U.S. stocks closed mostly lower after an initial uptick following January’s inflation data, as investors wrapped up a volatile week marked by heavy sector rotation and mixed economic signals. While the Dow Jones Industrial Average managed a modest gain on the day, all major indexes finished the week in negative territory.
The Dow ended the week down 1.23%, while the S&P 500 slipped about 1.4%. The Nasdaq Composite posted the steepest weekly decline, falling nearly 2%, driven largely by continued selling pressure in heavyweight technology and software stocks. Small-cap stocks also underperformed, with the Russell 2000 down roughly 1% for the week despite a strong session to close it.
Defensive Sectors Lead the Way
Market leadership reflected a defensive tone. Utilities and consumer staples both reached record highs, underscoring investor preference for stability amid uncertainty. Real estate and healthcare also outperformed, while communication services and financials lagged behind.
Over the past five trading days, utilities surged more than 7%, followed by real estate gains of about 3.5%. Financials and consumer discretionary stocks were among the weakest performers, signaling caution around economic growth and consumer spending.
Within the Nasdaq 100, mega-cap stocks remained under pressure. While select semiconductor names posted strong gains, broader weakness persisted across major technology players. In contrast, some industrial and consumer names provided support to the Dow, including Caterpillar, Nike, Disney, and UnitedHealth.
Labor Market Finds Its Footing
On the economic front, recent labor data suggests the job market is beginning to stabilize. According to insights from ZipRecruiter, more than half of new hires are now finding jobs within one month, though fewer are landing what they would consider “dream roles.” Workers appear increasingly focused on realistic opportunities rather than holding out for ideal positions.
Wage growth remains supportive, with average pay rising 3.7% year over year in January, continuing to outpace inflation. This trend has helped households manage ongoing cost pressures and maintain some negotiating power, even as fewer job seekers attempt salary negotiations.
Stability has become a top priority for workers, with many choosing to stay in their current roles amid economic uncertainty. However, falling unemployment and improving hiring indicators suggest job mobility could gradually pick up later in the year.
Healthcare employment stood out as a key area of strength, driven by long-term demographic trends such as an aging population. Unlike more cyclical industries like tech and manufacturing, demand for healthcare workers remains structurally strong.
Construction and skilled trades also showed resilience, supported by housing demand, infrastructure needs, and large-scale projects such as data center development. Temporary staffing has increased as well, often viewed as a leading indicator that employers may be preparing for broader hiring without committing to full-time roles immediately.
Crypto Regulation and the Road Ahead
Beyond equities, attention is also focused on crypto regulation. Despite recent volatility in Bitcoin prices, optimism remains around potential regulatory clarity through pending legislation. Lawmakers continue negotiations to reconcile differences between House and Senate versions of proposed crypto bills, with the goal of establishing clearer oversight between regulators and creating a more stable framework for digital assets.
While challenges remain, policymakers emphasize compromise, noting that regulatory clarity could benefit both traditional financial institutions and the crypto industry over the long term.
What Investors Are Watching Next
Looking ahead, investors are preparing for another busy week. U.S. markets will be closed Monday for Presidents’ Day, but earnings season remains in full swing. Major companies, including Walmart, are set to report results, with analysts closely watching commentary on consumer health and 2026 guidance.
Additionally, minutes from the January Federal Open Market Committee meeting and the Fed’s preferred inflation gauge—personal consumption expenditures—will be key in shaping expectations for interest rate policy as markets assess whether inflation continues to cool.