US Stock Weekly Report

2026-02-16

Previous Week’s Market Review & Analysis

• Macroeconomic Landscape: The past week, February 9-15, 2026, saw a dense cluster of delayed U.S. macroeconomic data releases, influenced by recent government disruptions. Key data included Retail Sales on February 10, the rescheduled January Jobs Report and Employment Cost Index on February 11, and Existing Home Sales on February 12. The Federal Reserve's January statement indicated solid economic expansion, low job gains with some stabilization in unemployment, and still elevated inflation, with the federal funds rate maintained at 3-1/2 to 3-3/4 percent. Dallas Fed President Lorie Logan noted on February 10 that core PCE inflation had remained relatively flat, with the trimmed mean PCE at 2.5 percent for the 12 months through November, a decrease from the prior year. Private-sector job growth slowed in January, contributing to investor anxiety, and JOLTS data revealed a sharp drop in job openings.

• Market Performance Overview: U.S. equity markets experienced mixed performance for the week. The S&P 500 Index slipped 0.10 percent, and the Nasdaq Composite Index declined 1.84 percent. Conversely, the Dow Jones Industrial Average rose 2.50 percent, closing above the 50,000 level for the first time on Friday. The week began with broad gains on Monday, followed by midweek selling pressure as investors digested earnings, before a rebound on Friday, often characterized as a "buy the dip" mentality. There was an early-week rotation out of technology stocks into more cyclical sectors, reflecting concerns over capital expenditure plans and potential AI-driven bubbles in the tech space. Small-cap stocks have shown outperformance over the last three months.

• Key Events Analysis: Over 100 S&P 500 companies reported earnings, including onsemi, Principal Financial Group, Medpace, Goodyear, and Vornado on February 9. Other anticipated reporters included Robinhood, AppLovin, and Coinbase. Federal Reserve officials, including Atlanta Fed President Raphael Bostic and Fed governors Christopher Waller and Stephen Miran, delivered remarks earlier in the week.

• Flows & Sentiment: Investor sentiment was volatile, particularly mid-week, driven by concerns over slowing private-sector job growth. However, a University of Michigan survey released on Friday indicated consumer sentiment had risen to its highest level in six months, buoying market expectations. Treasuries rallied early in the week on weaker employment data and expectations for more aggressive Fed rate cuts, with the 10-year yield falling to nearly 4.15%. Cryptocurrency markets saw a sharp decline in Bitcoin following comments from Treasury Secretary Bessent, highlighting asset vulnerability.

• Overall Assessment: The past week was a dynamic period characterized by a condensed schedule of significant economic data and considerable market volatility. An initial flight from technology to cyclical names underscored concerns regarding growth durability, but a strong Friday finish, spurred by renewed consumer confidence, demonstrated underlying resilience and a "buy the dip" behavior. The market continues to balance solid economic activity with signs of labor market softening and persistent, yet stabilizing, inflation.

Next Week’s key market drivers & Investment Outlook

• Upcoming Events: The week of February 16-22, 2026, will observe a U.S. market holiday on Monday for Presidents' Day. Key data releases include the US ADP Weekly Employment Change on Tuesday, followed by the release of the FOMC Meeting minutes (from January) and Durable Goods Orders on Wednesday. Friday will feature the advance estimate of Q4 US GDP and December PCE data, along with preliminary PMIs. Major corporate earnings reports are expected from Walmart, Warner Bros Discovery, Booking Holdings, and Palo Alto Networks, among others.

• Market Logic Projection: Markets will closely analyze the FOMC minutes for insights into the Federal Reserve's policy trajectory, especially concerning future rate adjustments following the recent pause. Expectations point to a strong Q4 GDP reading, with December PCE inflation anticipated around 0.3% m/m, suggesting continued inflationary pressures. Further market volatility is expected in 2026, driven by evolving macroeconomic conditions and policy responses.

• Strategy & Allocation Recommendations: We recommend a market-weight allocation to equities. Investors might consider a barbell strategy, combining growth opportunities in technology and AI with the stability of high-quality value stocks to mitigate potential volatility. Industrials, energy, and healthcare sectors have shown relative strength year-to-date, suggesting a broadening market rally beyond the narrow tech leadership seen previously. Small-cap stocks, currently trading at a 13% discount, may offer attractive opportunities.

• Risk Alerts: Elevated uncertainty surrounding the economic outlook persists. Geopolitical developments could impact market sentiment. Continued vigilance is advised for potential re-acceleration of inflation or unexpected shifts in labor market data, which could influence Federal Reserve policy and market reactions.