**Market Wrap – February 4, 2026** In today’s session, U.S. equities finished lower amid a broad-based selloff in technology stocks, which has been a persistent theme this year. According to Yahoo, the decline in software shares was particularly pronounced, with hedge funds increasing their short bets against the sector, contributing to a "brutal sell-off." The Nasdaq composite fell 0.82%, while the S&P 500 and Wilshire 5000 also posted losses of 0.24% and 0.76%, respectively. This bearish sentiment was echoed in European indices, with the Euro Stoxx 50 and DAX down nearly 1% each, as investors reacted to concerns over growth and inflation. U.S. Treasury yields remained stable but slightly lower, with the 10-year yield at 4.28% after a 1 bp decline. This stability in yields suggests that the market is currently pricing in a cautious outlook, particularly in light of the rescheduled U.S. employment report and consumer price index, which may indicate potential volatility in upcoming sessions, as reported by MarketWatch. The flattening yield curve reflects a risk-off sentiment as investors weigh economic growth against inflationary pressures. The high-yield corporate bond market also saw a rise in spreads, with the CCC corporate yield increasing by 6 bp to 12.48%, signaling increased credit risk premiums. Sector performance revealed a stark divide, with energy stocks rebounding sharply, up 2.95%, driven by rising crude oil prices, which are also reflected in commodities markets. WTI crude oil gained 3.05%, hitting $63.78. In contrast, technology stocks were heavily sold off, with major players like Meta, Tesla, and Alphabet all reporting significant declines of over 2%. Notably, Meta shares dropped 3.11%, influenced by broader sector fears as hedge funds shorted tech stocks, as highlighted by CNBC. The industrials sector benefitted from a rotation out of tech, with defense and transportation stocks reaching new highs. In the foreign exchange market, the USD gained against several currencies, including a notable drop in USD/MXN, which fell by 0.80%. Commodities also saw mixed results; precious metals enjoyed a rally, with gold rising by 5.03%, as investors sought safe-haven assets amid the tech selloff. Conversely, agricultural commodities like orange juice and coffee saw sharp declines of 5.88% and 5.57%, respectively. The volatile cryptocurrency market also reflected risk aversion, with Bitcoin falling to a 15-month low amid reduced trading activity and negative sentiment, as reported by Cointelegraph. Looking ahead, investors should remain vigilant as the upcoming U.S. employment report and CPI data could catalyze significant market movements. The current risk-off tone may lead to further rotation into defensive sectors and safe-haven assets if economic indicators suggest continued inflationary pressure. Traders might consider short positions in overvalued tech stocks or seek opportunities in energy and industrials as they benefit from the ongoing economic recovery narrative. The markets remain poised for potential volatility as participants digest key economic data and adjust their positions accordingly.