February 1, 2026 
3 min read 
The Russell 2000 outperformed the S&P 500 Nasdaq and Dow Jones in January as capital flowed into smaller capitalization names at the start of the year. Market seasonality known as the January Effect contributed to the move.
- Tax-Loss Harvesting: Some investors sell losing positions in December to realize losses then re-enter markets in January which can lift prices.
- Portfolio Rebalancing: Institutions often shift allocations toward smaller higher-growth stocks at the beginning of a new year.
Large-cap technology largely consolidated while memory-focused names such as Micron and Sandisk drew activity. Broader tech advance was uneven despite pockets of strength.
Earnings remain active. Microsoft Meta Apple and Tesla reported recently while Alphabet and Amazon are scheduled to report next. These results are central to near-term market attention.
Alphabet has invested in in-house chips open source tools chatbots and AI agent capabilities and its installed customer base and large capital position have supported deployments and tests of those solutions.
Alphabet has risen to become the second-largest public company by market capitalization behind Nvidia. Its reported results have the potential to affect the broader technology sector.
Additional notable reports this week include Palantir AMD and Eli Lilly alongside Amazon.
President Trump nominated Kevin Warsh to succeed Chair Powell in May. Warsh is widely viewed as a hawk though he has recently referenced an AI-driven boost to productivity that could support faster growth without triggering inflation.
Warsh favors shrinking the Federal Reserve's balance sheet and reducing what he describes as expansive monetary measures. A smaller balance sheet would remove liquidity from the system which reduces the availability of easy money and alters conditions for higher-risk assets.
Hiring appears to be slowing particularly among younger workers and the unemployment rate has moved to its highest level since 2021. That dynamic complicates the Fed's approach to inflation and interest-rate settings.
The CBOE Volatility Index ticked higher as major indexes swung to close the month. SPY faces significant resistance at its all-time high level of 698.96.
This material is provided for informational and educational purposes only and does not constitute financial advice. All investments carry risk, including the potential loss of capital.
