The S&P 500 index closed at 6878.88 points last Friday, declining approximately 0.5% for the week, yet the benchmark has maintained a gain of about 0.5% year-to-date. The tech-heavy Nasdaq Composite fell 0.9% last week and is down roughly 2.5% so far in 2026. Despite NVIDIA (NVDA) releasing stellar earnings on Wednesday, it failed to calm market concerns over ongoing turbulence in artificial intelligence; meanwhile, a fresh wave of selling linked to private credit indicated continued significant pressure on the financial sector.

Looking ahead to the coming week, the February employment report due on Friday will be the highlight of the economic data calendar. Additionally, key earnings from chipmaker Broadcom (AVGO) will be closely watched. Geopolitical uncertainty remains a focus for investors following weekend attacks by the U.S. and Israel on Iran. With anticipated declines in airline and other consumer sectors, market attention has turned to energy and defense companies as potential safe havens.

Driven by escalating Middle East tensions, risk-off sentiment intensified, pushing gold and silver prices higher at Monday's open. Spot gold rose to $5374 per ounce, up 1.8%; spot silver reached $96 per ounce, a gain of 2.6%. International oil prices surged by $8 at Monday's opening due to heightened U.S.-Iran conflict disrupting petroleum transport. Brent crude hit a high of $82.37 per barrel, while WTI crude jumped to $80.82 per barrel.

Friday's February employment report will be a key focus. Wall Street economists forecast the U.S. economy added 60,000 jobs last month, a slowdown from the 130,000 added in January. January's report easily surpassed expectations, largely dismissing fears of an imminent U.S. economic slowdown. Investors will also receive manufacturing data from S&P Global and the Institute for Supply Management (ISM) on Monday, followed by ADP employment figures on Wednesday and weekly initial jobless claims on Thursday.

In the corporate sphere, investor attention is split between the "AI trade" and the state of U.S. consumer spending. On Wednesday, following NVIDIA's earnings disappointment, Broadcom will provide another window into AI demand. Marvell Technology (MRVL) will also report earnings on Thursday. In the retail sector, Target (TGT) on Tuesday and Costco (COST) on Thursday will lead a week of earnings from big-box and grocery stores, with other reporters including Ross Stores (ROST), Kroger (KR), BJ's Wholesale Club (BJ), and Macy's (M).

NVIDIA once again exceeded analyst expectations for revenue and adjusted earnings on Wednesday. CEO Jensen Huang extensively discussed soaring demand for NVIDIA's chips during the earnings call, and the company raised its guidance. However, this was insufficient for investors. The stock fell approximately 4.8% the day after the report (Thursday) and dropped another 4% on Friday, ending the week down over 6% overall. Other stock markets followed suit, with all three major indices closing lower in Thursday and Friday trading.

Capital analyst Kyle Rodda wrote in a client note that NVIDIA's issue lies in a broader shift in investor sentiment toward the AI trade. Rodda stated that despite legitimate concerns about potential supply constraints, "by all accounts, NVIDIA's Q4 numbers were flawless." Rodda wrote: "The signal here is that despite extraordinary performance, an increasingly entrenched shift in sentiment and behavior is occurring in the market. AI is being perceived as a risk rather than an opportunity. In a market plagued by valuation and overinvestment worries, investors are more focused on avoiding losers than picking winners."

Rodda's argument points directly to "AI panic trading." Last Monday and Tuesday, a report from investment firm Citrini Research sparked widespread discussion by envisioning a future scenario of mass displacement of white-collar workers. Stocks mentioned as vulnerable in the report subsequently plummeted—IBM suffered one of its worst single-day declines since 2000, and Zscaler (ZS) ended the week down nearly 10%. Bank of America strategists argued in a Friday client note that the reality described in the Citrini report was "logically inconsistent and severely at odds with sound economic theory." Given that, why did it trigger selling? The analysts wrote: "The answer is a combination of crowded positioning and multiple equilibria, similar to a bank run triggered by unfounded bankruptcy rumors."

Is the labor market flashing red? President Trump stated in Tuesday evening's State of the Union address: "More Americans are working today than at any time in our nation's history." But this dynamic does not necessarily reflect the current state of the labor market. When the Bureau of Labor Statistics (BLS) last released the monthly jobs report, investors were greeted with an outperformance: 130,000 jobs added for the month, double the consensus expectation of 65,000.

BNP Paribas strategists wrote in a recent client note that the gap between expectations and the actual figure in January makes the February report crucial. Economists again forecast the U.S. economy added 60,000 jobs. The strategists indicated that if February's data shows strong performance again, "such figures could more decisively quiet the 'labor market is flashing red' and 'labor slack is rapidly accumulating' narratives."

Although the headline figure of 130,000 jobs added in January appeared optimistic, revisions to 2025 data revealed that employers added an average of only 15,000 jobs per month last year. According to the BLS Job Openings and Labor Turnover Survey (JOLTS), job openings fell for the fourth consecutive month in December, while overall vacancy levels changed little.

ADP chief economist Nela Richardson said in an interview last Thursday: "This labor market is characterized more by sluggishness than vitality. It is highly unusual to see employers exhibiting this degree of caution." The jobs report, along with any changes in the unemployment rate, could influence interest rate policy depending on the data outcomes. This week's data will be the final reference points for Fed officials before the "blackout period" ahead of the March 17-18 meeting.

BNP Paribas strategists wrote: "A strong February report could lead the FOMC to consensus on shifting the 2026 baseline expectation from 'one rate cut' to 'no cuts,' and might even prompt discussions of a 2026 rate hike among governors. However, downside risks may be underestimated." As of last Friday, traders priced a 94.2% probability that the Fed will leave rates unchanged in the current 3.5%-3.75% target range at the conclusion of the March meeting.