Market Balance Turns Fragile Amid Policy Uncertainty

U.S. markets are entering a period of reassessment. Political developments around the Federal Reserve, weakening sentiment in the technology sector and a dense macro calendar are collectively pushing investors into a more cautious stance.

Fed dynamics shift the balance

Stephen Miran has stepped down as chair of the President’s Council of Economic Advisers, while his formal term on the Federal Reserve Board ended on January 31, 2026. He may remain in his role until a successor is confirmed, but the move already signals a subtle shift within the policy landscape.

The Trump administration has previously indicated its intention to nominate Kevin Warsh, potentially including him as Miran’s replacement. However, Senate confirmation could take time. In the interim, Miran’s departure weakens the relative influence of the more dovish wing within the FOMC.

Markets have reacted neutrally so far, but for risk assets the development carries a moderately negative bias.

Technology sector under pressure

The pullback in AMD following its earnings report has done little to restore confidence among equity bulls. The move forced additional position trimming across the tech complex, reinforcing a fragile sentiment around AI-driven narratives.

Volatility in technology shares remains elevated, and investors are closely watching Alphabet’s earnings release after the close as a key test of sector resilience following Tuesday’s selloff.

Index levels and market structure

The S&P 500 and Nasdaq ended the previous session lower. The S&P 500 pulled back from record highs but held above the lower boundary of its medium-term ascending channel, remaining above the 6900 level. The Nasdaq declined from the 25,800 area, trading near its 50-day moving average.

During today’s session, futures on both indices are consolidating. S&P 500 futures continue to hover near the lower edge of the rising channel, while Nasdaq futures are stabilising around 25,400, with key support seen near 25,000.

The broader risk balance remains negative amid elevated volatility, with an implied trading range for the S&P 500 between 6,810 and 6,980.

What is driving markets today

• ADP employment report for January.
• Delayed JOLTS job openings data for December.
• Services sector PMI for January.

Technology stocks posted their weakest performance in two weeks, weighing on the broader market. Meanwhile, President Donald Trump signed a temporary funding bill, ending the recent partial government shutdown.

Sector performance

Cyclical sectors showed mixed results, with XLE and XLB leading gains, while XLF and XLY underperformed.

Growth-oriented sectors were also mixed. TAN and MJ advanced, while SKYY and XLK lagged.

Defensive sectors generally outperformed, led by XLP, while XLV finished the session lower.

Cross-asset signals

Oil continues to trade within a local ascending channel near the 63 level. U.S. Treasury yields remain in a medium-term uptrend, holding around 4.28%.

The VIX remains within its own rising channel and is approaching a test of its medium-term trendline, signalling persistent demand for downside protection.

Gold, maintaining its local uptrend after a recent pullback, is once again testing the 5,100 level.

In broader terms, markets appear to be searching for a new point of stability — and finding it only tentatively.

Technical analysis by: Lucas Grant, Senior Technical Analyst at Finmire.