Gloom Persists as Layoffs Surge, Alphabet Weakens

Published as of: February 5, 2026, 9:16 a.m. ET

(Thursday market open) The day kicked off with investors still in risk-off mode as they digested results from Alphabet (GOOGL), watched bitcoin crumble, awaited job openings data, and scanned a bearish layoffs report. Major indexes lost ground after an overnight rally effort and volatility soared as Alphabet lost more than 4% on concerns over the company's surprisingly heavy spending plans. Meanwhile, chip stocks got no relief as Qualcomm (QCOM) tumbled following its worse-than-expected guidance. Amazon (AMZN) reports later.

Turning to data, January job cuts from Challenger, Gray, & Christmas surged to the highest level since 2009 at 108,435. There was a "recession-like" spike in job cut announcements for the transportation industry last month, said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research (SCFR). With the government shutdown over, official data resumes after the open with December's Job Openings and Labor Turnover Survey (JOLTS), but nonfarm payrolls won't come out until February 11.

Tech struggles kept haunting major indexes Wednesday, with the Nasdaq down about 3% over the last two sessions. The DJIA climbed yesterday as cyclical stocks—which do better in a strong economy—extended gains, but the broader market stumbled. "The rotation trade continues and investors appear to be reallocating away from tech towards AI infrastructure," said Nathan Peterson, director of derivatives research and strategy at SCFR. Heavy machinery firms and transports recently hit all-time highs, which also speaks to the rotation trade, and the manufacturing sector grew last month. Only 19% of S&P 500 constituents outperformed the index over the past year, but that's up to 57% over the last month.

1. Half-time earnings update: Recent tech struggles can distract from what's been a better-than-expected flow of company results to date. "Earnings season is tracking a healthy path so far, but there has been some deterioration and less concentration within the S&P 500 Index, alongside more improvement among smaller-cap companies," said Liz Ann Sonders, chief investment strategist at SCFR, and Gordon in their latest look at results. The blended year-over-year earnings growth rate is around 11%. Leading sectors to date include materials, tech, industrials, and utilities. Zeroing in on the Magnificent Seven, the earnings growth rate is expected to remain higher than the rest of the S&P 500's components, but sequential growth for those other 493 stocks is seen generally climbing over the course of 2026. "Indeed, the growth rate for the Mag 7 will remain higher than the rest of the index's constituents, but the direction of travel is important as well," Sonders and Gordon said. "As we often tell investors, 'Better or worse often matters more than good or bad.'"
    
2. Indexes march in place, different story under surface: Focusing on the S&P 500 Index means one might miss general strength underneath. The S&P 500 Equal Weight Index (SPXEW), which weighs all components the same and not by market capitalization, gained almost 1% Wednesday versus a 0.5% loss for the S&P 500 Index. Investors might want to keep an eye on the equal weight index rather than the S&P 500 so long as tech remains under a rain cloud, since tech's heavy market capitalizations can distort the S&P 500's performance. "The broadening out of market performance over the past several months has come at a cost: less stellar index-level gains," said my colleague Gordon. "Tech, communication services, and discretionary make up 55% of the S&P 500’s market cap. If those sectors take a step back and give way to materials and energy, for example, the math is such that the S&P 500's gains won't be as strong as what we've been used to in the past couple years. That isn't a bad thing; it just reinforces the power of sector dynamics in an index that has gotten so skewed by a handful of sectors. The good news is that as the rotation has gathered steam, forward earnings estimates have continued to climb, which means that the relative underperformance of tech and its peers hasn't dented the outlook for profitability this year."
    
3. Data on way, D.C. drama not over: The latest shutdown is resolved and data flows again, but things aren't over in Washington. While the bill reopening the government that was approved Tuesday embraces almost every agency, a funding debate persists regarding the Department of Homeland Security (DHS) after the recent shooting in Minneapolis. Congress has until February 13 to resolve this issue or certain government departments, including the Transportation Security Administration (TSA), would have no funding. Shutdowns typically have impacted air travel because of "sick outs" by air traffic controllers and TSA agents. Both groups are considered "essential" and must work without pay during shutdowns. Congress is far from united on how to work out the DHS changes requested by both parties, The Washington Post said yesterday, so another partial shutdown can't be ruled out. In this case, airline companies might be front and center due to the TSA impact.

• Alphabet became the latest mega cap to get punished after earnings. Shares fell 4% despite the company topping analysts' earnings and revenue expectations. Investors appeared skittish about the company's forecast for significantly more spending, with capital expenditures to be between $175 billion and $185 billion for 2026. In its release, Alphabet said it's seeing its AI investments and infrastructure drive revenue and growth across the board, and the spending will help it "capitalize on the growing opportunities we have ahead of us." Several Wall Street firms raised their price targets for Alphabet after it reported.
   
• Alphabet's decision to open its wallet wider initially appeared to give struggling chip stocks a boost early Thursday after the sector fell 5% yesterday. Shares of Broadcom (AVGO) remained up more than 1% approaching the open, but other chip firms, including Nvidia (NVDA) and Advanced Micro Devices (AMD), slipped back into the red as trading progressed. When the dust settles, Alphabet's spending plans could be encouraging for a semiconductor sector that's flirting with a 10% correction from its late-January all-time high.
   
• Arm Holdings (ARM) was one source of pressure on chip firms early today, plunging nearly 5% following its earnings report. Quarterly revenue and earnings topped consensus for the semiconductor and design company and so did guidance, but quarterly licensing revenue missed expectations and investors are concerned about a possible drop in demand from the smartphone industry.
   
• Qualcomm (QCOM) descended 10% ahead of the open. Like Intel (INTC) a couple weeks ago, problems relate to a shortage of memory chips that hurt the company's forecast, CNBC reported. Quarterly results beat expectations but quarterly guidance fell short. Qualcomm expects the memory chip shortage to affect the entire consumer electronics industry as data centers compete for chips with smartphone and other device makers. Bank of America downgraded Qualcomm to neutral from buy, citing the "weak" handset market.
   
• Amazon dropped nearly 2% early ahead of results after the close. One thing that might be a tough bar for Amazon is to match or exceed the rapid pace of Amazon Web Services growth it posted in the third quarter of 20%. That was the most since 2022. At the time, Amazon said it continued to see strong demand in AI and core infrastructure, and that it was focusing on accelerating capacity.
   
• Metals remained volatile in early action, with silver tumbling 10% but gold slightly higher. Mining stocks fell sharply ahead of the open.
   
• Bitcoin (/BTC) drama continued early Thursday as prices dropped below $70,000 and are now beneath last April's lows. They're now at levels last seen in late 2024 before the epic rally that took them above $125,000 last October. Some of the pressure reflects what Bloomberg calls "forced deleveraging" with a demand vacuum forcing investors to exit at a loss. Inflows have dried up, Bloomberg noted, and volume is weak. Stocks associated with crypto, including Strategy (MSTR) and Coinbase Global (COIN), fell sharply this morning.
   
• Hims & Hers Health (HIMS) rose more than 3% after Reuters reported the company will aim to introduce a Wegovy pill copy at $49.
   
• Technically, the S&P 500 Index spent time Wednesday below its 50-day moving average of 6,877 and managed to close just above that. It hasn't finished beneath that key support level since January 20.

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Semiconductor shares (SOX—candlesticks) had one of their worst days of the last three months Wednesday, falling 5% and pulling within range of the 50-day moving average (blue line). The index hasn't spent much time below that since mid-November. Weakness in major names like Advanced Micro Devices, Nvidia, Broadcom, and Micron combined yesterday to take down the sector along with the broader tech market, but even with the selling, chip stocks trade near their month-ago levels.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

February 6: February University of Michigan preliminary consumer sentiment, and expected earnings from Philip Morris (PM) and Biogen (BIIB).
February 9: Expected earnings from Cleveland-Cliffs (CLF), Becton, Dickinson & Co. (BDX), and CNA Financial (CNA).
February 10: December retail sales, November factory orders, and expected earnings from Coca-Cola (KO), CVS (CVS), AstraZeneca (AZN), Spotify (SPOT), Marriott International (MAR), BP (BP), Duke Energy (DUK), Lyft (LYFT), and Ford (F).
February 11: January CPI and core CPI and expected earnings from McDonald's (MCD), T-Mobile (TMUS), Shopify (SHOP), Cisco (CSCO), and AppLovin (APP).
February 12: January existing home sales, and expected earnings from Anheuser-Busch (BUD), Applied Materials (AMAT), Arista Networks (ANET), Vertex Pharmaceuticals (VRTX), Brookfield (BN), Airbnb (ABNB), and Coinbase Global (COIN).