Markets are heading into the first week of February with leadership narrowing, momentum slowing, and political risk increasing. After a strong start to the year, last week saw some of the early winners cool off. Gold, silver, and rare-earth stocks lagged—suggesting profit-taking after strong rallies—while broader risk appetite showed signs of hesitation.

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Policy Takes the Spotlight

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The Federal Reserve held interest rates steady, reinforcing a cautious and patient approach. But longer-term uncertainty crept in after President Trump formally named Kevin Warsh as his choice for the next Fed chair. While this announcement doesn't shift short-term expectations, it introduces a new variable into future monetary policy debates.
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At the same time, Washington failed to pass a funding agreement, pushing the U.S. government into a shutdown. Although the immediate economic impact may be limited, it adds headline risk and raises questions about broader political gridlock.

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Sector Moves Reflect Caution

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The market’s behavior was more about rotation than a clear risk-on or risk-off stance.
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• Energy led as geopolitical tensions reignited interest in supply security and strategic reserves.
• Materials posted modest gains.
• Health Care saw slight inflows from investors seeking earnings stability.
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On the other hand:
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• Technology and Financials underperformed.
• Real Estate and Utilities were hit hardest, continuing to feel pressure from elevated interest rates and funding costs.
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Overall, market leadership was narrow—more indicative of selectivity than broad bullish conviction.

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What’s Coming Up This Week

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It’s a dense calendar with potential to reset expectations across inflation, earnings, and global policy:
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U.S. Macro Data:

• Jobs report
• JOLTS (Job Openings)
• ADP employment
• Challenger layoffs
• ISM manufacturing and services PMIs
• University of Michigan consumer sentiment

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Earnings to Watch:

• Amazon
• Alphabet
• AMD
• Palantir
• Qualcomm
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These reports will shape investor views on the strength of the economy, big tech, and AI-related capital spending.

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Global Events:
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• ECB, Bank of England, and Reserve Bank of Australia decisions
• Eurozone inflation
• China PMIs
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These developments will help guide expectations for policy direction and demand trends outside the U.S.

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Bottom Line

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There’s no single macro driver dominating markets right now. Instead, investors are navigating a mix of policy transitions, slowing momentum, and headline risk. The setup demands selectivity—not just in sectors, but in trading timeframes and positioning.