February is currently quiet, contrasting with recent volatility. The Dallas Fed manufacturing survey at 10 am ET is the only noteworthy economic indicator scheduled for today.
S&P 500 futures have increased by 31 points, or 0.5%, following last Friday’s declines. A weekend note from TD Cowen mentioned a slowdown in AI spending, yet the market appears unaffected.
Market sentiment will be a focus this week, particularly with Nvidia’s earnings report on Wednesday and Vistra’s on Thursday.
This calm start to February stands in stark contrast to the turbulence seen at the end of January. With little economic data to digest, attention is centred on broader trends influencing risk appetite. The Dallas Fed manufacturing survey is an isolated data point today, though its impact is generally confined to regional economic conditions rather than driving widespread sentiment shifts.
Futures on the S&P 500 have rebounded after last week’s pullback, suggesting that traders are willing to take on risk ahead of upcoming earnings reports. The mention of weaker AI spending from TD Cowen may have raised concerns, but equity markets have not reacted negatively. This suggests that either expectations were already leaning in that direction or that strong earnings elsewhere are providing a counterbalance.
This week, Nvidia’s earnings report on Wednesday will act as a test of the AI-driven enthusiasm that has fuelled the recent rally. Jensen’s company has been at the centre of equity strength, and any deviation from expected revenue or forward guidance could have wide-reaching effects. A miss could prompt sharp repositioning, particularly given the weight the stock holds in major indices. On Thursday, Jim’s company will release earnings as well, providing insights into another important sector.
Outside of corporate results, traders should pay attention to bond yields and shifts in interest rate expectations. While equity markets have taken last week’s weakness in stride, sudden changes in rate forecasts could alter positioning quickly. Federal Reserve officials will also be speaking throughout the week, and any deviation from the current market view on rate cuts will need to be accounted for in positioning.
Volatility in currencies and commodities may also provide clues on which sectors could see the most movement in the near term. A stable dollar would support the view that risk sentiment is intact, while any sharp fluctuations would likely reveal underlying nervousness. With few scheduled economic reports in the immediate sessions, sentiment is more likely to be influenced by positioning and expectations rather than abrupt fundamental shifts.
