Wall Street Rallies as February Gets Off to a Strong Start

Wall Street Rallies as February Gets Off to a Strong Start

Dow posts its best session in nearly two weeks as investors rotate into defensive stocks

US stock markets began February on a positive note, with major indices finishing higher as investors shifted away from high-growth technology shares and into more defensive sectors. Improved sentiment around trade developments and easing geopolitical tensions also supported gains.

Dow Jones records strongest day since late January

The Dow Jones Industrial Average rose 1.1% to close at 49,407.66, marking its best performance since 21 January. The S&P 500 gained 0.6% to 6,978.65, while the Nasdaq Composite also advanced 0.6% to end at 23,592.11.

Market strategists said the rally was driven by a defensive rotation, with investors favouring stability over risk. Consumer staples outperformed, while enthusiasm around artificial intelligence stocks cooled slightly.

Defensive stocks outperform as tech momentum slows

Consumer staples were among the strongest performers, as investors looked for safer exposure amid recent volatility. Companies such as Walmart, Coca-Cola and PepsiCo saw solid gains, while Apple outperformed many AI-focused names due to its relatively limited exposure to the sector.

By contrast, Nvidia shares lagged, reflecting growing caution around the pace and scale of investment in artificial intelligence infrastructure.

US–India trade agreement boosts investor confidence

Market sentiment was further supported by comments from President Donald Trump, who announced that the US had reached a new trade agreement with India. According to Trump, India has agreed to stop purchasing Russian oil and significantly increase imports from the United States.

Under the deal, the US will reduce its reciprocal tariff rate to 18% from 25%, while India has committed to buying more than $500 billion worth of American goods. The announcement helped shift investor focus away from recent commodity market turbulence.

Oil prices fall despite major geopolitical headlines

Oil markets showed little immediate reaction to the US–India trade news. Instead, prices fell sharply following signs of easing tensions between the US and Iran.

Brent crude dropped 4.2% to $66.41 a barrel, while West Texas Intermediate fell 4.5% to $62.25. Meanwhile, OPEC+ left production levels unchanged at its latest meeting, a move widely expected by markets.

January jobs report delayed by government shutdown

Attention now turns to US economic data, although the January jobs report has been delayed due to the partial government shutdown. Federal services were temporarily suspended after Congress failed to pass a full funding package.

The shutdown is expected to be short-lived, limiting the longer-term impact on markets.

Investor sentiment recovers after precious metals sell-off

Sentiment had weakened late last week following a steep sell-off in gold and silver, driven by profit-taking and a stronger US dollar. Both metals recorded historic single-day declines.

The nomination of Kevin Warsh as the next Federal Reserve chair added to pressure on precious metals, as the dollar strengthened on expectations of changes to monetary policy.

Despite the volatility, Wall Street ended January with gains of more than 1%, supported by resilient economic data and strong corporate earnings.

Earnings season continues with tech and media in focus

The earnings season remains in full swing, with more than 100 S&P 500 companies reporting this week. Walt Disney exceeded revenue and profit expectations but warned of weaker international visitor numbers.

Investors are also watching results from major technology firms, including Amazon, Alphabet and Microsoft, amid ongoing concerns about the cost and timing of returns from large-scale AI investments.

Sources: (Investing.com, Reuters.com)