New York, Feb 1, 2026, 13:25 EST — Market closed.
- XLI closed down 0.25% on Jan 30, as major industrial stocks showed mixed results
- With the Fed chair pick stirring uncertainty, rate expectations remain unsettled; all eyes now turn to payrolls data due Feb 6
- Investors are also focused on fresh earnings reports and Monday’s ISM factory survey
U.S. industrial stocks start a data-packed week under pressure, with the Industrial Select Sector SPDR Fund closing Jan 30 down 0.25% at $165.44. Since markets were closed Sunday, all eyes turn to Monday’s factory data for the next big move.
Rate cut bets are back on after Donald Trump picked Kevin Warsh to replace Jerome Powell at the Federal Reserve. Markets now see a rate reduction coming as soon as the June meeting. “We haven’t really gotten a lot of clean looks” at inflation or the labor market, said Michael Reynolds from Glenmede. Jim Baird of Plante Moran Financial Advisors warned that with expectations “very lofty,” the pressure will be on the Fed “to deliver.” Reuters
Earnings added fuel to the fire. According to FactSet, upbeat results in Industrials boosted the S&P 500’s blended Q4 earnings growth to 11.9%, while the forward 12-month P/E ratio stood at 22.2. They also flagged 127 S&P 500 companies scheduled to report next week.
Friday saw Wall Street’s key indexes finish in the red, pressured by the Warsh nomination, a hotter-than-expected producer price index, and renewed fears of a U.S. government shutdown. “There’s a combination of investor concerns around the Fed chair announcement … and lingering inflation pressure,” noted Angelo Kourkafas of Edward Jones. Reuters
Within the industrial sector, action was mixed. Caterpillar dropped 1.1%, Boeing edged down 0.1%, and Honeywell inched up 0.2% by Friday’s close.
The fund covers sectors ranging from aerospace and defense to machinery, air freight, and electrical equipment, its sponsor says. That wide scope can be a boost during market rallies, but it also means the group is vulnerable when investors quickly shift their growth expectations.
The week kicks off Monday with S&P Global’s final manufacturing PMI at 9:45 a.m. ET, then the ISM manufacturing PMI at 10 a.m., followed by several Fed officials speaking. PMI measures business conditions; readings over 50 indicate expansion. Tuesday’s spotlight is on JOLTS job openings, while Wednesday rolls out ADP private payrolls and ISM services data.
Stronger factory data might boost the cyclical trade in industrials. Yet, if that strength drives Treasury yields up and tightens financial conditions, it could backfire.
Tariffs continue to throw a curveball at manufacturers relying on imported parts and raw materials. Caterpillar warned of a $2.6 billion tariff impact in 2026. Stephen Volkmann from Jefferies pointed to “tariff headwinds” as a drag on margin gains, with no quick end in sight. Still, CEO Joe Creed noted that orders for “prime power” generators are climbing, driven by data-center clients seeking more on-site electricity. Reuters
If Friday’s jobs report beats expectations, traders might reconsider the odds of the Fed easing by early summer—a scenario that typically drags on rate-sensitive industrial stocks. A weaker number could push those shares higher, but it would also cast doubt on equipment and transport demand.
Monday at 10 a.m. EST brings the first key catalyst: the ISM manufacturing PMI release. Then, all eyes turn to the February 6 payrolls report, which could steer industrial stocks through the week ahead.
