Tech stocks are a problem

Briefing.com Summary:

*The stock market has a mega-cap problem and tech stock problem on its hands.

*Bitcoin has dropped below $70,000 and has triggered concerns about forced selling.

*Initial jobless claims hit their highest level since early December.

The month of February got off to a good start for the stock market. That good start, though, lasted all of one day. In the interim, it has been a struggle for the stock market, largely because it has been a bigger struggle for the information technology sector, which is the market’s most heavily weighted sector.

Truth be told, things aren’t as bad as they feel. The reason they might feel worse is because so many investors are overexposed to the tech sector. It is a different story for those who are not.

The S&P MidCap 400 is up 1.7%; the equal-weighted S&P 500 is up 1.1% this week and trading at a record high; and the Russell 2000 is up 0.4%. Separately, the S&P 500 materials sector is up 4.6%, the consumer staples sector is up 4.4%, the energy sector is up 3.5%, and the industrials sector is up 2.4%.

Yeah, it isn’t bad out there, except for some very influential pockets of the market. The Philadelphia Semiconductor Index is down 4.7%, the S&P 500 information technology sector is down 3.6%, the S&P 500 communication services sector is down 2.6%, and the consumer discretionary sector is down 1.4%.

The early read today, however, is that market breadth won’t be positive—at least not at the open—and that the mega-cap stocks and tech sector will again be a primary source of weakness.

Currently, the S&P 500 futures are down 47 points and are trading 0.7% below fair value, the Nasdaq 100 futures are down 225 points and are trading 0.9% below fair value, and the Dow Jones Industrial Average futures are down 185 points and are trading 0.4% below fair value.

Alphabet (GOOG/GOOGL), which had an otherwise impressive earnings report, is indicated 4.8% lower. Investors are grappling with the company’s FY26 capex guidance of $175-185 billion and how and when that will translate to pleasing returns on that investment.

Qualcomm (QCOM) is another laggard of note, down 10.6% after issuing disappointing guidance that was tied to memory supply constraints. That guidance looks to have spilled over to Arm Holdings (ARM), which is down 5.2%.

Beyond the tech stocks, cryptocurrencies have created some market waves, particularly Bitcoin, which has dropped below $70,000 and has fostered concerns about forced selling that are likely bleeding into the stock market. The volatility in metals prices isn’t helping sentiment either. Silver futures, up 7.5% for the week coming into today, are down nearly 10% this morning to $76.31/toz.

Treasuries are starting to perk up with the increased volatility. The 2-yr note yield is down five basis points to 3.51%, and the 10-yr note yield is down five basis points to 4.23%. Those moves started ahead of the weekly initial jobless claims report at 8:30 a.m. ET, taking on some fuel after the Challenger report indicated layoffs hit their worst January level since 2009. The jobless claims report, though, added to the gains.

Initial jobless claims for the week ending January 31 increased by 22,000 to 231,000 (Briefing.com consensus: 210,000). Continuing jobless claims for the week ending January 24 increased by 25,000 to 1.844 million.

The key takeaway from the report was the jump in initial claims, which hit their highest level since early December. That created some headline surprise, but to be fair, the absolute level isn’t that bad.

In other developments, the Bank of England and the ECB both voted to leave their key policy rates unchanged, as expected.

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Originally Posted February 5, 2026 – Tech stocks are a problem