Wall Street bulls got something of a scare in the first trading week of February 2026. After starting the week strong, the S&P 500 (Index: SPX) got clobbered between Tuesday and Thursday before rebounding to end the week at 6,932.30, up 0.24% from where it closed out the final trading week of January 2026.

What clobbered the market in the middle of the week was tightly targeted on companies making big capital expenditures in building out their investments in Artificial Intelligence (AI) technologies. Google (NASDAQ: GOOGL) led the market down early in the week after revealing they were doubling their capital expenditures to $185 billion to support building their AI systems. That was followed up by Amazon's announcement they plan to spend $200 billion this year on its AI infrastructure.

Also during the week, privately held Anthropic unveiled a new generation of its Claude AI system tailored to automate the generation of computer code. That development prompted investors to not just beat the hell out of software development companies but also financial firms that have made large investments in them.

That downward action was mitigated by the end of the week as investors rotated toward dividend paying firms, benefitting the Dow Jones Industrials, which broke through the 50,000 mark.

Overall, the combination of things going on within the S&P 500 was enough to keep it on track with the dividend futures-based model's trajectory associated with investors focusing on the upcoming quarter of 2026-Q2. The latest update of the alternative futures chart shows the S&P 500 has kept within a few percent of that projected level.

Although we've already covered the week's biggest market-moving news, there was more that investors absorbed. Here are those additional headlines:

Monday, 2 February 2026

• Signs and portents for the U.S. economy:
• Oil falls 5% on US-Iran de-escalation
• OPEC+ agrees in principle to keep planned pause in oil output hikes for March, sources say
• Next Fed minion boss wants to shake things up at Fed:
• Warsh 'regime change' faces steep hurdles at sprawling US central bank
• Fed chair nominee Warsh may want smaller Fed holdings, but that's not easy to do
• Bigger stimulus developing in China:
• China's measures to shore up its indebted property sector
• China new home prices rise in January as government signals support, private survey says
• Growth signs developing in Japan:
• Japan's factory activity growth hits near 3-1/2-year peak, PMI shows
• Less bad, but still bigger trouble developing in Eurozone:
• Euro zone factory activity contracts in January but output rebounds, PMI shows
• Euro zone firms see deteriorating profits, ECB survey shows
• S&P 500 flirts with record high; chipmakers and small caps jump
• Slump in commodities rattles global markets
• Gold, silver fall further as CME margin hike stokes selling
• Bitcoin falls below $80,000, continuing decline as liquidity worries mount

Tuesday, 3 February 2026

• Signs and portents for the U.S. economy:
• India-US trade deal slashes tariffs; seen lifting exports, market sentiment
• US to cut tariffs on India to 18%, India agrees to end Russian oil purchases
• India to ramp up purchases of US oil, arms, aircraft
• Oil steadies as investors weigh supply, possible US-Iran de-escalation
• US refiners struggle to absorb sudden surge in Venezuelan oil imports
• Investors ramp up bets on steeper yield curve under Warsh-led Fed
• US homebuilders working on plan to develop as many as 1 million ‘Trump Homes,' Bloomberg News reports
• Fed minions say predicting the future is hard:
• Fed's Barkin says hard to know how long higher productivity will last
• Fed's Miran tells Fox Business he still wants rate cuts this year
• Bigger trouble developing in Japan:
• Japan PM's idle yen comments send finance bureaucrats scrambling
• Bigger trouble developing in Eurozone:
• Euro zone banks tightening access to business credit, ECB survey shows
• U.S. stocks finish lower as Wall Street sells tech despite positive Q4 results and a gold rebound
• Wall Street ends sharply down as traders fret about AI disruption
• Gold heads for biggest daily gain since 2008 as investors step in after steep selloff
• Walmart hits $1 trillion market value, joins club dominated by Big Tech giants

Wednesday, 4 February 2026

• Signs and portents for the U.S. economy:
• Oil prices climb 3% on report US officials reject Iran's request to change location of talks
• US services sector steady in January, supply constraints from AI data centers feared
• Trump says 'not much' doubt interest rates will be lowered, in NBC interview
• US Treasury's Bessent says he was wrong when he said tariffs could be inflationary
• Fed minions told they lost trust of Americans, new minion stops working second job:
• Bessent: Fed lost trust of American people over inflation, threatening independence
• Fed Governor Miran quits White House job
• Bigger stimulus developing in China, signs of growth:
• Automakers in China roll-out longer-term financing plans to spur demand
• China services activity picks up in January, hiring hits 6 month high, survey shows
• BOJ minions wish new Japan PM "good luck with that", growth signs develop in Japan:
• Exclusive: BOJ won't come to the rescue of a Takaichi-driven bond rout
• BOJ debated risk of being 'behind the curve' on inflation, January summary shows
• Japan's services activity hits fastest growth in nearly a year, PMI shows
• Bigger trouble developing in the Eurozone:
• Euro zone economic momentum wanes further in January, PMI shows
• Euro zone inflation dips in January as soft patch begins
• Nasdaq, S&P 500 extend losses amid suffering tech trade, weak jobs data
• Wall Street ends down as AI worries slam tech stocks
• US tech stocks hit with fresh wave of selling as chipmaker AMD tumbles
• How Anthropic achieved AI coding breakthroughs — and rattled business
• Nvidia's Huang dismisses fears AI will replace software tools
• Google Goes Wild After Hours After Beating Estimates, Projecting Mindblowing CapEx

Thursday, 5 February 2026

• Signs and portents for the U.S. economy:
• Oil falls more than 1% on easing supply concerns after US, Iran agree to talks
• US job openings drop to more than five-year low in December
• Fed minions thinking about doing nothing with interest rates, even though they understand their policy is restrictive:
• Fed's Cook says it's time to 'wait and see' on rates
• Fed's Cook says policy rate 'ever so mildly' restrictive
• Bigger trouble, stimulus developing in China:
• China faces higher prices for further U.S. soybean buys to please Trump
• JapanGov minion starting to think fiscal discipline might be important:
• Japan PM Takaichi's reflationist aide calls for fiscal discipline
• ECB minions do nothing with Eurozone interest rates, as expected. Also say they’re okay with weaker US dollar:
• ECB keeps rates unchanged, signal comfort with dollar weakness
• Wall Street sells off due to AI capex fears and disappointing jobs data
• Wall Street ends sharply down as AI worries weigh
• Google Goes Wild After Hours After Beating Estimates, Projecting Mindblowing CapEx
• Amazon sees 50% boost to capital spending this year; shares tumble
• Silver tumbles, oil drops in commodity sell-off

Friday, 6 February 2026

• Signs and portents for the U.S. economy:
• Oil prices stable after U.S. and Iran hold nuclear talks
• Interest rate outlook comes under scrutiny next week with jobs, inflation data on deck
• Anthropic’s breakout moment: how Claude cracked AI for business
• Fed minions see weak labor market as giving room for rate cuts:
• Exclusive: Fed's Daly sees labor market vulnerabilities, room to cut interest rates
• Fed's Daly says job market feels 'precarious,' eyes rate cuts
• Fed's Jefferson cautiously optimistic about economy, sees job market stabilizing, inflation falling
• Bigger trouble developing in Japan:
• Japan's biggest banks ready to increase JGB holdings despite growing losses
• Former Japan currency chief says FX intervention should be backed by rate hikes
• ECB minions see bailouts as growth opportunity; Eurozone minions see crypto-Euro as key to their growth:
• ECB's safety net is part of EU plan to court new allies
• Exclusive: Euro zone ministers to weigh euro-stablecoins, more joint debt issuance to boost role of euro
• Dow reaches 50K, ends at record high as U.S. stocks rise on NVDA lift
• Dow closes above 50,000, Nvidia soars as traders focus on AI spending
• Nvidia leads chip stocks higher as broader market gains after software sell-off
• Gold rebounds as volatility continues; exchange operator CME again raises margins

The CME Group's FedWatch Tool continued projecting the Fed will keep holding the Federal Funds Rate steady until 17 June (2026-Q2) when it forecasts a quarter point rate cut. The tool anticipates another quarter point reduction on 16 September (2026-Q3). The expected timing of both these projected rate cuts have held steady for the last several weeks.

The Atlanta Fed's GDPNow toolestimates real GDP growth in the U.S. during 2025-Q4 is unchanged at +4.2%, with no updates in the last week. Updates are on tap for the upcoming week.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a young Wall Street bull who is shocked and scared after a jack-in-the-box pops open to show a bear holding a sign that says 'AI CAPEX'".

Tennis players looking to improve their game have a challenge. It's not always possible to find someone you can play or practice with when you have the time to go to the court.

Traditionally, this problem has been solved with the tennis ball machine. These tend to be pretty big machines that hold lots of tennis balls that are gravity fed one at a time into a tube. When the ball gets to a certain point in the tube, it encounters a set of fast-spinning rollers that accelerate and fire it out over the net where the practicing player can then return it. Fancy machines can alter the direction and the timing between ball launches.

Amazon features a number of portable tennis ball machines, the price of most of which starts around $1,000 and gets higher from there for all but the smallest and least capable machines. Given their bulky size and their cost, many players who use tennis ball machines will rent them.

But what if it you could shrink the size of a tennis ball machine enough that it could fit into a backpack? Or more ingeniously, is a backpack. One with a clever enough design that can hold as many as 100 tennis balls and your rackets? That could become an affordable option for a casual tennis player or a very useful kit for an enthusiastic player.

Hong Kong-based Nisplay Sports has done just that with their Y1 model, for which they've launched a Kickstarter campaign. The following video features tennis coach Henry So unboxing the Nisplay Y1 and demonstrating it. We've queued the video to start at the demonstration part:

As of 6 February 2026, the campaign has less than 30 days left to go, but has already well surpassed its goal. The campaign's Super Early Bird special is still available for HK $4,282, which is about US $549.

"It's tough to make predictions, especially about the future."

That's just one of many bits of wisdom that baseball great Yogi Berra dispensed over his life. But how tough is it to predict what happened in the past?

Let's play a game to find out. We're going to give you a set up involving trade between the U.S. and China so you can guess what actually happened next. And then we'll give you more background information and a chance to change your prediction. Once you've locked in your prediction of what happened in the past, we'll tell you what actually happened.

To play, just scroll down line by line, so you don't get to the answer before you've made your prediction. It's that easy, here we go!

At the start of November 2025, the U.S. and China reached a new truce in their tariff war, which started almost seven months earlier. If you were asked to predict how the total value of goods exchanged between these two nations would proceed to change during November 2025, after the trade deal was reached, which option would you choose?

• The total value of goods exchanged would rise.
• The total value of goods exchanged would stay the same.
• The total value of goods exchanged would fall.

Now, let's throw some extra information for you to consider in making your hypothetical wager. The U.S.-China tariff war significantly reduced the quantity of goods exchanged between the two nations, with the total value of goods plunging to near-2020 pandemic lows in the months ahead of the November 2025 truce. That's a big deal because the months of August and September typically represent the peak of China's exports to the U.S., with consumer goods flowing into the U.S. ahead of the Christmas holiday shopping season. Meanwhile, the months of October and November typically represent the peak of U.S. exports to China, which are dominated by shipments of soybeans following their annual harvest at this time of year.

Does that extra information change your thinking? Or will you stick with your original wager? We'll give you one last moment to decide....

Now that you've made your prediction, the following chart reveals the outcome. Did you make the right call?

The total value of goods exchanged between the U.S. and China fell in November 2025, both month-over-month and year-over-year. The reason why is the tariff war's disruption of trade between the two nations during the preceding months, which shrank the flow of goods in both directions and, more importantly, shrank the orders for the goods that might be exported.

By the time the tariff war truce was struck, the firms that do the actual importing and exporting of products didn't have orders for the goods they would normally be transacting set up, nor did they have any cargo ships lined up to transport them. Even if they had these things ready to go, since it typically takes about three weeks for the physical goods themselves to transit across the Pacific Ocean after the ships are loaded and leave their ports, most of the month of November would not have seen any uptick as a result of the deal. At least, not until the end of the final week of the month in the most optimistic of scenarios.

Now we'll make a prediction about what happens next. We will most likely see a reversal when the trade data for both December 2025 and January 2026 is reported in the months ahead, with a rising level of goods exchanged between the two nations.

What can we say? "The future ain't what it used to be."

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 29 January 2025.

Neon question mark photo by Simone Secci on Unsplash.

Motio Research reports their initial estimate of U.S. median household income for December 2025 is $86,820, a $340 (or 0.4%) decrease from their initial November 2025 estimate of $87,160.

The change is the first decline Motio's household income index has seen in the last several months, which we've described as appearing to "run hot" with respect to the estimates we develop using our alternate methodology. One interpretation of that outcome is that Motio Research's use of survey-based data has picked up on a new trend that isn't yet making its presence felt in the aggregate wage and salary data we use to develop our estimates of median household income.

That's a real possibility for October and November 2025's data, we found we had some really uncanny accuracy in predicting what our "official" estimates would be after the aggregate wage and salary data along with population data for both months became available in late January 2026. Our accuracy suggests the BEA is using similar methods to project their own estimates, which means it's fully independent of the survey-based data Motio Research utilizes in determining their estimates.

Another possibility is the sampling used by the Census Bureau in collecting income data through its monthly Current Population Survey. If that sample has been skewed to the high side compared to the general population in recent months, it could well produce estimates that are higher than those we project using the BEA's aggregate income data. Given the various survey and analytical methodologies involved, that state of affairs could last for several months until the survey population fully rolls over and the resulting income data undergoes what statisticians refer to as a reversion to the mean.

If this second possibility holds, we should see Motio Research's estimates move back toward our projections over the next several months. But if it stays elevated, then the argument for the first possibility becomes stronger. We'll all find out soon enough.

For now, Motio Research presents the results of its analysis of the Census Bureau's surveyed income data in the form of an seasonally-and-inflation-adjusted index with the median household income of January 2010 assigned a value of 100. The initial value of the firm's U.S. Real Median Household Income Index for December 2025 is 118.6.

The following screenshot of Motio Research's interactive chart shows how this index has changed from January 2010 through December 2025:

In other news, we're still dealing with the disruption of 2025's 43-day-long federal government shutdown. While many government agencies will be fully caught up in reporting their monthly data in the next few months, several of the data streams we follow in developing our own median household income estimates are still impacted by delays.

Analyst's Notes

Political Calculations produces median household income estimates using other original data sources that complement Motio Research's survey-based estimates. Because of the ongoing delays in official data being reported, we'll be delayed in producing our "official" median household income estimate for December 2025.

But then, if the data for which we're waiting is just a linear projection of historic data, we can produce a fairly accurate ballpark estimate in the meantime. Our ballpark estimate of median household income in the U.S. in December 2025 is $85,821, which is $1,001 (or 1.15%) below Motio Research's initial estimate for the month.

We'll see how close that is to our "official" estimate after we get the data we're after for December 2025, which we'll cover in our next regular edition of the median household income series.

Image credit: U.S. Census Bureau. We modified the public domain image to make it more generally applicable beyond reporting the median household income from 2022.

Dividend paying stocks in the U.S. stock market got off to an unexpectedly strong start in January 2026.

Tallying up the dividend-payers' metadata for the month, we find the year-over-year number of net favorable dividend actions totaled 50. With fifty more publicly traded firms announcing favorable dividend actions than unfavorable ones, January 2026 represents the best month on record since September 2023. Coincidentally, that was the last month that saw its net favorable dividend actions reach 50, as the next 15 months fell below that level, with 12 of those months recording a negative result.

Until January 2026. As we noted, this result was unexpected and largely driven by an increase in the number of firms announcing they would pay an extra, or special, dividend to their shareholding owners. The first month of 2026 had 98 such declarations, 46 more than were recorded in January 2025.

The following table presents a full summary of January 2026's dividend actions and provides a Month-over-Month (MoM) comparison with December 2025 and Year-over-Year (YoY) comparison with January 2025.

Without the extra dividends being announced, January 2026's dividend metadata is just slightly better than January 2025's data. The following chart presents the U.S. stock market's total number of dividend increases and decreases for each month from January 2004 through January 2026.

The number of dividend rises was 181, three more than counted a year earlier. The number of dividend decreases was 17, one less than counted a year earlier and well below the threshold that indicates recessionary conditions are present in the U.S. economy. Combined with the much larger increase in special dividends, January 2026 was a very strong month for the U.S. stock market's dividend-paying companies.

That's not to say it couldn't have been stronger. Companies that otherwise pay a set dividend will pay out extra dividends when their performance pulls in more cash than they anticipated, but they increase their ordinary dividends when they expect their good fortune to continue. Paying an extra dividend suggests many companies are taking a cautious wait-and-see approach with their dividends going into the new year.

References

Standard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 2 February 2026.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull who is happy to be getting an extra dividend payment in January 2026".