US Stock Futures Steady as Yen Weakness Offsets AI Jitters; Focus Shifts to ISM Services PMI and Amazon Earnings

On February 3, 2026, US stock futures steadied in Asian markets, with the Dow Jones E-mini up 38 points, Nasdaq 100 E-mini adding 2 points, and S&P 500 E-mini rising 3 points [1]. This modest recovery came as the Japanese yen’s weakness against the US dollar provided support for global risk assets, offsetting ongoing AI-related caution and the gradual fading of expectations for early 2026 Federal Reserve rate cuts [1]. The currency movement represents a critical technical development, with the USD/JPY pair climbing 0.27% to reach 156.125—a level that carries significant psychological importance for traders monitoring carry trade dynamics and Japanese monetary policy [1].

The market’s current state reflects a complex interplay of forces. On one hand, the weaker yen typically benefits Japanese exporters and supports global risk appetite through carry trade dynamics [1]. On the other hand, the same yen weakness could trigger sharp unwinds if the Bank of Japan adopts a more hawkish stance in response to strengthening domestic economic data, particularly the Japanese Services PMI rising from 51.6 in December to 53.7 in January [1]. This duality creates a nuanced backdrop for equity market positioning as traders balance short-term sentiment against medium-term policy risks.

The preceding US trading session on February 3, 2026, revealed pronounced market divergence that merits careful examination [0]. The S&P 500 closed at 6,917.82, down 0.97% on the day and 0.34% for the week, while the NASDAQ Composite fell 1.74% with a weekly decline of 1.15% [0]. The Dow Jones Industrial Average showed relative resilience, declining only 0.24% but actually posting a weekly gain of 0.25% [0]. Most notably, the Russell 2000 surged 1.69% with a weekly gain of 1.12%, the strongest performer among major indices [0].

This sector rotation pattern reveals significant institutional positioning dynamics. The Technology sector’s 2.60% decline and Consumer Cyclical’s 3.69% drop—worst among all sectors—contrast sharply with Energy’s 2.97% gain, Consumer Defensive’s 1.89% advance, and Basic Materials’ 1.02% increase [0]. Such a rotation from growth and consumer discretionary names toward defensive and cyclical sectors typically indicates risk aversion and uncertainty about the economic outlook [0]. The elevated trading volumes—7.02 billion shares on the S&P 500 and 8.63 billion shares on the NASDAQ—suggest active institutional rebalancing rather than passive position maintenance [0].

The yen’s weakness to 156.125 against the dollar carries multiple layers of market significance [1]. First, this level represents a technical breakthrough that could signal further appreciation pressure if the Bank of Japan signals additional policy tightening. The stronger-than-expected Japanese Services PMI data suggests the BoJ may have room to continue its gradual normalization path, potentially narrowing the interest rate differential between Japan and the United States [1].

For global equity markets, yen weakness traditionally supports risk assets through several channels. Japanese exporters benefit as their goods become more competitively priced in dollar terms, while the carry trade—where investors borrow in low-yielding yen to fund higher-yielding asset purchases—remains profitable and additive to global liquidity [1]. However, this dynamic creates latent vulnerability. If the BoJ adopts a more hawkish stance or if Japanese economic data continues to strengthen, a rapid yen appreciation could trigger aggressive carry trade unwinds, creating sudden selling pressure in global equities [1].

Market expectations regarding Federal Reserve monetary policy have undergone significant revision in recent sessions [2]. The stronger-than-expected ISM Manufacturing PMI data has pushed back rate cut expectations from earlier in the year to July or September 2026 at the earliest [2]. This shift in expectations has produced corresponding movements in Treasury yields and dollar valuations, with the dollar steadying after a two-day rally on Fed Chair commentary and stronger economic data [2].

The persistence of multiple 2026 Fed rate cuts as a market expectation remains a key bullish underpinning for US equity valuations, particularly in rate-sensitive sectors [1]. However, the gradual erosion of early-cut expectations introduces uncertainty into medium-term positioning. Traders are closely monitoring upcoming Fed official speeches for any shifts in the policy outlook, particularly regarding labor market conditions and inflation trajectory [1]. The ISM Services PMI release will provide additional data points for assessing the broader economic picture beyond manufacturing.

Amazon.com (AMZN) has emerged as a focal point for near-term market direction, with the e-commerce and cloud computing giant scheduled to release quarterly results that could significantly impact technology sector sentiment [1]. Current trading data shows Amazon shares at $238.62, down 1.79% on the day with trading volume of 50.36 million shares and a market capitalization of $2.55 trillion [0]. The stock’s P/E ratio of 33.75 reflects market expectations for continued growth across its retail, AWS cloud computing, and advertising segments [0].

Amazon’s earnings report carries outsized importance for several reasons. First, as one of the largest components of the NASDAQ Composite and S&P 500, the company’s performance directly influences index movements. Second, AWS represents a significant and growing portion of Amazon’s profitability, making the cloud segment’s performance a key indicator of enterprise technology spending trends. Third, the company’s retail operations provide insight into consumer spending dynamics that intersect with broader economic health assessments [0][1].

Technical analysis reveals critical support and resistance levels across major indices [1]. For the Dow Jones Industrial Average, near-term support sits at 48,689 with resistance at 49,901 and the psychologically significant 50,000 level [1]. The NASDAQ 100 shows support at 25,000 with resistance at 26,399 and the 26,000 level [1]. The S&P 500’s support level at 6,907 is particularly noteworthy given the index’s close of 6,917.82 on February 3—placing the market very near technical vulnerability if selling pressure continues [0][1].

The medium-term technical bias for US index futures remains bullish, though near-term consolidation appears likely given the mixed signals from sector rotation and the concentration of important catalyst events in the coming days [1]. Traders are managing positions defensively ahead of the ISM Services PMI release, Fed speeches, and Amazon earnings report, with many adopting wait-and-see approaches to positioning [1].

The market dynamics observed on February 3, 2026, reveal several important cross-domain correlations that inform the broader investment landscape. The inverse relationship between technology sector performance and defensive sectors suggests institutional investors are actively repositioning based on anticipated economic conditions rather than maintaining sector exposures through uncertainty [0]. This rotation pattern is consistent with expectations for a more moderate economic growth trajectory where consistent earnings matter more than high-growth potential.

The correlation between yen movements and risk asset performance demonstrates the ongoing influence of currency dynamics on global capital flows [1]. As long as the BoJ maintains relatively accommodative policy compared to other major central banks, the yen should remain a funding currency for global risk-taking. However, any signals of BoJ policy normalization could rapidly alter this dynamic, creating sudden and significant market moves [1].

The pronounced divergence between the NASDAQ’s 1.74% decline and the Russell 2000’s 1.69% gain represents more than a single-day fluctuation [0]. This rotation from growth to value, from large-cap technology to small-cap domestic-oriented stocks, suggests fundamental repositioning by institutional investors adjusting for a changing macroeconomic landscape. If this rotation persists, it could mark the beginning of a longer-term trend shift that would have significant implications for portfolio construction and sector allocation strategies.

The energy sector’s strong performance (+2.97%) combined with elevated trading volumes across indices indicates that commodity-linked assets continue to attract capital flows, potentially reflecting ongoing geopolitical risk premiums and expectations for continued global energy demand [0]. This sector strength provides a counterweight to technology weakness and helps explain the Dow Jones’s relative resilience compared to the NASDAQ [0].

Several risk factors warrant close monitoring in the near term. First, the Bank of Japan’s potential hawkish stance represents a significant currency and carry trade risk, as sudden yen appreciation could trigger aggressive position unwinds across global markets [1]. The Japanese Services PMI’s rise to 53.7 provides economic justification for additional BoJ policy tightening, making this scenario increasingly plausible [1].

Second, Federal Reserve policy uncertainty has increased following stronger-than-expected manufacturing data and evolving commentary from Fed officials [2]. The shifting timeline for rate cuts—from earlier expectations to July or September 2026—introduces volatility into rate-sensitive asset valuations and could pressure technology and growth stocks disproportionately [2].

Third, the technology sector’s pronounced weakness (-2.60%) and the NASDAQ’s significant decline create technical vulnerability and sentiment headwinds [0]. The proximity of the S&P 500 to the 6,907 support level intensifies this concern, as a breach could trigger additional selling from algorithmic and systematic strategies [1].

Fourth, the upcoming Amazon earnings report introduces company-specific risk that could extend beyond individual stock movements to affect broader technology sector sentiment [0]. Any disappointment in AWS growth, advertising revenue, or retail margins could intensify the ongoing rotation away from technology names [0].

Despite the elevated risk environment, several opportunity windows exist for positioned investors. The sector rotation toward value and defensive names creates opportunities in historically undervalued segments of the market, particularly small-cap stocks as evidenced by the Russell 2000’s strong performance [0]. Energy sector strength may continue if geopolitical risk premiums persist or if supply concerns materialize [0].

The ISM Services PMI release represents a potential catalyst for either direction. A weaker-than-expected reading (below the 53.5 forecast) could reinforce Federal Reserve cut expectations and support risk assets [1]. Conversely, stronger data could validate the current rotation toward value stocks and defensive sectors [1]. Either outcome may provide clearer directional signals for near-term positioning [1].

The yen’s weakness, while creating eventual carry trade risk, currently supports export-competitive industries and global risk appetite [1]. Japanese equity markets and US exporters with significant international exposure may benefit from continued currency dynamics in the near term [1].

This analysis is based on the FXEmpire report [1] published on February 3, 2026, which documented US stock futures steadying in Asian markets as yen weakness lifted sentiment, with traders focusing on ISM services data, Federal Reserve signals, and corporate earnings ahead of the US trading session.

Market data from the preceding US session reveals significant sector rotation from technology and consumer cyclical stocks toward defensive sectors including energy, consumer defensive, and basic materials [0]. The NASDAQ Composite’s 1.74% decline contrasted sharply with the Russell 2000’s 1.69% gain, suggesting institutional repositioning from growth to value [0]. The USD/JPY pair’s advance to 156.125 carries both supportive and potentially destabilizing implications for global risk assets, depending on Bank of Japan policy intentions [1].

Upcoming catalysts include the ISM Services PMI release (forecast 53.5, down from 54.4 in December), Federal Reserve official speeches for policy signals, and Amazon.com’s earnings report [1]. The convergence of these events within a compressed timeframe creates elevated short-term volatility potential and may determine near-term market direction [1][2].

Trading volumes remain elevated across major indices, indicating active institutional participation in current market moves [0]. Key technical support levels to monitor include the S&P 500 at 6,907, NASDAQ 100 at 25,000, and Dow Jones at 48,689, with resistance levels established at 7,036, 26,000, and 49,901 respectively [1].