WEEKLY MARKET BULLETIN
This report is prepared by CUMA ÇEVİK
WEEKLY MARKET BULLETIN
EDITION: #080226
WEEKLY MACRO AGENDA
Markets have abruptly shifted from a "Goldilocks" (not too hot, not too cold) scenario to "Capex Panic" and rotation pains. The main theme of the week was the fear that the massive capital poured into AI infrastructure by tech giants (such as Google nearly doubling its capital expenditures) would squeeze short-term profitability. This situation led to sharp sell-offs in Nasdaq and tech stocks, while the "Equal Weighted S&P 500" (RSP) and the Energy sector reached all-time highs as investors turned to safe havens or value-oriented strategies. The market story evolved from "buy everything" to "prove the ROI."
On the macro front, the biggest game-changer was President Trump's nomination of Kevin Warsh for Fed Chair. With Jerome Powell set to leave in May, a new layer of uncertainty regarding the future of monetary policy has emerged. Although Warsh is known as a "hawk" for his past criticisms of quantitative easing (QE), he may be forced to keep liquidity taps open due to upcoming midterm elections and growth-oriented pressures from Trump. Markets are currently trying to price in a scenario where Warsh "talks tough but acts soft."
Towards the end of the week, market sentiment witnessed a clash between the "mini-crash" in tech stocks and the rally in traditional sectors. In crypto assets, Bitcoin's value loss of up to 22% and MicroStrategy's 30% melt-down revealed the fragility in risk appetite. However, the flat course of the general indices (SPY) shows that this sell-off is a profit realization from over-inflated valuations and sector rotation rather than a systemic crisis. Whether this divergence continues will be the main focus next week.
HIGHLIGHTED DATA & FED SIGNALS
LABOR CRACKS
Cracks in the employment market are deepening. According to the Challenger Report, job cuts in January surged by 118% YoY to 108,435. This is the highest January figure since the Great Recession of 2009. ADP private sector employment also came in far below expectations (22,000 vs 45,000). The market reads this as a potential hard wall impact rather than a soft landing.
FED & WARSH
Kevin Warsh's nomination changed all calculations. Analysts do not expect any rate cuts until the June FOMC meeting when Warsh takes office. Sticky inflation around 3% and an economy still "hot" with fiscal incentives are delaying rate cuts. Bond markets will test the new administration's sincerity on budget discipline.
YIELD OUTLOOK
10-year Treasury yields are expected to hover in the 4.25% - 4.75% band. If labor market deterioration accelerates, the Fed's hand may be forced sooner. However, the current base scenario is that inflation will remain high until summer and the Fed will maintain its "higher for longer" stance.
INDICES & VIX OUTLOOK
A complete "divergence" is occurring in main indices. While S&P 500 (SPY) closed the week flat (-0.20%), the tech-heavy Nasdaq 100 (QQQ) broke short-term trend support, losing over 2.5%. In contrast, the Equal Weighted S&P 500 (RSP) and Dow Jones (DJIA) tested new all-time highs. This indicates the market isn't crashing, but changing leadership—money is fleeing Mega-Cap tech for cheaper stocks.
Technically, QQQ below 600 is concerning. For S&P 500, the 690 region is a critical balance point. Despite 10-20% moves in individual stocks, VIX not spiking to crisis levels suggests institutional "rebalancing" rather than panic. However, market structure remains fragile until SaaS and crypto stabilize.
TOP TRENDING SECTORS
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WINNER: Energy (XLE) & Materials
Absolute winners of rotation. Iran-US tension and rising oil prices pushed energy to all-time highs. Investors are fleeing uncertain AI returns for "old economy" cash flow and inflation hedges.
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LOSER: Software (SaaS)
A "slaughter." MongoDB, Salesforce, Adobe lost 20-30% on "AI Disruption" fears (AI replacing their business models). Analysts define this as "Software Armageddon."
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NEUTRAL: Finance & Semiconductors
Financials gaining on deregulation hopes. Semis are mixed: Nvidia leads, AMD struggles to satisfy investors.
COMPANY NEWS (FULL LIST)
Announced doubling AI Capex to $175-185B. Stock fell on margin fears, but accelerated cloud revenue remains a "great story" for long-term bulls.
Biggest winner of Google's Capex news. Primary supplier of TPUs. Market repricing it as the safest "pick and shovel" player in AI infrastructure.
Missed Q4 EPS expectations. Rising costs are pressuring profitability. Analysts revising targets down due to extended AI payback periods.
Beat revenue but fell on guidance. Market feels market share gain vs Nvidia is too slow. Classic "sell the news" event.
+70% annual revenue growth. Proved "hypergrowth" status. AIP platform demand is exploding, decoupling it from the general tech sell-off.
Crashed on fears of Novo Nordisk legal action regarding compounded GLP-1s. Investors see this as an "existential risk."
Crushed EPS ($0.69 vs $0.49). Confirms "sky-high" demand for AI servers. Remains a safe haven for infrastructure spending.
Great 2026 guidance ($0.60 EPS), but stock remains down 27% (3 months) due to macro fears and general fintech distrust.
Dropped 40% from peak on Crypto crash, but bounced 13.9% late week as Bitcoin recovered. Fate tied to crypto volatility.
Massive weekly bounce from oversold territory. Demand recovery signs and sector rotation fueling the rally.
Priced as "AI Victims". Stocks down 20-30% monthly. Investors avoiding these until they see concrete AI revenue, fearing AI will break their business models.
ANALYST VIEWS
- Morgan Stanley: Argues the bull market has "room to run." Defines current state as "late cycle," not "end cycle." Expects index to rise in 2026 with AI efficiency.
- Ed Yardeni: Calls tech sell-off a "Mini Tech Wreck," rejects 2000 bubble comparisons. Maintains 7,700 S&P target.
- FS Insight (Tom Lee): Sees the drop as a buying opportunity. Notes stabilization in SaaS and Crypto could trigger a bottom.
ECONOMIC CALENDAR
Primary Focus: CPI (Inflation). Next week, eyes are on inflation data. A new CPI pressure could fuel "rates higher for longer" fears. The test is whether inflation sticks at 3% or heads to 2%.
Also Watching: Kevin Warsh's nomination process signals from the Senate. Any "hawkish" statement could hit tech again.
UPCOMING EARNINGS
- Datadog (DDOG): Cloud usage signal.
- Robinhood (HOOD): Bitcoin impact on volume.
- Cloudflare (NET): Edge computing demand.
- Astera Labs (ALAB): CXL tech growth.
- Vertiv (VRT): Data center cooling (Capex).
- Shopify (SHOP): E-commerce health.
- AppLovin (APP): AI ad performance.
- Nebius (NBIS): GPU cloud demand.
- Coinbase (COIN): Crypto volatility effect.
- Arista (ANET): AI networking infra.
SECTION 9: RISKS
- ⚠️ Employment Doom Loop: Layoffs -> Low Spending -> Low Profits.
- ⚠️ AI ROI Fear: Perception that Capex isn't generating revenue.
- ⚠️ Warsh Uncertainty: Bond market fear of tightening.
- ⚠️ Crypto Contagion: Spreading to general sentiment.
- ⚠️ Geopolitics: Iran-US tension spiking oil/inflation.
SECTION 9: OPPORTUNITIES
- 🚀 Energy (XLE): Best hedge against inflation/geopolitics.
- 🚀 Asymmetric Growth: Oversold quality stocks (50% down from peak).
- 🚀 Palantir (PLTR): Guaranteed winner of Govt AI.
- 🚀 Project Vault: US Critical Minerals (Mining).
- 🚀 AI Infrastructure: Arista, ALAB, Vertiv (Pick & Shovel).
SECTION 10: INVESTOR'S MEANING
The market table screams that the era of "blind buying" is over. As Amazon and AMD showed, companies are punished if they aren't "perfect."
The most logical positioning is holding Energy and Infrastructure for protection, while gradually accumulating "high-conviction" tech stocks (PLTR, SoFi, Robinhood) that have been unfairly penalized. The productivity revolution continues. Do not be paralyzed by macro noise; follow the earnings momentum. AI is a survival requirement, not an option.
Therefore, instead of raising cash on pullbacks, one can slowly switch to gradual purchases in solid stocks.
I wish you a profitable week.