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Posted February 4, 2026 at 11:31 am
Markets are adjusting as rising yields and persistent inflation reshape investor expectations, driving capital out of big tech and into more defensive and cyclical sectors. Scott Bauer joins Jeff Praissman to break down what’s behind the rotation, how institutional investors are positioning and what key data points could steer markets next.
The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.
Hey everyone. This is Jeff Praissman with the Interactive Brokers Podcast. It’s my pleasure to welcome back to the podcast studio Scott Bauer from Prosper Trading Academy. Hey Scott, how are you?
Jeff, I am great. Yourself?
Just trying to stay warm, Scott. Just trying to stay warm.
Exactly.
No, we love you coming in here, and we usually get to see you a couple Wednesdays a month for a market update, in which, for our listeners who aren’t aware, we do a quick five- to seven-minute podcast just on the week we just passed through and what’s ahead—and today’s no different. Scott, we’re busy right now, but looking back at last week’s trading activities, what were some of the biggest drivers behind the market moves, and were they more sentiment-driven or data-driven?
I think a little of both, quite honestly. And to me, what really set things in motion was the Fed and war, and just the whole backdrop there—that, you know, maybe because he has been a little bit more hawkish in the past, maybe rates are not going to be coming down anytime soon. So we’ve seen that in the 10-year, and rates actually moving higher. And I think because of that, it’s put a little bit of concern into the market, especially on the tech side of things, where we started to see that sector rotation out of it.
Yeah. And a lot of tech earnings coming out, and I think they come out today, because I saw they’re down 10%, so I’m—
Yeah, Palantir was two days ago. I think it had a nice pop yesterday, but giving it back today.
But anyway, earnings season is in full swing. Scott, which sectors surprised to the upside, and which ones, in general, have fallen short of expectations?
This whole sector rotation is in place, so big tech has fallen short. I’m not so sure that the results or guidance have fallen short, but stock performance certainly has. The latest one is AMD, which just came on, and we obviously saw what happened with Microsoft. Many of the others—we get Alphabet after the close today, and I’m actually very bullish on Alphabet, so we’ll see what happens there. So a lot of the big tech names have taken a nice hit. Look at even, in the payment space, PayPal. PayPal just got annihilated. And again, when you dive into some of these reports, they don’t seem to be so bad. On the upside, we’re seeing stocks like Caterpillar, and even some of the banks that have been pretty strong recently and still continuing—the banks: JP and Goldman recovered after the sell-off, Capital One. So those are the areas that have shown some strength after earnings.
And with geopolitical tensions and central bank commentary in the mix, how are institutional investors positioning themselves for the week ahead?
I think very cautiously. It’s so funny because over the last couple days, if you followed the market movement and if you followed the VIX intraday, boy, it has been just spot on with how quickly the market has moved. So I think there’s a lot—again, I go back to saying—there’s a lot of concern even on the institutional side that things are happening so, so quickly. So I am seeing a lot of upside versus call buying from the institutional side. And I think people and big firms are just positioning—not for anything catastrophic to the downside—but listen, it’s been a while since we’ve seen a percent correction or so, which is normal for the marketplace. And I think maybe we’re starting to see some positioning for that.
And what key events or data releases are people looking out for over the next five days or so?
With the delay of JOLTS and the delay of the January non-farm payrolls, if we get them next week, the anticipation is we might get them next week instead. That’s going to be the big one. That is going to be the key economic driver for the marketplace. We’re getting a little bit towards the backside of earnings, so yes, I mentioned that we still have Google and we have Amazon, so people are going to be looking at that as well. But I really think the focus is going to be on the data that we see about the jobs market, because we know how intertwined that is with rates, the Fed, and quite frankly, where the entire economy is going.
Scott, this has been great, as always. For our listeners, you can find more from Scott at prospertrading.com or on our website. Go to IBKR.com, go to Education—you can find past podcasts as well as webinars. Scott, thanks again, and see you in a couple weeks.
Thank you, Jeff.
All right!
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