Closing Bell: Volatility Cools, Semis Lead as Dollar Slips; Risk Appetite Rebuilds
U.S. equities rallied as risk appetite returned in force, led by semiconductors and growth-sensitive sectors. The VIX fell back below 18, easing pressure from systematic selling and reopening the door for higher beta leadership. A weaker dollar reinforced the move, lifting emerging markets, commodities, and crypto, while rates stayed supportive. Under the surface, however, sector leadership remained uneven, keeping sustainability questions in play.
Three things that mattered today:
1) Volatility breaks, semis take control
The most talked-about shift was the sharp volatility reset. As fear rolled over, buyers stepped back into the highest-conviction growth areas. Semiconductors led decisively, with NVIDIA (NVDA) and Advanced Micro Devices (AMD) pacing gains. Technically, NVDA drew attention after failing a neckline breakdown on the daily head-and-shoulders pattern late last week, a signal many traders interpreted as a bear trap. That reversal helped ignite follow-through buying across the SOXX and reinforced the idea that AI leadership remains intact.
2) Weaker dollar lifts global risk, commodities, and crypto
The U.S. dollar index ($DXY) moved lower, benefiting assets levered to global liquidity. Emerging markets (EEM) advanced, while the Japanese yen (FXY) strengthened amid rising confidence around political stability and election clarity. Commodities responded in kind: crude oil (/CL) and gold (/GC) moved higher, and long bonds (/ZB) caught a bid as yields eased modestly. In crypto, Bitcoin (/BTC) extended its recovery following last week’s liquidation-driven selloff, reinforcing the broader risk-on tone.
3) Growth rebounds, defensives lag.
Growth participation broadened beyond chips. Software and communications services rebounded sharply, with the IGV complex and leaders such as Oracle (ORCL), ServiceNow (NOW), Palantir Technologies (PLTR), and Microsoft (MSFT) moving higher as investors rotated back into secular growth. At the same time, defensive and value sectors sold off: Staples (XLP) was the weakest sector on the day, while Financials (XLF) and Health Care (XLV) also lagged, reflecting a softer rate narrative and reduced demand for protection.
Market concerns: sustainability under the hood
Despite the strong headline move, Consumer Discretionary (XLY) remained flat to down, a notable divergence during a risk-on session. Even more telling, Staples continue to underperform since last year, raising questions about the durability of consumer demand and margin resilience. These internal splits suggest today’s rally was driven more by positioning, volatility, and FX relief than by a clean, economy-wide acceleration.
What’s next — Wednesday, Feb 11 (ET)
Economic data
- 8:30 a.m. — Retail Sales (Jan)
- A key read on consumer momentum and an important test for the divergence between risk assets and discretionary spending.
Earnings
Before market open
- Coca-Cola (KO)
- AstraZeneca (AZN)
- BP (BP)
- Marriott International (MAR)
- Spotify (SPOT)
- Ferrari (RACE)
- Datadog (DDOG)
- Fiserv (FISV)
- DuPont (DD)
- Quest Diagnostics (DGX)
- Zimmer Biomet (ZBH)
- Hasbro (HAS)
After market close
- Gilead Sciences (GILD)
- Cloudflare (NET)
- Ford Motor (F)
- Edwards Lifesciences (EW)
- Lyft (LYFT)
- Zillow (Z)
- Teradata (TDC)
- Upstart (UPST)
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