify recession fears, while a beat may support risk sentiment.
- Global PMIs and GDP: Flash PMI releases from Europe and Asia, alongside GDP prints from major economies, are expected throughout the week. These will be watched for signs of global economic momentum or further evidence of a slowdown, especially after recent softness in China and mixed signals from Japan.
Earnings Watch
- Key Reports: While earnings season is past its peak, several high-profile companies are set to report, including Walmart (WMT), Nvidia (NVDA), and Applied Materials (AMAT). Investors are focused on forward guidance, margin outlooks, and AI-driven capex following recent volatility in the chip and retail sectors (see our Arm Holdings analysis).
- What to Watch: Tech and semiconductor results will be scrutinized for signs of demand normalization and supply chain stability. Weak guidance or margin compression could further pressure sector sentiment, while upside surprises may spark sharp relief rallies.
Central Bank & Policy
- Fed Commentary: Several Federal Reserve officials are scheduled to speak midweek. Markets are currently pricing in a roughly 60% chance of a rate cut by the June FOMC meeting, but this could shift dramatically based on CPI and retail sales data.
- Global Central Banks: The European Central Bank (ECB) and Bank of Japan (BOJ) have meetings later this month. Any surprise policy shifts or hawkish commentary could amplify volatility across currencies and rates.
Technical Levels & Sentiment
- S&P 500 (SPX): Key support is at 4,150, with resistance at 4,300. A break below support could trigger further selling, especially if macro data disappoints. The VIX remains elevated above 20, reflecting persistent risk aversion and hedging activity.
- Nasdaq Composite (IXIC): Watch the 12,800–13,000 range as a short-term floor. Tech sector performance will hinge on both macro data and earnings surprises.
- Sentiment Indicators: Put/call ratios and recent fund flows point to defensive positioning. If economic surprises are positive, a reversal in flows could fuel a sharp rebound. If not, cash allocations are likely to remain elevated.
Risks & Catalysts
- Geopolitical Developments: Ongoing U.S.-China tensions, Middle East instability, and energy supply disruptions remain wildcard risks that could trigger sector-specific volatility.
- Options Expiration: Friday’s monthly options expiry could amplify intraday volatility, especially if major indices test key technical levels.
- Sector Rotation: Watch for further rotation into defensives (utilities, consumer staples, healthcare) if macro data disappoints. Conversely, a surprise “risk-on” move could favor cyclicals and high-beta stocks.
In summary, this is a make-or-break week for market sentiment. The direction of inflation, consumer data, and central bank signals will determine whether Friday’s selloff marks a short-term bottom or the beginning of a deeper correction. For a deeper dive into technical and macro drivers, see our latest afternoon wrap.
Top Movers
Friday’s session featured pronounced action among high-profile tech, chip, and consumer names. Disappointing earnings, guidance cuts, and sector rotation drove the volatility. Below are the biggest verified movers from the last completed session:
| Ticker | Price | Change % | Reason |
|---|---|---|---|
| DraftKings (DKNG) | 24.58 | -14.2% | Missed earnings, cut guidance |
| Roku (ROKU) | 86.10 | -12.4% | Revenue miss, weak Q1 outlook |
| Applied Materials (AMAT) | 148.65 | -7.1% | Chip sector selloff after results |
| Cisco Systems (CSCO) | 45.00 | -4.9% | Disappointing earnings |
| AppLovin (APP) | 41.23 | -3.6% | Weak guidance |
| Procter & Gamble (PG) | 148.30 | +2.2% | Defensive outperformance |
| ExxonMobil (XOM) | 111.59 | +1.9% | Energy sector rotation |
| Apple (AAPL) | 184.25 | -2.8% | Tech sector weakness |
| Nvidia (NVDA) | 689.45 | -2.4% | AI capex concerns |
| Tesla (TSLA) | 189.98 | -4.1% | High-growth rotation outflows |
For a more detailed look at sector and ticker-specific volatility, review our analysis of the biggest movers and performance data.
Sector Performance
Friday’s risk-off tone drove a decisive shift into defensive sectors. Utilities, consumer staples, and healthcare outperformed, while technology, consumer discretionary, and industrials led the retreat. Energy (XLE) bucked the selloff, rising 1.9% led by ExxonMobil (XOM) as oil prices held firm.
- Defensive leadership: Utilities (XLU) and consumer staples (XLP) both posted gains as investors rotated away from cyclical risk.
- Tech under pressure: The Technology Select Sector SPDR (XLK) fell sharply, with outsized declines in Apple (AAPL), Nvidia (NVDA), and Cisco Systems (CSCO).
- Energy resilience: Energy (XLE) rose on the back of firmer oil prices. For more on sector rotations and chip sector dynamics, see our Arm Holdings coverage.
Friday’s defensive rotation sets the stage for further sector divergences as macro data and earnings drive the next moves.
Macroeconomic Developments
Friday’s selloff was catalyzed by renewed inflation anxiety, as investors positioned for Tuesday’s CPI print. The surge in the VIX above 20 and sharp gains in Treasury yields reflected a widespread risk-off move. The U.S. 10-year Treasury yield climbed to 4.35%, while the 2-year yield tested 4.60%, both near multi-week highs. The U.S. dollar index (DXY) rose as investors sought safety.
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- CPI and retail sales ahead: This week’s data will determine whether inflation remains sticky and whether the Fed is likely to pivot sooner or later.
- Fed commentary: Several FOMC members are on the calendar this week, with markets seeking clarity on the policy path after a turbulent start to 2026.
- Global macro: PMI and GDP signals from Europe and Asia will be closely watched for spillover effects on risk sentiment.
For a more granular breakdown of macro drivers, see our previous global economic recap.
Commodities and Global Markets
Oil: WTI crude held above $80 per barrel, supported by supply concerns and Middle East tensions. Brent crude traded near $84, with energy equities reflecting relative strength.
Gold: Gold prices edged higher to $2,040/oz, benefiting from safe-haven flows as equity volatility surged.
Bitcoin: Bitcoin (BTC-USD) traded sideways near $47,200, pausing after recent gains.
Asia: Tokyo’s Nikkei ended Monday’s session mixed, consolidating after recent highs but still reflecting global risk-off sentiment.
Europe: European bourses remain closed ahead of Tuesday’s open, with futures indicating a cautious start as traders digest Wall Street’s volatility.
Commodities and global indices remain highly sensitive to both geopolitical risk and U.S. macro headlines this week. The sustained strength in energy and precious metals signals persistent demand for diversification amid equity volatility.