Rotation Trade a Boon for Dow 30 Today

Wednesday, February 4th, 2026

Stock market rotation out of software and tech in general was on clear display today, with the tech-heavy Nasdaq and Nasdaq-exposed S&P 500 hitting the closing bell lower by -1.51% and -0.51%, respectively. The small-cap Russell 2000 fell -0.67% on the day. The Dow is up +0.9% over the past five trading days; the other three indexes are negative over that time.

That the Dow would gain when tech-heavy indexes would be shedding growth is a very direct link to the rotation trade — leaving highly valued, potentially overextended AI buildouts for Mom & Pop portfolio stocks. Strong earnings from Amgen AMGN this morning led that stock up +8% today, leading the Dow 30 index. 3M MMM was up +5%.
 

Services PMI in Growth Territory: S&P, ISM

Shortly after the market opened this morning, the final S&P Services PMI report came out for January. It posted a slightly better-than-expected +52.7. ISM Services, also for January, went to +53.8%, ahead of expectations and matching its previous-month growth rate. Both metrics are solidly above the 50 levels, as today’s services-heavy private-sector ADP ADP report would attest.
 

Earnings Roundup After the Closing Bell

Alphabet GOOGL easily surpassed estimates on both top and bottom lines for its Q4 report this afternoon. Earnings of $2.82 per share was well ahead of the $2.58 projected, which itself represented +16% sales growth over the past year. Revenues beat estimates by more than $2.5 billion to $97.23 billion (minus Traffic Acquisition Costs [TAC], which the company does not subtract from its top line. GOOGL reported $113.8 billion in its Q4 report).

Clouds growth was better than expected, $17.7 billion versus $16.2 billion, and +48% year over year. YouTube was a smidge light at $11.3 billion, and Waymo self-driving auto service led its Other Bets category with $126 billion in revenues. Biggest of all, Google Search Ad Revenue grew to $63.07 billion from $61.47 billion anticipated. 

Alphabet is one corporation already putting its AI functions to work, most visibly with its Search assistant Gemini, but the new Capital Expenditures target is up by more than $50 BILLION from where it had been expected, to a new range of $175-185 billion. This feeds into the “over-invested in AI” caution we’ve seen elsewhere this earnings season, and shares are trading somewhat lower in the after-market.

Qualcomm QCOM reported mixed fiscal Q1 results this afternoon, with earnings of $3.50 per share easily outpacing the $3.39 in the Zacks consensus, and the $3.41 per share reported in the year-ago quarter. Revenues, however, reached $12.25 billion, shy of the $12.28 billion analysts had been expecting. Further, a decline in memory chips is pulling down current-quarter guidance, and QCOM shares are down -9% as a result.

e.l.f. Beauty ELF posted big positive surprises in its fiscal Q3 numbers after the close today, with earnings of $1.24 per share on $490 million in revenues careening past expectations of $0.73 per share on $462.77 million, which itself represented +30% growth year over year. Much of the cosmetics major’s success came from the recent acquisition of Hailey Bieber’s Rhode brand. Shares had initially spiked +16% on the news, but have settled down in the half hour since.

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