Hello, I'm Eric Criscuolo, Market Strategist at the New York Stock Exchange, and this is Market Storylines. We’re here to keep you up to date on the key trends and events driving global markets. We’re recording this on Thursday, February 12. Let’s dive in.

First, we need to congratulate the Seattle Seahawks for their cakewalk win over the Patriots in Super Bowl 60. Thank you for sticking with the running game from start to finish this time. Now to step back a little further.

Last Monday Punxsutawney Phil saw his shadow and added 6 more weeks of winter to our lives. If you’re a fan of Game of Thrones, you know that Winter is Coming is the big narrative theme in that story. In our world it’s been painfully obvious that winter has been here for a while.

We’ll also use a tortured metaphorical version today, in which the White Walkers are played by the rising swarm of new AI services. Last week, Winter became a SAAS-pocalypse. Already under pressure from AI displacement fears, a rollout of new AI services by Anthropic triggered a wave of selling across software groups, which bled into other areas like private credit names that had exposure to software company loans. The IGV software ETF fell about 10% for the week. Without a relief rally on Friday it would have been worse. You could feel the shoot-first momentum engaging a higher gear.

However, despite the weakness in tech and momentum names last week, the great rotation continued. Friday saw a sharp bounce in many of those names and multiple indices hit new all-time highs. That includes the Dow Jones Industrial Average which broke above 50,000 for the first time in history. We have hats to prove it. Despite the SAAS-pocolypse the S&P 500 was about flat. The rotation underneath was readily apparent when looking at other indexes: the equal-weight, Mid and Small cap indexes rose 2% to 4%. The Friday rally got the S&P 500 back above its 50-day moving average. Equity losses were largely contained to the big tech sectors and the software-exposed names.

So that sets the stage for this week. Coming off the Super Bowl, things started well with the S&P trading higher, software continuing its bounce and small caps leading on Monday. It was a false spring, however, and the rolling wave of AI White Walkers spread and engulfed new industry groups. Financial brokers and wealth advisor stocks got hit on potentially competitive AI product offerings from Altruist. Financial data analytics companies, already stumbling from earlier AI concerns, got hit again after some disappointing earnings. Real Estate firms with significant data businesses also came under pressure. Today, Thursday, was trucking and logistics companies, with both federal rules and AI displacement fears taking aim at all sides of their business.

The selling became more indiscriminate today. With the index unable to crack 7000 on multiple tries, the S&P broke back below its 50-day and moving down towards its 100-day average. Consumer Staples, Real Estate and Utilities are leading today as most other sectors are sharply lower.

Though it’s rather ugly today, we can’t pretend it’s anything like the carnage we saw last April. For the week the S&P 500 is down 1%. Financials are the worst off, down 4%. Banks are getting hit but other areas like exchanges, data providers and related financial services are worse off. In Tech, Semis are trading well for the week. Dividend paying Real Estate and Utilities are the best sectors, along with Materials as it continues to make up ground after underperforming last year. Small caps are underperforming, but the 1% difference from the large caps isn’t stark.

While the AI White Walker swarm was the main theme this week, macro data also pushed markets around. Treasury yields continued to fall from recent highs but bounced around this week on several developments. Chinese regulators reportedly told financial institutions to pare holdings of US Treasuries, nudging yields higher. But then White House economic advisor Kevin Hassett talked down upcoming expectations for labor data. That pushed yields lower. However a strong non-farm payroll report later in the week sent yields higher. Guess they pranked Hassett with the wrong embargoed release. Sandwiched between all this was weak Retail sales that caused a drop in yields. Today’s risk-off condition has triggered a flight to Treasuries, pushing yields lower. With all that, the 2-year yield is down about 3 basis points this week while the 10 and 30 year yields are lower by about 10. The decline in yields has helped push the US Dollar Index lower, which has retraced about half its February move up from 96 to almost 97.

Now, this sounds weird to say but one area that was standing out for its relative calmness was commodities, especially metals. The parabolic moves in gold and silver have eased since January 30 as the markets consolidated the breakneck gains. Gold was trading around $5100 for most of the week before dropping below $5000 today on the broad sell-off. Silver declined sharply as well. The metals market will be interesting to watch next week as China shuts down for Lunar New Year. Bitcoin’s weakness continued, briefly taking the coin to around $60,000 before it snapped back, only to fail to hold $70,000 and stumble back to around $65,000. Oil continued to rally but like most everything else hit a wall on Tuesday with the risk-off conditions.

It’s a lot to take in, so we’ll pivot to what’s coming up. More volatility could be in store tomorrow with the CPI release. Markets expect the next Fed cut in June. Saturday, February 14 is Valentine’s Day. Get your flowers now because, while I can’t give investment advice here, I’m confident in saying that that’s where the next market bubble will be. Lets talk warmer weather too. Pitchers and catchers have already begun reporting to Spring Training and the first games will take place Friday.

Back to the markets, which will be closed on Monday for Washington’s Birthday. The big data is next Friday: preliminary Q4 GDP, December PCE and the latest Flash PMIs. Friday is also the next potential date for the Supreme Court to issue a ruling on the tariff case. The FOMC minutes will be out on Wednesday. Other data throughout the week include Housing Starts, Home Sales, Durable Goods orders, Industrial Production, Trade Balance and some Regional Fed Bank surveys. Overseas, China will be closed for the Lunar New Year as we noted.

Earnings will continue. Medtronic, Devon Energy (named after my daughter of course), Palo Alto Networks, Toll Brothers, Invitation Homes, Moody’s, major retailers and Con Edison will be among the reporters.

That’s a wrap for this week. You can watch Market Storylines on TV.NYSE.com or on the NYSE YouTube Channel. You can also listen on the Inside the ICE House Podcast feed. Thanks for joining me. I’m Eric Criscuolo. We’ll see ya next week. Play Ball!