“There is still talk back and forth about who might be the victim and who will actually emerge as winners because they are leveraging AI rather than being replaced by it,” said Kristina Hooper, chief market strategist at Man Group.“There’s very little that’s definitive at this point, and so I think this will continue to be a concern.”
Stock prices in areas such as software remain acutely sensitive to AI-related developments. AI Indicator Nvidia’s highly anticipated quarterly report failed to calm nerves, with the semiconductor giant’s shares falling more than 5% on Thursday and weighing on the technology sector. Investors are concerned about whether Nvidia’s “hyperscaler” customers will earn enough returns to justify their massive spending on data centers and other infrastructure.
Despite the problems in the technology sector, gains this year in other areas such as industrials and consumer staples have helped major stock indexes. The benchmark S&P 500 rose 0.9% through 2026 as of Thursday.
“The U.S. stock market is more or less in its late cycle trying to find the winners and losers of this new disruptive technology and is pretty much treading water,” said John Velis, Americas macro strategist at BNY.
WILL THE JOBS OF FEBRUARY RETURN THE STRENGTH OF JANUARY?
The U.S. jobs report for February, due March 6, is expected to show an increase of 60,000 jobs, according to a Reuters poll. It comes after January’s surprisingly robust report, which saw an increase of 130,000 jobs and a drop in the unemployment rate to 4.3%.
The January report allayed concerns about a weakening labor market, but “the concern is that January is a one-off,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.
“We’ve seen a good jobs report for January, but we’ve also seen a very weak 2025 for the labor market,” Hooper said. “And so the question becomes: where do we go from here?”
Investors will also look for clues from the report as to when the Federal Reserve will make the next rate cut. Fed funds futures suggest the next cut will come in June or July, after Fed Chairman Jerome Powell’s term expires in May and his nominated replacement Kevin Warsh could take charge.
The Fed cut rates last year in the face of a weakening employment environment, but halted the easing cycle in January, and solid employment data could prompt investors to lower their expectations for further cuts. Investors generally associate lower interest rates with higher prices for stocks and other assets.
BNY’s Velis said the market’s reaction to the jobs data will reveal which factors are prominent for equity investors. For example, strong numbers followed by weak stock performance will be “a sign that the interest rate argument is important,” Velis said.
RETAIL SALES, BROADCOM REVENUE ALSO NEXT
Other economic releases coming out in the coming week include reports on activity in the manufacturing and services sectors. The January retail sales report is due March 6.
In addition to Broadcom’s quarterly report on Wednesday, results are also expected from retailers Best Buy and Target.
Wall Street is eager to see any evidence of AI’s impact on the economy, both positive and negative. In an interview with Reuters this week, outgoing Atlanta Fed President Raphael Bostic said the US may be entering a period of structurally higher unemployment as companies deploy AI tools to save labor. “Major technology shifts are causing both excitement and fear,” Keith Lerner, chief investment officer at Truist Advisory Services, said in a research note Thursday. “More recently, optimism has begun to give way to heightened anxiety and increasingly gloomy stories about AI’s impact on work, productivity and economic outcomes.”
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