Will Friday’s Fierce Rally Continue?

* Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

• DJIA 52-wk: +13.12% | YTD: +4.27% | Wkly: +2.50%
• S&P 500 52-wk: +15.04% | YTD: +1.27% | Wkly: -0.10%
• NASDAQ 52-wk: +17.97% | YTD: -0.91% | Wkly: -1.84%
• iShares Bitcoin Trust ETF 50-WK: -27.15% | YTD: -20.08% | Wkly: -16.45%
  
  (Figures as of Market Close 6th February 2026)

Major U.S. stock indexes ended the week mixed after volatile trading:

• Dow Jones Industrial Average: up ~2.5% on the week and closed above 50,000 for the first time ever on Friday, a historic milestone.
• S&P 500: essentially flat for the week (slightly down).
• Nasdaq Composite: down ~1.8% for the week after tech weakness earlier in the period.
• Russell 2000 (small caps): up ~2.2% for the week.

What Drove the Markets This Week

1. Historic Dow Rally Friday
 Friday’s session saw a sharp rebound, with the Dow surging about 1,200 points and topping 50,000 for the first time, while the S&P 500 and Nasdaq both climbed over 2% on the day. Gains were led by chipmakers and AI-related stocks.

2. Mid-week Volatility and Tech Weakness
 Earlier in the week, the market faced selling pressure, especially in technology and high-beta names, driven by growth concerns, profit-taking, and caution around heavy AI spending. This contributed to the Nasdaq’s weekly decline.

3. Rotation to Cyclicals and Small Caps
 Industrial, financial, and cyclicals helped support the Dow’s outperformance. The Russell 2000’s weekly gain suggested some renewed appetite for smaller, economically sensitive stocks.

4. Crypto and Sentiment Cues
 Bitcoin rallied back above ~$70,000 after earlier weakness, which helped sentiment in crypto-linked equities late in the week.

Thematic Drivers of the Week

• AI and chip stocks: Major gains late week, especially in semiconductors like Nvidia, fueled optimism about corporate AI spending.
• Earnings reactions: Mixed earnings led to sector divergence, with some tech and growth names lagging mid-week.
• Economic data & sentiment: Market participants weighed manufacturing and jobs data alongside positioning ahead of key inflation and Fed commentary.

Bottom Line: The week was marked by a sharp rebound on Friday that lifted the Dow to a record milestone, mixed performance across major indexes, and ongoing rotation between growth and cyclical sectors as investors balanced earnings news, economic data, and sentiment.

(Bloomberg) -- Bitcoin is no longer beating the big asset classes.

Once pitched as “digital gold” and a higher-octane counterpart to the Nasdaq and S&P 500, the world’s largest cryptocurrency now lags all three over the past five years after its recent ferocious rout.

Since early 2021, Bitcoin has returned roughly 73% — trailing gold at 164%, the Nasdaq 100 at 82% and the S&P 500 at 75%, and the Nasdaq 100 at 82%, according to data compiled by Bloomberg. On Thursday, Bitcoin was down about 7% as of 10:55 a.m. in New York, with year-to-date losses approaching 30%.

While it’s not the first time in Bitcoin’s history that the token has lagged behind all three major benchmarks, the underperformance undercuts an enduring narrative of superior long-term returns. The data is especially stark given Bitcoin’s history of big swings and outlier rallies. For years, it retained a reputation as a “buy pain, earn outsize” asset: a volatile holding that rewarded believers through cycles and served as a hedge against other investments.

Now that logic is under pressure as it faces selling from all sides, in what some the industry are dubbing a “crisis of faith.” It hasn’t acted as a hedge, failing to rally alongside gold during geopolitical shocks and dollar weakness. It hasn’t delivered on momentum, with oversold technicals failing to spark sustained bounces. And while the arrival of spot ETFs initially drove record inflows, recent weeks have shown net outflows and fading demand.

“Bitcoin’s claim as a store of value and portfolio hedge has been eroded,” said Joshua Lim, global co-head of markets at crypto prime broker FalconX. “Retail flows have been leaving crypto in favor of equities and metals on their historic parabolic run. Gold is the favored reserve asset for sovereign actors and even for crypto-native stockpilers like Tether.”

For an asset once hyped as a ticket to life-changing wealth, the erosion of long-term outperformance strikes at the heart of its appeal. Bitcoin famously offers no yield, no cash flow, and no intrinsic claim on growth — only price. When that falters, so does the story. And for a market built more on belief than income, that’s an existential blow.

7 Bank Stocks with Solid—and Growing—Dividends

On the heels of strong fourth-quarter earnings results notched by the largest U.S. banks, it’s a good time for income investors to consider some of these stocks for their portfolios.

They don’t typically offer the highest yields, with many hovering around 2%. Still, their dividends are growing at a good clip and, more important, their fundamentals look solid.

“One of the things that we like about them is that they’re more resilient, and we haven’t seen excessive credit erosion,” says Matt Quinlan, a manager of the $4.7 billion Franklin Equity Income fund, citing the overall quality of loan portfolios for these banks.

The fund’s holdings include Bank of America and JPMorgan Chase.

Betsy Graseck, global head of banks and diversified financial research at Morgan Stanley, points out that the large-cap U.S. banks have plenty of excess capital. This allows them to buy back a lot of stock, often more than they allocate for dividends. But there’s plenty of the latter.

Goldman Sachs Group, for example, last year boosted its quarterly dividend to $4 a share from $3, an increase of 33%. The stock yields 1.9%. Last month the company said it would raise its quarterly dividend again, this time to $4.50 a share, up 13%.

Wells Fargo put through a 13% dividend hike last year to 45 cents a share each quarter, up from 40 cents previously. JPMorgan Chase, whose stock yields 2%, last year raised its quarterly dividend to $1.50 a share, up 7%.

Dividends You Can Bank On

These seven companies, mostly large-cap banks, all have shown good dividend growth, helped by strong earnings.

Table with 5 columns and 7 rows. (column headers with buttons are sortable)

• Bank of America / BAC
  Recent Price: $54.45
  52-Week Return: 20.5%
  Market Value (billion): $398
  Dividend Yield: 2.1%
  
  
• Charles Schwab / SCHW
  Recent Price: $103.73
  52-Week Return: 26.9%
  Market Value (billion): $190
  Dividend Yield: 1.2%
  
  
• Citigroup / C
  Recent Price: $117.71
  52-Week Return: 51.7%
  Market Value (billion): $211
  Dividend Yield: 2.0%
  
  
• Goldman Sachs Group / GS
  Recent Price: $938.99
  52-Week Return: 51.5%
  Market Value (billion): $292
  Dividend Yield: 1.9%
  
  
• JPMorgan Chase / JPM
  Recent Price: $314.85
  52-Week Return: 20.5%
  Market Value (billion): $849
  Dividend Yield: 1.9%
  
  
• Morgan Stanley / MS
  Recent Price: $182.91
  52-Week Return: 36.9%
  Market Value (billion): $291
  Dividend Yield: 2.2%
  
  
• Wells Fargo / WFC
  Recent Price: $92.31
  52-Week Return: 20.7%
  Market Value (billion): $290
  Dividend Yield: 2.0%

Note: Data as of Feb 3.

Source: Bloomberg

Stepping back, dividends in any sector are a reflection of a company’s financial health—an encouraging sign for large-cap bank dividends.

“We just finished fourth-quarter 2025 earnings, and it was very strong,” says Graseck. “And the reason for that is we have a very positive backdrop.”

She cites a host of factors that are supporting these firms, including healthy stock and bond markets, an appetite for mergers and acquisitions, a strong market for initial public offerings, and accelerating loan growth.

Investment returns have been rising as well.

Graseck covers 12 financial companies, all of them large, including Goldman Sachs, Citigroup, JPMorgan Chase, and Wells Fargo.

For that group, the median return on tangible common equity—a key metric on which these stocks trade—was 17.5% in last year’s fourth quarter. That’s up from 16.3% in the prior quarter and 15.2% in the second quarter of 2025.

“What’s driving this is a strong, supportive market environment with improving efficiencies” for the banks, Graseck says. One way to think about that is that non-interest expenses for these companies as a percentage of revenue is declining.

All of which should bode well for dividend health and growth at these companies, barring a major financial downturn.

Even in Graseck’s most negative financial scenario, which would include a recession and increasing credit losses for the banks, her financial models don’t show the dividends being cut. She says the probability of such a case occurring is very low.

The large banks that Graseck follows had a dividend payout ratio—the percentage of earnings that get paid out in dividends—of 31.5% in 2025, roughly in line with the previous year’s result.

That’s considerably lower than other S&P 500 sectors such as utilities, which has a payout ratio of more than 50%. But a higher payout ratio doesn’t make sense for the large banks.

“The higher you go on the payout ratio, the more you put yourself at risk for having to cut it in a severe downturn, and nobody wants to do that,” Graseck says.

With the payout ratio staying in a fairly tight range, large-cap bank dividend increases hinge on earnings growth. The median earnings-per-share growth for the Graseck’s coverage group, which includes money-center, superregional, and trust banks, was a robust 17%.

“Durable earnings are improving, with efficiencies increasing, and [earnings per share] are going up as well,” she says. “Dividends are going up in line with EPS growth.”

For investors looking for an income play outside of the large U.S. banks, one to consider is Charles Schwab, which yields 1.2%—about in line with the S&P 500’s of about 1.1%.

The company reported that it earned $4.87 a share in adjusted earnings last year, in line with the consensus estimate of analysts polled by FactSet.

Schwab has been paying a quarterly disbursement of 27 cents a share. However, the company recently declared a 19% quarterly dividend increase to 32 cents a share from 27 cents.

“They’re seeing really nice growth in client assets, which are around $12 trillion, still growing share, and they are seeing nice flows,” says Quinlan, who holds the stock in the equity income fund he helps run.

Another large-cap bank to consider for investors seeking income is Morgan Stanley, which yields 2.2%—higher than any of the other stocks mentioned here.

Last year, the company put through a dividend increase of 8% to $1 a share from 92.5 cents on a quarterly basis.

The bank has been growing its wealth and investment-management arms—segments that have a lot of recurring revenue and are much less dependent on the vagaries of the capital markets. They accounted for more than half of Morgan Stanley’s $70.6 billion in net revenue last year.

Quinlan, who holds the stock, says that the company has become “less of traditional capital markets, M&A kind of a place.”

That should augur well for the dividend’s safety and growth.

1. Federal Reserve Signals & Policy Speeches

• Early in the week, Fed officials (Waller & Bostic) speak — these comments can influence expectations for future interest rate decisions, monetary policy, and market valuation. Traders will parse their tone for hints about rate cuts or future tightening.

2. Economic Data to Watch

• Retail Sales, Import Prices, Business Optimism on Tuesday — these readings help gauge consumer demand and inflation pressure.
• China CPI & PPI on Wednesday — global inflation trends sometimes shift risk sentiment and demand for equities worldwide.
• Initial Jobless Claims on Thursday — data on employment trends can influence expectations around growth and Fed policy.
• U.S. CPI (January) on Friday — one of the biggest market-moving reports of the week. Higher or lower inflation than expected can shift expectations for rates and valuations, especially for interest-rate-sensitive sectors like tech and financials.

3. Corporate Earnings & Sector Trends

While the major earnings flurry for big tech has been underway, some individual companies and guidance updates may still impact sectors:

• Analysts are highlighting how capital expenditures (capex) and forward guidance from tech names affect sentiment — especially in AI, cloud, and data-center investments. Investors remain sensitive to spending that doesn’t immediately translate into higher profits.
• Watch for earnings surprises or disappointing guidance in any large or influential names — these can trigger sector rotations (e.g., tech to cyclicals or value).

4. Volatility & Market Psychology

• Last week saw a volatile finish with the Dow closing above 50,000, but risk-off sentiment earlier in the week and tech capex concerns created mixed signals. Continued volatility or rotation between sectors is likely until macro clarity increases.

What Investors May Focus On

• Fed commentary > market rates: Traders look for shifts in expectations about future rate cuts or hikes.
• Inflation trends (CPI & import prices): Directly tied to cost pressures and Fed policy narratives.
• Consumer demand indicators: Retail Sales and business optimism can signal economic momentum or softness.
• Tech vs. broader market leadership: Whether mega-cap tech can regain footing or whether cyclicals/value stocks continue outperforming.

Bottom Line: Next week’s market direction will likely hinge on economic data releases (especially CPI), Fed commentary on policy outlook, and earnings/sector leadership signals. Volatility and rotation between sectors remain possible as investors weigh inflation expectations and growth prospects.

Friday’s session delivered a fierce, broad-based rally as buyers rushed back into equities after several days of heavy selling. Major indexes surged sharply, with short-covering and bargain-hunting amplifying the move. Leadership came from industrials, financials, and select technology names, signaling a renewed appetite for risk. Improving sentiment around economic conditions and easing near-term fears helped fuel the rebound, turning what had been a cautious week into a powerful, momentum-driven finish. I expect this rally to continue.

— Richie

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