CWS Market Review – February 10, 2026

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On Friday, the Dow Jones Industrial Average closed above 50,000 for the first time in its history. This comes almost 70 years to the day from when the Dow first breeched 500. In other words, the Dow has risen 100-fold in nearly 70 years. That works out to an average gain of 6.8% per year, or 1% every eight weeks, and that doesn’t include dividends.

As impressive as that sounds, the Dow has actually been the laggard in recent years. The Dow’s holding of mega-cap tech isn’t quite as hefty as the overall market’s weighting. The Dow currently holds Amazon, Nvidia, Microsoft and Apple.

An important fact here is that the Dow is price-weighted which means the index is calculated by adding up the prices of the 30 stocks and adjusting by a divisor. Roughly speaking, each dollar move in a Dow stock is worth about 6.16 points in the Dow. How large the company is doesn’t matter. Of the four mega-cap stocks I just mentioned, only Microsoft is ranked among the top 12 in the Dow going by price weighting.

In the chart below, you can really see how badly the Dow (in blue) has lagged the S&P 500 (red). If the Dow had merely kept pace with the S&P 500 over the last eight years, the index would be around 63,000 today instead of 50,000.

Right about the time the Dow was breaking 500, the index made its first change in 17 years. In 1956, International Paper was added and Loews Theaters was dropped. Before that, we’d have to go back to 1939 when Nash Motors and IBM were dropped.

The dropping of IBM was a huge mistake, and it completely altered the Dow’s history. All the major milestones would have come years earlier. IBM was added back to the Dow in 1979. Over those 40 years, shares of IBM soared 22,000%.

The Market’s Inflation-Adjusted Peak

Speaking of Wall Street history, yesterday was an important, and largely overlooked, anniversary for Wall Street. Yesterday marked the 60th anniversary of the stock market’s inflation-adjusted peak.

Some explanation is needed. On February 9, 1966, the S&P 500 closed at 94.06. Going by nominal terms, the S&P 500 passed that high as early as 1967. By 1968, the S&P 500 traded over 100, but after adjusting for inflation, the market was in a tailspin that lasted for several years.

Here’s a look at the inflation-adjusted S&P for nearly the entire 20th century. I got this data from Robert Shiller’s data library. To make it easier to read, I set February 1966 to 100.

By 1982, the S&P 500 was down more than 60% from its peak sixteen years prior. Think about that! As late as October 1992, the market was still trading below its inflation-adjusted peak from 26 years before.

The key lesson from this data is how dangerous inflation is to the stock market. Inflation is a tax on capital. When inflation appears, bonds quickly lose value, and stocks fall as well to keep pace with fixed-income investments. From 1966 to 1982, inflation in the United States tripled. That took a huge toll on financial markets.

Inflation was finally cured by the Fed in the 1980s, but it took a brutal recession to slay the beast. Once that was out of the way, the stock market soared. From a long-term perspective, stocks weren’t really climbing as much as they were making back a lot of lost ground.

Here’s a chart looking at stocks and inflation from the early part of this decade. Notice that a sharp rise in inflation (the red line, left scale) sparked a big loss in stocks (the blue line, right scale). Again, stocks hate inflation.

IES Teaches Us a Good Investing Lesson

One of the lessons I stress to investors, especially newer investors, is how irrational the stock market can be. Warren Buffett once said, “If markets were rational, I’d be waiting tables for a living.”

From a distance, the stock market can appear to be rational. It has all these numbers, and all these experts giving their expertise on all sorts of things. But in the short-term, it’s pure chaos. No one likes to admit that, but it’s true.

We got a good lesson in the market’s behavior recently with one of our Buy List stocks.

On January 30, IES Holdings, Inc. (IESC) released its fiscal-Q1 earnings report. This was for the three months ending in December. IES has been a great stock for us. I added it to the Buy List last year, and it gained over 90% for us in 2025. I especially like IES because it’s virtually unfollowed by any Wall Street analysts.

I decided to keep the stock on the 2026 Buy List as well. IES is having another solid year for us. By January 30, IES was a 22% winner for us. That’s not bad for less than one month’s work.

According to the earnings report, IES’s quarterly revenues rose 16% to $871 million, and operating income was up 31% to $97.7 million. Diluted adjusted EPS attributable to common stockholders was up 40% to $3.71. With so little analyst coverage, there’s no real consensus to speak of.

At the end of the quarter, IES had a backlog of $2.6 billion. The company ended the quarter with $88.8 million in cash, no debt, and $169.9 million in marketable securities.

IESC has four reporting segments. Communications’ revenue grew 51% to $351 million. Residential was down 11% to $284 million. Infrastructure Solutions had 30% revenue growth to $140 million. Commercial & Industrial was up 7% to $95 million.

You would think this was good news. Not so. Once trading opened on Friday, January 30, shares of IES got absolutely clobbered. Whatever the expectations were, IES quite obviously didn’t meet them. By the end of trading, shares of IES were down 20% on the day. Ouch!

I thought the drop was extreme, but it’s hard to argue with a mob. Did they even look at the earnings report? It said nothing that should have been a surprise.

Now here’s the odd part. Since IES reached its low, the stock has been in a blistering rally. Over the last seven trading days, IESC has gained more than 31%. It’s made up everything it lost and then some. IESC is now a 28% winner on the year. The stock reached another new all-time high in today’s trading.

I don’t get it. We made a tidy profit, and we didn’t do anything except not panic. This is a good reminder of why it pays to ignore the market’s short-term bumps and bruises.

Tomorrow’s Jobs Report

Earlier today we got the delayed retail sales report for December. The Commerce Department said that retail sales were flat during the month of December. Economists had expected an increase of 0.4%. Excluding autos, sales also were unchanged compared to the estimate for a 0.3% increase. That comes on top of a 0.6% increase for November.

We’re getting several excuses for the poor report including inflation, tariffs and the weather. For the year, retail sales were up by 2.4%. That’s a little bit below the rate of inflation. Not including autos, sales were up 3.3% over the last 12 months.

Miscellaneous retailers and furniture stores posted declines of 0.9%, while clothing and accessories stores were off 0.7%, and electronics and appliances saw a drop of 0.4%. Online outlets sales rose just 0.1%, while building materials and garden centers saw the strongest gain, up 1.2%.

I need to apologize for an error. In last week’s issue, I said the January jobs report was coming out on Friday. That was incorrect. The report is due out tomorrow. My apologies. In my defense, the government shutdown screwed up many of these reporting dates.

For tomorrow, Wall Street expects to see a gain of 55,000 new jobs for January. The last few reports haven’t been that strong. I think a disappointing report could upset the market. Wall Street expects the unemployment rate to stay at 4.4%.

My biggest concern is average hourly earnings. For January, Wall Street expects to see a gain of 0.3%. Wage growth is running ahead of inflation but not by much.

A big question for tomorrow’s jobs report is that the annual revisions are also due out. There’s a good chance that the numbers will show that the labor market is doing a lot worse than originally thought.

As it looks right now, the Fed under Jerome Powell won’t touch interest rates again. We may have to wait until June, and a new Fed chair, for the central bank to cut rates again.

That’s all for now. Expect more earnings news this week. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on February 10th, 2026 at 6:17 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.