Market Minute: February 5, 2026 - A Challenging Start to February
The stock market has faced some challenges as we roll into February. This morning, I read that employers announced over 108,000 layoffs for the month—nearly 120% higher than the same period last year and more than 200% higher than December.
From a historical perspective, one must go back to January 2009 to see this level of layoff activity. A report from Challenger, Gray & Christmas also noted that January new hires totaled only 5,306, the lowest figure since January 2009, when the country was mired in the Great Financial Crisis.
Market Performance This Morning
As I write this on the morning of February 5th:
Dow: down 1.2%
S&P 500: down 1.4%
Nasdaq: down 1.7%
Russell 2000 (small caps): down 1.2%
The selloff has been broad but largely concentrated in technology stocks, as the market attempts to decipher how AI will impact the economy and job creation.
Investor Psychology and Consumer Behavior
I would like to take this a step deeper and discuss investor psychology. Regular readers know that I am an adherent to behavioral finance. This column has highlighted many times the impact of investor psychology on consumer spending and the importance of consumer spending to overall economic performance.
If people begin to worry about jobs in the abstract, they are likely to worry about their own employment situation and shift their focus to nondiscretionary spending such as food, shelter, and clothing, while pulling back on discretionary spending such as dining out, travel, and more extravagant purchases.
The critical concept here is that the highest 10% of income earners are not going to consume more food, clothing, and luxuries to make up for the concerns of the rest of the country.
Long-Term Perspective
At the same time, our focus remains on long-term investing, and current volatility must be viewed through the proper lens. We continue to recommend emphasizing broad diversification and asset allocation to manage portfolios for the long term.
Please reach out to any of our advisors if you would like to discuss the markets or your current portfolio positioning.
Key Data Points to Watch
The critical data points we are monitoring now are:
Consumer spending
Employment trends
Upcoming inflation reports
We believe it is the connection among these data points that will help us decipher the short- and intermediate-term paths for both the economy and the markets.
Stay tuned!
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