5 Things That Can Break the Market Next Week (AI Scare + Tariff Tantrums)

1.Quick summary: the state of play

• Market rotated into defense: Utilities and Real Estate outperformed; Tech and Financials lagged.
• An "AI scare" is punishing perceived middlemen and software/services exposure.
• Macro calendar is heavy: Fed minutes (Wed) and Core PCE (Fri) will drive rate-cut expectations.
• Earnings to watch: Walmart (consumer signal) and Figma (post-IPO weakness).
• Technical watch: S&P 500 range 6,700 downside / 7,000 upside. IGV (software ETF) is in a potential inflection zone.

2.Five things I’m watching next week

1. President’s Day / shortened week (Monday, no trading)**

1. Which companies get hit by the AI scare?**

** Last week the market punished freight logistics, property managers, wealth managers and parts of insurance and legal-tech. The market is penalizing "middlemen" businesses perceived as easily automated. Watch names with obvious AI vulnerability and crowded valuations, volatility will concentrate there.

1. Earnings: Walmart (Thursday) and Figma (post-IPO performance)**

** Walmart’s report is less about clever revenue beats and more about consumer health. The market is pricing Walmart at 46x forward EPS while the broader market trades 22x. That premium must be justified by either margin expansion, faster growth, or a re-rating of Wal‑Mart’s role in retail. If the consumer shows cracks, Walmart is vulnerable.

Figma (one of last year’s marquee IPOs) remains a poster child for how sentiment and AI narratives can vaporize enthusiasm, reported drawdowns in the 80% range demand vigilance. Earnings/metrics that disappoint will accelerate de-risking flows.

1. Federal Reserve minutes (Wednesday, 2 PM ET)**

** The minutes will reveal the Fed’s internal debate on rate cuts. Labor and inflation data don’t show a clear path to cuts, if the minutes emphasize caution, risk assets can sell off quickly. Also expect political commentary to amplify volatility; central-bank narratives are market-moving again.

1. Core PCE (Friday) - the inflation read the Fed watches**

** Core PCE will influence whether markets keep pricing in rate cuts. A hotter-than-expected print reduces cut odds and supports defensive positioning; a softer print opens room for risk assets. Treat this as the biggest macro swing risk of the week.

3.Market recap and what it signals

Last week was a rotation, not a blanket selloff. Equal-weight S&P (RSP) was up even as cap-weighted indexes were down, more names were green than red, but the largest names dragged headline indices lower. This is a classic “generals in retreat” scenario: leaders (mega-cap tech) sold off while defensive sectors rallied.

Notable hits and themes

• CBRE and property managers sold off on headlines that AI could reduce office demand.
• CH Robinson and logistics stocks fell on narratives that AI/automation will compress middleman roles.
• Big tech names (Apple, Google, Amazon, Nvidia) experienced notable declines, Apple was down 8% in the referenced week.

4.IGV (Software ETF) - bottom, buy zone, or trap?

IGV is down roughly 22.5% from peak with a maximum drawdown near 29.7%. Weekly price action formed a candlestick that many technicians interpret as a potential change-of-direction (a doji-like candle after selling pressure), and volume behind the move shows accumulation interest.

Actionable framework:

• If IGV holds current support and follows through with higher weekly closes on above-average volume, this looks like a selective buy with strict risk control.
• If IGV fails and revisits prior lows with expanding downside volume, treat it as a distribution and expect further downside.

5.Technical map - S&P 500

S&P is range-bound between 6,700 (support) and 7,000 (resistance). Friday’s candle was a doji, suggesting short-term equilibrium between buyers and sellers. Trading plan:

• Break below 6,700: increase defensive allocations, expect selling acceleration.
• Break above 7,000: technical breakout that invites risk-on positioning.
• Inside range: prefer idiosyncratic, tradeable setups rather than market-wide directional bets.

6.Practical trade and portfolio rules for the week

1. Size positions smaller heading into Fed minutes and Core PCE. These events can create outsized intraday moves.
2. Trim concentrated exposure to mega-cap tech if your portfolio is top-heavy; hedge selectively with inverse or diversified protection if you cannot change allocations quickly.
3. For IGV, set clear buy rules: confirmation on a weekly close above recent high on volume, and a stop below the weekly low. Do not scale in without confirmation.
4. For Walmart, watch same-store sales, margins, and commentary on consumer trading down. Use options for asymmetric risk if you want exposure around earnings.

7.Concise takeaway

Next week’s market direction depends on two overlapping forces: the AI narrative (which is re-pricing software and middleman businesses) and macro data/policy signals (Fed minutes + Core PCE). Defensive sectors will remain in favor until those uncertainties resolve. Trade with smaller sizes, clear rules, and event-driven protection.

#### References

Federal Reserve - FOMC and minutes schedule: https://www.federalreserve.gov/monetarypolicy/fomc.htm

Personal Consumption Expenditures (PCE) price index - BEA: https://www.bea.gov/data/personal-consumption-expenditures-price-index

IGV (iShares Expanded Tech Software ETF) overview: https://www.ishares.com/us/products/239668/ishares-expanded-tech-software-etf

Walmart investor relations: https://stock.walmart.com/

Market quotes and ETF flows reference: https://finance.yahoo.com/quote/IGV/