The Profit Margin: February 9, 2026
Statistic of the Week
The toy industry continues to benefit from a surprising trend: adults buying toys for themselves. Despite declining birthrates, overall toy sales grew 7% last year, driven in part by childless adults spending on personal enjoyment. A decade ago, only 9% of toy sales came from consumers over age 18; that share has more than doubled, highlighting a meaningful shift in demand.
Global Perspective
Global central banks delivered mixed messages last week. The European Central Bank kept its benchmark rate at 2.00%, expecting inflation in the euro zone to stabilize near its 2% target over the medium term. The Bank of England also held rates steady at 3.75%. In contrast, Australia raised rates to 3.85%—its first increase in two years—responding to renewed inflation pressures.
Market Moving Events
Tuesday: Import Prices (December), Retail Sales (December)
Wednesday: Employment Report, Federal Budget
Thursday: Jobless Claims, Existing Home Sales
Friday: Consumer Price Index
Commentary
Crosscurrents between improving U.S. growth expectations and a persistently soft labor market contributed to a rise in market volatility last week. Investor anxiety was further heightened by competing trends in AI and heavy capital spending by mega-cap technology companies to build out AI infrastructure. Domestic equity indices declined sharply early in the week before staging a strong rally on Friday. The DJIA led performance, gaining 2.50%.1 The S&P 500 and Nasdaq both finished the week in negative territory. Despite posting its largest single-day rally since May of last year, the S&P 500 ended the week down 0.10% and has declined in three of the past four weeks.2 The Nasdaq, weighed down by pressure on technology holdings, fell 1.84% and has now declined for four consecutive weeks.3 The Dow’s relative strength suggests a broadening in market participation. The equal-weight S&P 500 outperformed the market-cap-weighted index by the widest margin since 2020,4 signaling improving performance outside of the largest technology stocks. Meanwhile, bond markets were relatively stable, with the 10-year Treasury yield ending the week at 4.22%.5
Last week’s job openings report came in well below expectations, with the December reading marking the lowest level since the height of the pandemic in 2020.6 This week, markets will turn their attention to the December employment report and the latest CPI inflation data. The employment report was delayed due to the recent government shutdown, and CPI is expected to show inflation running near 2.5%.7 Earnings season also continues.
Chart of the Week
Both the ISM Services and Manufacturing Indices exceeded expectations last week, with manufacturing rebounding from a 14-month low. ISM views the improvement in manufacturing as temporary, but economists will watch for signs of a sustained trend.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week:
Clearnomics,
ISM, Reuters.com
Statistic of the Week:
The Economist
Global Perspective:
The Economist
Commentary:
1. Bloomberg
2. Bloomberg, Investor’s Business Daily
3. Bloomberg, Investor’s Business Daily
4. MarketWatch.com
5. MarketWatch.com
6. MarketWatch.com
7. MarketWatch.com