Market Insights Recap — Week of February 9, 2026

Hello. I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Software slump, breathe easy and more waffling. What do we got here? Let's take those in turn.

Last week's action reinforced a lesson every investor should know. Pay attention to the tape, not the noise, especially the news noise. Over the last couple of weeks, the nattering nabobs of news, you got to look that up, have told us the end of software was at hand. Health insurance was doomed and people stopped eating junk food. Not me.

Well, let's look at the tape action first. The last several years, AI mega-cap companies have driven market indexes and valuations higher. Traditional cyclical and consumer stocks, they've been left back at the station. That cycle is ending now and turning back towards cyclicals and value stocks. That's very typical price action in a secular bull market. For the first six weeks of this year, the S&P Technology Software Index is down 22%, half that drop last week. These are companies like Palantir, Salesforce, AppLovin, even CrowdStrike that service the tech industry. Now, recent improvements and large language models, especially Anthropic's leap ahead with Opus 4.6, have scared investors away from the sector because over the last several years, the market was increasing the value of those companies that could benefit from AI. Now the fear is those companies are going to be harmed by AI because folks will be able to build those software tools themselves. Fair enough.

How about private equity funds that invest in tech software: KKR, Blackstone, TPG, others were down over 20% also over the last three weeks. History does rhyme, sometimes repeat: Railroads, TVs, cell phones, PCs, they all had the same hype, worry and retreat stages. 

What does the tape and earnings say about the real economy and AI? Dow transports hitting record highs. Full-service dining and fast food stocks? They're making higher and higher lows. Consumers may be whining, but they're still spending. Now the AI Magnificent Seven, it's down 4% this year. But the other 493 stocks and the S&P 500, they're up 3.3%. And the Dow Industrials, over 4%, breaking 50,000 for the first time last Friday. Then the 24 trading days this year, the S&P 500 has had only three days where stocks making new four-week lows outnumbered stocks making four-week highs. So breadth and tape measures tell us that we can breathe easy and maintain our stock allocations. The bull is doing just fine rotating away from tech for a while.

Fourth quarter earnings coming in ahead of estimates. We're halfway through the current reporting season. Earnings on average, 13% above '24's fourth quarter, well above the 8% Wall Street analysts were projecting back at year-end. Now if the index can hold that 13% earnings growth, it's going to mark an impressive fifth straight quarter of double digits earnings growth. Earnings growth makes it easier to hire and expand. 

And that brings us to our third tape over noise topic: the job market. The BLS released its monthly survey of job openings Thursday. And the number was down almost three quarters of a million, from 7.1 down to 6.5 million. The news on top of that was a slight jump in jobless claims. Oh, no. The economy's crating. The news computers hit the sell button. Well, again, step back from the noise. Let's look at the tape because it tells a different story. Indeed.com shows increasing openings, especially in tech. The AI buildout is pushing demand. Manufacturing jobs have stopped falling. The unemployment rate is holding steady at 4.3%. Layoffs, they're back at pre-COVID levels. They're not at recession levels. How about those jobless claims? This week sees a slight bump every year. It's kind of a seasonal anomaly. Plus, there was that big winter storm that prevented a lot of folks from punching the clock. And oh, by the way, we're going to have a little bit more noise later this week from a partial government shutdown coming Thursday night. 

So let's wrap up. The stock market undergoing a typical rotation; the bull remains in place. Our thesis remains in sync with our indicator dashboard that the economy has shifted up from first gear to second gear. The stimulus from Congress and tax refunds are coming later this quarter. Deregulation is coming to banking later this year. Lower interest rates may be in play in the second half of the year. We still don't think they need any rate cuts. We're fully invested. We're tilted a bit towards value in international; 'til next time.