"Tale of Two Markets:" Everyone Else Wins in Software "DeepSeek Moment"
Schwab Network
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February 04, 2026 at 05:17 PM UTC
Neutral
90% Confidence
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Key Points
- Market breadth is improving, with the S&P 500 Equal Weight index performing well, indicating a rotation out of mega-cap tech.
- The tech sector, particularly software (e.g., IGV hitting an RSI of 16), is experiencing significant selling pressure due to competitive threats and disruption from AI.
- Earnings season shows a high beat rate (around 77%), but companies are not being rewarded with strong share price reactions, a trend last seen in 2022.
AI Summary
The discussion highlights a 'tale of two markets,' where improving market breadth and rotation into non-tech sectors are observed despite headline index declines. While tech faces competitive threats from AI and muted earnings reactions, other sectors like materials, financials, and industrials are showing strength, suggesting a healthier underlying market.
Model Analysis Breakdown
| Model | Sentiment | Confidence |
|---|---|---|
| Gemini 2.5 Flash | Neutral | 90% |
| Consensus | Neutral | 90% |