Sector Focus - February 04, 2026 (Morning)

 ## Sector Overview Market sentiment is mixed as sectors react to overnight news. Technology stocks are under pressure following a significant selloff fueled by AI disruption fears, while healthcare, particularly biotech, is buoyed by strong earnings and forecasts. Energy appears stable with oil prices holding firm amid geopolitical tensions. ## Technology - **$AMD** and **$NVDA** experienced sharp declines after disappointing earnings reports, with **$AMD** down 9% on weaker sales guidance and **$NVDA** facing concerns over AI-related disruptions. Investor sentiment is cautious as analysts predict a challenging environment for software stocks due to emerging AI technologies. - **$MSFT** is also in focus as it prepares for earnings; expectations are tempered following broader market trends. - Sector ETF **$XLK** is likely to reflect these pressures as investors reassess tech valuations amidst heightened volatility. ## Healthcare & Biotech - **Eli Lilly** surged 9% following a strong quarterly performance, driven by robust sales of its weight-loss drugs, Mounjaro and Zepbound, which doubled in sales from the previous year. The company forecasts continued growth in 2026. - **AbbVie**’s shares dipped despite beating earnings expectations, as the market reacts to cautious guidance regarding its drug portfolio. - The healthcare sector ETF **$XLV** is expected to benefit from positive sentiment surrounding key players like **Eli Lilly** while navigating mixed reactions to other major biotech firms. ## Energy - Oil prices steadied above $63 amidst rising geopolitical tensions, particularly related to US-Iran relations. This stability is likely to support major energy companies. - **$XOM** and **$CVX** are poised to perform well as demand remains solid, and investor focus shifts to upcoming earnings reports. - The sector ETF **$XLE** is expected to reflect resilience in energy stocks, benefiting from sustained oil prices. ## Consumer - **Amazon** reached a $1 trillion market value, signaling strong performance in the retail sector amidst a mixed economic backdrop. - **Walmart** and **Costco** are also drawing attention as they report solid sales figures, bolstered by consumer spending trends. - Consumer sentiment remains cautiously optimistic, which could bode well for sector ETFs **$XLY** and **$XLP**. ## Today's Sector Playbook - **Favor**: Healthcare and Energy sectors show strong fundamentals and positive outlooks, particularly due to robust earnings in healthcare and stable oil prices in energy. - **Be Cautious**: Technology stocks are facing significant headwinds from earnings misses and AI disruption fears; investors may want to reduce exposure or look for buying opportunities post-correction. - **Consumer**: With solid performances from major retailers, this sector may offer growth opportunities, particularly as consumer spending shows resilience. Overall, investors should closely monitor earnings announcements and sector performance, adjusting strategies accordingly to capitalize on emerging trends and mitigate risks.