Nvidia rose after announcing a multiyear deal to supply millions of advanced AI chips to Meta. Amazon and Microsoft edged higher. Analog Devices jumped on strong guidance. Cadence Design Systems rallied after beating revenue estimates. Even the New York Times got a lift from news that Berkshire Hathaway has taken a stake.

Not everyone is enjoying the bounce. Palo Alto Networks slid after trimming its profit forecast, citing higher costs tied to expanding its artificial intelligence capabilities. Sandisk shares fell after Western Digital said it would sell part of its stake. Markets, it seems, are still in a "prove it" mood. Optimism is welcome. Blind faith is not.

That tension, between belief and doubt, has defined February. Technology stocks remain under pressure from a fear that is both big and oddly vague: that artificial intelligence will disrupt everything, but perhaps not in the way investors first imagined. Just weeks ago, the worry was that AI would steamroll entire industries. Now, the anxiety has flipped. What if the tech giants' enormous capital spending binge fails to generate the profits to justify it?

During the recent earnings season, the largest tech firms all signaled sharply higher capital expenditures for 2026. Instead of cheering their ambition, investors flinched. According to Bank of America's latest fund manager survey, roughly one-third of investors believe companies are overinvesting, the highest share since the survey began.

The result has been a steady compression in valuations. Microsoft is down roughly 18% this year, Amazon about 13%. Both now trade at price-to-earnings multiples that are low relative to their own histories, around levels not seen in a decade when compared with their long-term averages. These are not distressed companies, but they are simply no longer treated as invincible.

And yet, the broader market refuses to break. The S&P 500 has spent two months drifting between roughly 6,800 and 7,000, a remarkably tight range. Yesterday was a perfect example. The Nasdaq dropped more than 1% at the open, only to claw its way back and finish nearly flat. The S&P 500 managed a slight gain. Europe, meanwhile, closed solidly higher despite early weakness.

Money has been flowing into defensive sectors: utilities, consumer staples, companies that sell things people buy whether the economy is booming or not. Walmart is up about 16% this year and recently crossed the $1 trillion market capitalization mark, making it more valuable than all but one of the so-called Magnificent Seven tech stocks. It now trades at a valuation that looks surprisingly tech-like, thanks to its growing e-commerce business. 

If tech once promised the future, defensives now promise survival. Investors are choosing both, just in different proportions.

Today's focus is on the Federal Reserve's meeting minutes. Traders are pricing in about a 63% chance of a rate cut by June: the first time odds have climbed above 50%. That shift reflects a growing belief that borrowing costs may start easing this summer. But not everyone at the Fed sounds ready to declare victory over inflation. Governor Michael Barr has said he wants clear evidence that goods inflation is truly retreating before backing further cuts. The labor market, he noted, appears balanced.

Elsewhere, geopolitics is exerting its usual quiet pressure. U.S.–Iran talks in Geneva have shown signs of progress, nudging oil prices slightly lower while maintaining a geopolitical risk premium. Japan has announced plans for roughly $36 billion in U.S. investments as part of a broader trade agreement, giving the dollar a lift. In Europe, reports suggest European Central Bank President Christine Lagarde could step down before her term ends in 2027, though markets have barely reacted.

And in Asia, Lunar New Year closures have thinned trading volumes, adding a faint holiday hush to global markets.

Today's economic highlights:

On today's agenda: the monthly and yearly inflation rates along with the core yearly inflation in the United Kingdom; In the United States, the MBA 30-Year Mortgage Rate, housing starts and building permits, durable goods orders, industrial production, Fed Bowman's speech, FOMC minutes, long-term TIC flows, and API crude oil stock change will be monitored; In Japan, machinery orders will be released. See the full calendar here.

  • Dollar index: 97,188
  • Gold: $4,937
  • Crude Oil (BRENT): $69.23 (WTI) $63.98
  • United States 10 years: 4.05%
  • BITCOIN: $67,559

In corporate news:

  • Alphabet CEO Sundar Pichai announced a new subsea cable project linking India and the U.S., a partnership between the Indian government and Google DeepMind, and pledged $30 million to advance global AI research.
  • Western Digital plans to raise $3.17 billion by selling part of its stake in Sandisk, while Danaher agreed to acquire Masimo for $9.9 billion, Warner Bros Discovery rejected a $30-per-share bid from Paramount Skydance but invited a final offer, and BlueScope Steel is considering a sweetened A$15 billion takeover proposal from SGH Ltd and Steel Dynamics.
  • Yotta Data Services will invest over $2 billion in Nvidia Blackwell Ultra chips to build a major AI hub in India ahead of a potential IPO.
  • Adani Enterprises and FedEx will develop a fully automated air cargo hub at Navi Mumbai airport with a long-term investment exceeding 25 billion rupees.
  • Nevada regulators sued Kalshi to block it from offering sports-related prediction contracts in the state amid a broader jurisdictional dispute with federal authorities.
  • Naturgy plans to extend Executive Chairman Francisco Reynes' mandate to 2030, reshuffle its board after ownership changes, and forecast broadly stable 2026 earnings and dividends.
  • Alcoa will pay about $39 million to remediate illegally cleared native forest in Western Australia and will record related charges as part of an approvals modernization agreement.
  • Several European countries including Spain and Ireland have intensified regulatory action against major social media platforms such as Meta and X, escalating tensions with the United States over tech oversight.
  • JPMorgan Chase plans to open more than 160 new branches across over 30 U.S. states in 2026 as part of a multibillion-dollar retail expansion.
  • YouTube, owned by Alphabet, restored services after a widespread outage caused by a malfunction in its recommendations system.
  • Goldman Sachs said potential U.S. strategic copper stockpiling could create upside risk to its 2026 copper price forecast.
  • Blackstone, EQT, and CVC have submitted offers for Volkswagen's Everllence unit, according to the Financial Times.
  • Tesla avoided a 30-day license suspension in California after removing the term “autopilot” from its vehicle marketing in the state.
  • Nvidia secures a multibillion-dollar chip deal with Meta, strengthening AI data-center hardware leadership.
  • Bayer seeks a multibillion-dollar settlement of U.S. glyphosate lawsuits.
  • Microsoft announces a $50 billion investment by 2030 to expand AI technologies across the Global South.
  • Amazon stops using its ‘Blue Jay' warehouse robot after a few months of operation.
  • CSL grants Eli Lilly exclusive rights to develop clazakizumab for end-stage kidney disease, receiving a $100 million upfront payment.

Analyst recommendations:

  • Costco Wholesale Corporation: William O'Neil & Co Incorporated upgrades to buy from dropped coverage.
  • American Express Company: Baird maintains its neutral recommendation and raises the target price from USD 280 to USD 345.
  • Celanese Corporation: Mizuho Securities maintains its neutral recommendation and raises the target price from USD 45 to USD 55.
  • Cnh Industrial N.v.: Baird maintains its neutral recommendation and raises the target price from USD 10 to USD 13.
  • Cognex Corporation: Melius Research LLC maintains its buy recommendation and raises the target price from USD 57 to USD 70.
  • Draftkings Inc.: Texas Capital maintains its hold recommendation and reduces the target price from USD 39 to USD 27.
  • Howmet Aerospace Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 240 to USD 290.
  • Humana Inc.: Wells Fargo maintains its equalweight recommendation and reduces the target price from USD 290 to USD 206.
  • Keysight Technologies, Inc.: JP Morgan maintains its overweight recommendation and raises the target price from USD 207 to USD 255.
  • Palo Alto Networks, Inc.: Wolfe Research maintains its outperform recommendation and reduces the target price from USD 250 to USD 190.
  • S&P Global, Inc.: Daiwa Securities maintains its outperform recommendation and reduces the target price from USD 615 to USD 490.
  • Sofi Technologies, Inc.: Truist Securities maintains its hold recommendation and reduces the target price from USD 28 to USD 21.
  • Sonoco Products Company: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 47 to USD 60.
  • Sprouts Farmers Market, Inc.: UBS maintains its neutral recommendation and reduces the target price from USD 108 to USD 75.
  • The Trade Desk, Inc.: Jefferies maintains its hold recommendation and reduces the target price from USD 40 to USD 27.
  • Vertiv Holdings Co: Melius Research LLC maintains its buy recommendation and raises the target price from USD 249 to USD 320.