Global Highlights for This Week: GDP and PCE Data Loom as "AI Whack-a-Mole" Sentiment Persists
Driven by intensifying anxieties over the disruptive power of Artificial Intelligence (AI), the three major U.S. indices all recorded losses last week. The S&P 500 fell 1.4% cumulatively, the Dow Jones Industrial Average dropped 1.2%, and the Nasdaq Composite slid 2.1%.
This week, equity investors remain on high alert for further market volatility sparked by AI disruption fears. Simultaneously, they will evaluate the sustainability of underlying sector rotations while focusing on Walmart’s earnings and a fresh batch of economic data.
Following the hit to software stocks, concerns that a new generation of AI tools could upend established business models have spread to insurance, wealth management, and transportation.
"It feels like a game of 'whack-a-mole' where everyone is guessing which industry AI will destroy next," said Art Hogan, Chief Market Strategist at B. Riley Wealth. "Because the technology is so new, people can spin any narrative they want, even suggesting AI will eventually consume the entire world. That likely won't happen, but that is the current market sentiment."
AI-related pressure has dragged down the technology sector. Since the current bull market began in October 2022, tech has been the primary driver, but it has declined over 4% year-to-date.
Investors are beginning to rotate into previously lagging sectors. Energy, consumer staples, materials, and industrials have all gained at least 10% this year, with small-cap stocks also showing significant strength.
"The shift in leadership is now an undeniable reality," said Mark Hackett, Chief Market Strategist at Nationwide. "This rotation is gradually becoming rooted in investor psychology."
Major economic data releases this week include the advance estimate for Q4 GDP, the monthly consumer confidence survey, and the Personal Consumption Expenditures (PCE) price index—the Federal Reserve's preferred inflation gauge.
Furthermore, investors will closely parse the FOMC meeting minutes on Wednesday to gauge the divide between officials supporting a "wait-and-see" approach and those advocating for rate cuts.
"The January minutes will likely detail the arguments for both the 'wait-and-see' stance and the case for cutting rates, aligning with the varied viewpoints expressed by FOMC policymakers since the meeting," HSBC analysts noted in a report.
Money market data currently reflects that a 25-basis-point cut in July is fully priced in, with roughly 60 basis points of total easing expected for 2026.
Additionally, the U.S. Treasury will auction $16 billion in 20-year bonds on Wednesday and $9 billion in 30-year Treasury Inflation-Protected Securities (TIPS) on Thursday.
As the Q4 earnings season winds down, the corporate focus this week will be on retail giant Walmart’s quarterly results.
Walmart is scheduled to report on Thursday before the market open, providing a window into consumer spending trends. Previous data showed that U.S. retail sales were unexpectedly flat in December.
Walmart’s stock has gained 20% this year, with its market cap recently surpassing $1 trillion. It is the largest company in the consumer staples sector, which has rallied 15% in 2026.
U.S. markets will be closed this Monday in observance of Presidents' Day.
Global Key Events Calendar:
Monday (Feb 16): Eurozone December Industrial Production
Tuesday (Feb 17): U.S. February Empire State Manufacturing Index; Eurozone February ZEW Economic Sentiment; Germany January Final CPI
Wednesday (Feb 18): RBNZ Interest Rate Decision and Policy Statement; France January Final CPI; UK January CPI; U.S. January Conference Board Leading Indicators
Thursday (Feb 19): FOMC Meeting Minutes; Eurozone February Preliminary Consumer Confidence; U.S. February Philadelphia Fed Manufacturing Index
Friday (Feb 20): U.S. December Core PCE Price Index; U.S. Q4 Advance Real GDP; Japan January CPI; Flash PMI Data (Services/Manufacturing/Composite) for France, Germany, Eurozone, and UK