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Posted February 10, 2026 at 11:00 am
Software stocks, gold, silver, and bitcoin were among the momentum-driven market areas impacted by last week’s selloff.
Data from the manufacturing sector and insights from corporate earnings reports were a bright spot in a grey week.
Periods of rotation can feel uncomfortable, but they often help build the foundation for more durable market advances.
“Every silver lining has a touch of grey.” That line from the 1987 Grateful Dead captures the mixed signals that defined this past week in global markets. Now, I can already hear investors questioning the idea of a “touch” of grey as last week’s market selloff likely felt much closer to a storm for many of them. But lost in the carnage of the software sector selloff1 and the unwind of several other momentum-driven areas of the market is the fact that nearly 20% of the S&P 500 Index hit new highs last week.2 To put it further into perspective, roughly two-thirds of the stocks on the New York Stock Exchange are still trading above their 200-day moving average.3
Nonetheless, the reversal across several momentum-driven areas of the market was particularly striking. Gold, which had rallied substantially, declined.4 Silver plunged5 as did bitcoin,6 which has now fallen to nearly half of its October peak. The weakness extended into the software industry, where concerns have grown about the durability of long-term business models in a world where large artificial intelligence (AI) companies are building deeper capabilities that move into traditionally profitable software territory. In fact, of the 32 stocks in the S&P 500 Software Industry GICS Level 3 Index, not one posted a positive return for the five days ended February 5, 2026. The bellwether software companies, such as Microsoft, Palantir, Oracle, and Salesforce all fell by double digits.7
I promised silver linings. First, the most recent reading of the ISM Manufacturing Purchasing Managers’ Index, which is seen as a leading indicator of the US economy, outperformed expectations.8 The headline index climbed meaningfully into expansionary territory, thanks in large part to a very strong advance in new orders. Also encouraging was that the prices-paid measure remained essentially unchanged over the prior three months. For a stock market and a Federal Reserve (Fed) seeking steady activity without reignited inflation pressure, that combination is about as favorable as one could hope for.
Next, corporate results generally added more reasons for optimism. For example, both Alphabet and Amazon used their earnings updates to highlight ambitious AI investment plans for the coming year.9 These plans should support continued strength in companies tied to semiconductors and to the construction of advanced data centers. Tellingly, industrial firms reported solid results that pointed to ongoing momentum in areas such as transportation equipment, machinery, and power technology.10 The energy sector has posted strong market returns in 2026.11
Broadly speaking, most sectors within the S&P 500 have remained positive for the year.12 Stock markets outside the US have also held on to gains.13 These trends appear to align well with the rebalancing theme we emphasized in our annual outlook, in which leadership was expected to rotate more widely after a period dominated by a very narrow set of winners. In our view, what we‘re seeing now is not the unraveling of a cycle or the bursting of the feared AI bubble, but rather the healthy adjustment that typically occurs as momentum stalls.
For investors, the message is to take a deep breath. Periods of rotation can feel uncomfortable, especially when they affect assets that had been powerful performance drivers only weeks earlier. Yet these phases often help build the foundation for more durable market advances. As Jerry Garcia sang, “We will get by.” Despite the volatility of the past week and the sense that the touch of grey has been a little more prominent, the fundamental backdrop remains supportive. We believe the bull market, to paraphrase the 1987 Grateful Dead song one last time, will survive.
| Date | Region | Event | Why it matters |
|---|---|---|---|
| Feb. 9 | US | Wholesale inventories (Dec.) | Indicator of supply chain and sales trends |
| Feb. 10 | US | Employment Cost Index (Q4) | Measure of labor cost pressures |
| US | Trade price indexes (Dec.) | Inflation in trade goods | |
| Feb. 11 | US | Employment report (Jan.) | Key labor market indicator |
| US | Treasury statement (Jan.) | Fiscal position insight | |
| Canada | Building permits (Dec.) | Construction sector activity | |
| Feb. 12 | US | Existing home sales (Jan.) | Housing market health |
| UK | Gross domestic product (GDP) (Q4) | Economic growth measure | |
| UK | Industrial production (Dec.) | Industrial sector strength | |
| UK | Trade balance (Dec.) | Trade position | |
| Feb. 13 | US | Consumer Price Index (CPI) (Jan.) | Inflation gauge |
| Eurozone | GDP (Q4) S | Eurozone economic growth | |
| Eurozone | Trade balance (Dec.) | Trade insights |
—
Originally Posted February 9, 2026
Finding silver linings in the market selloff By Invesco US
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.
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