Weekly Market Recap

Week Ending February 21, 2026

THIS WEEK IN REVIEW

Markets delivered a modest rebound this week after enduring significant losses in recent weeks, with investors rotating back into technology and megacap stocks while navigating a Supreme Court tariff decision and mixed economic data. The S&P 500 gained approximately 1.1%, the Nasdaq advanced roughly 1.5%, and the Dow rose 0.3%. Notably, the Magnificent Seven led market gains, averaging a 2.3% rise as dip-buyers stepped in following the recent selloff.

Early Week: Software Struggles Continue

The week began on Tuesday following the Presidents' Day holiday with continued pressure on software stocks despite modest overall market gains. The S&P 500 inched up 0.1% to 6,843, while the Nasdaq rose 0.14%. However, software names extended their year-to-date declines as AI disruption fears persisted.

ServiceNow fell over 1%, bringing its 2026 loss to 31%. Autodesk and Palo Alto Networks declined more than 2%, with year-to-date losses of 24% and 11% respectively. Salesforce and Oracle dropped nearly 3% and 4%, extending their yearly declines to 30% and 21%. The iShares Expanded Tech-Software Sector ETF slid over 2%, bringing its year-to-date loss to 23%.

Investors continued rotating out of software into financial stocks like Citigroup and JPMorgan. The persistent concern remains that AI tools could replace industry-specific software providers, threatening business models across the sector.

Midweek: Tech Rebound Gains Momentum

Wednesday marked a turning point as AI stocks regained investor confidence. The S&P 500 climbed 0.56% to 6,881, the Nasdaq advanced 0.78% to 22,754, and the Dow rose 0.26% to 49,663. Technology led gains despite eight of eleven S&P 500 sectors finishing negative.

The catalyst was Meta Platforms' announcement of a massive deal with Nvidia to install new CPUs, next-generation GPUs, and Vera Rubin rack-scale systems in its AI data centers. Meta committed to spending $600 billion on AI infrastructure by 2028, with $135 billion planned for 2026 alone. Nvidia shares advanced 1.6% on the news, while Amazon gained nearly 2% after Bill Ackman's Pershing Square disclosed a 65% increase in its Amazon stake, making it the fund's third-largest holding. Amazon's gain ended a brutal nine-day losing streak that had erased $450 billion in market value.

Federal Reserve minutes released Wednesday showed a divided committee on the path forward for rate cuts, with "several" officials suggesting the central bank may need to raise rates if inflation stays above target. However, the minutes indicated rate cuts could resume later in the year if inflation trends lower.

Thursday: Weak GDP Shakes Confidence

Thursday brought disappointing economic data that initially pressured markets. Q4 GDP came in at just 1.4%, well below the 2.5% consensus estimate and 3% Wall Street expectation. The government shutdown appeared to be the key driver of the weak growth. Additionally, core PCE inflation rose 0.4% month-over-month, above November's 0.2%, signaling sticky inflation remains a concern.

Despite the weak data, some saw it as potentially accelerating Fed rate cuts. However, the combination of slow growth and elevated inflation creates a challenging environment for policymakers.

Friday: Supreme Court Ruling Creates Volatility

Friday delivered the week's most dramatic developments as the Supreme Court struck down President Trump's reciprocal tariffs, ruling the administration lacked authority under the International Emergency Economic Powers Act to impose sweeping duties. Markets initially dipped on the news before rallying strongly.

The S&P 500 advanced 0.69% to close at 6,909.51, the Nasdaq gained 0.9% to 22,886.07, and the Dow added 0.47% to end at 49,625.97. The Dow recovered from a 200-point loss earlier in the session.

However, President Trump immediately responded by announcing a new 10% global tariff via executive order, claiming various categories of his existing tariff program remain in place. This created a new layer of uncertainty as investors weighed potential refunds of the $175 billion in previously collected tariffs against the threat of new levies.

Amazon jumped 2.6% and Home Depot rose 1% as trade-sensitive stocks rallied on the initial ruling. Alphabet surged 3.7%, helping technology lead the rebound. The Nasdaq snapped a five-week losing streak, providing technical relief for growth investors.

Sector Performance and Rotation

A significant rotation back into technology occurred this week after weeks of selling pressure. Growth outperformed value as capital flowed from small/mid-caps, defensive yields, and staples into high-beta sectors, communication services, and commodities. The Magnificent Seven led all groups for the second consecutive week.

Software stocks remained the notable laggard despite the broader tech rally, while semiconductors saw renewed investor interest ahead of Nvidia's highly anticipated earnings report on Tuesday. Mining stocks, especially silver-related names, also attracted buyers.

Economic Data Summary

Beyond the weak GDP print, economic data this week showed mixed signals. Manufacturing output rose 0.6% in January, while capacity utilization came in slightly below expectations at 76.2%. New orders for manufactured durable goods fell 1.4% in December, though excluding transportation, orders increased 0.9%. Non-defense capital goods orders—a proxy for business spending—rose 0.6%, suggesting some corporate investment resilience.

The sticky core PCE inflation reading keeps the Fed cautious about aggressive rate cuts, even as growth slows. Markets continue pricing in two or more rate cuts this year, but the path remains uncertain.

THE WEEK AHEAD

Next week features Nvidia's crucial earnings report on Tuesday, February 25, which will serve as a major bellwether for AI spending and technology sector health. Other notable reports include Home Depot, Lowe's, Salesforce, Snowflake, and TJX Companies.

Economic data includes January new home sales on Monday and February consumer confidence on Tuesday. Analysts widely expect Nvidia to post strong results given massive AI infrastructure spending commitments from Meta, Amazon, Microsoft, and Alphabet. CEO Jensen Huang has described demand for the company's Blackwell platform as "off the charts."

The tariff situation remains fluid following Friday's Supreme Court decision and Trump's immediate response with a new 10% global tariff. Markets must navigate uncertainty around implementation, potential legal challenges, and economic impacts.

What We're Watching

The week's modest rebound and technology sector leadership reversal suggests investors are willing to buy the dip in growth stocks after recent weakness. However, persistent software sector concerns and sticky inflation create headwinds.

Nvidia's earnings will be critical in determining whether technology can sustain its recovery or if AI spending concerns resurface. The company's guidance and commentary on infrastructure demand will heavily influence market sentiment.

The tariff situation adds complexity, with questions about previously collected tariff refunds, new 10% global levy implementation, and ongoing legal challenges. This policy uncertainty makes corporate planning difficult and could weigh on business investment.

We continue to emphasize diversification, discipline, and focusing on long-term objectives rather than short-term market swings. The current environment rewards selectivity and patience.

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Important Disclosures

 Disclosures This material is for informational purposes only and is not investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including loss of principal. Asset allocation and diversification do not ensure a profit or protect against loss. Please review your specific circumstances with us before making any changes to your portfolio.