By Teresa Rivas
It's Groundhog Day, Again. It's a new month, but stocks are rising, just as they did in January. Fresh data and a bumper crop of upcoming earnings helped investors see the bright side on Monday.
The Dow Jones Industrial Average added 515 points, or 1.1%, the S&P 500 rose 0.5% and the Nasdaq Composite climbed 0.6%.
Stocks had a choppy start, but quickly picked up steam after an unexpectedly strong U.S. manufacturing reading. The Institute for Supply Management's Purchasing Managers' Index, or PMI, rose to 52.6 in January, up from 47.9 for December. That was its highest level since mid 2022 and easily ahead of economists' expectations of 48.9.
"The surge in the ISM Manufacturing Index in January suggests that after years of malaise, perhaps the manufacturing sector might be turning a corner," opined Alexandra Brown, North America economist at Capital Economics. "While the headline index is still at a level that historically has been consistent with weak sub 2% growth, growth has been stronger than implied by the index for the past three years."
Markets are also still digesting Kevin Warsh as the new chair of the Federal Reserve after Jerome Powell's term ends this spring.
Thierry Wizman, who covers global FX and rates at Macquarie Group, believes that traders "may not have yet formed a consensus around whether Kevin Warsh is disposed to be 'hawkish' or 'dovish'...Given Trump's current disposition about wanting the fed-funds rate to be lowered, we still have disquiet over whether the Fed's loss of autonomy, and think that it has become more structurally dovish with Warsh at the helm, rather than Jay Powell."
While investors are trying to get a bead on the Fed, earnings season is rolling on. High expectations for tech company results led to mixed reactions, and while average earnings per share are up 12% year over year, with about a third of the S&P 500 having reported, fewer companies are beating fourth-quarter estimates, leading to more negative stock reactions.
Things could still turn around this week. "Along with notable reports from Alphabet and Amazon this week, a wider selection of companies across S&P 500 industries are scheduled to report and could provide a more holistic view of corporate fundamentals and outlooks by the end of the week," writes Anthony Saglimbene, chief market strategist at Ameriprise.
The Hot Stock: Sandisk +15.4% The Biggest Loser: Robinhood Markets -9.6%
Best Sector: Consumer Staples +1.6% Worst Sector: Energy -2.0%
A Taxing Question
With much of the country still in a deep freeze, spring may feel ages away. Yet it -- along with tax season -- will be here soon enough. It may be tempting, but filers should think twice before swapping their accountant for AI offerings from Anthropic or OpenAI.
The idea of using artificial intelligence to do your taxes has obvious appeal, from finding overlooked deductions to having a second set of eyes on your math. The catch is that the advice isn't always correct, as Barron's warns: "AI can't consistently provide accurate answers to tax questions and isn't reliable when it comes to math calculations or interpreting complex issues like international, self-employment, and state tax law."
That's not to say that AI won't improve, and it's already helpful in terms of extracting relevant data from documents and importing it into tax forms. Major tax preparers including TurboTax and H&R Block Online are already using AI.
But AI is far from infallible. It can use out-of-date tax code, the wrong interpretation of a regulation, or just be flat out wrong: "For this reason, the Internal Revenue Service's Taxpayer Advocate Service cautions taxpayers to avoid turning to general large language models like OpenAI's ChatGPT, Google's Gemini, or Microsoft's Copilot for tax questions, advice, and computations," Barron's Karen Hube writes.
The best advice? Stick with a human preparer. While accountants and tax professionals use AI too, those more specialized tools are trained on more accurate, specific data sets than general AI models. Plus, you'll also have a real person to talk to if problems crop up after April 15.
The Calendar
Advanced Micro Devices, Amgen, Archer-Daniels-Midland, Ball Corp., Broadridge Financial Solutions, Chipotle Mexican Grill, Clorox, Corteva, Emerson Electric, Gartner, Hubbell, Illinois Tool Works, Jack Henry & Associates, Jacobs Solutions, Marathon Petroleum, Match Group, Merck, Mondelez International, PayPal Holdings, PepsiCo, Pfizer, Prudential Financial, Super Micro Computer, Skyworks Solutions, Take-Two Interactive Software, TransDigm Group, and W.W. Grainger report earnings tomorrow..
The Bureau of Labor Statistics releases the Job Openings and Labor Turnover Survey. Economists forecast 7.25 million job openings on the last business day of December, about 100,000 more than in November.
What We're Reading Today
-- Trump Announces New Trade Deal With India -- Bitcoin Rises After Hitting 10-Month Low -- The Druckenmiller Connection: Meet the Man Behind Bessent and Warsh -- Adjustable-Rate Mortgages Are Buzzy Again. What Borrowers Should Know. -- A $58 Billion Shale Merger Comes at an Awkward Time
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(END) Dow Jones Newswires
February 02, 2026 19:55 ET (00:55 GMT)
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