Weekly Market Recap

Week Ending February 14, 2026

LAST WEEK IN REVIEW

Markets endured another volatile week marked by AI disruption concerns and mixed economic signals, ultimately finishing relatively flat despite significant swings. The S&P 500 posted its worst weekly performance since November, the Nasdaq declined approximately 1.8%, while the Dow maintained strength above 50,000. Small-cap stocks significantly outperformed as cooling inflation data sparked a Friday rally.

Early Week: Dow Milestone and Retail Weakness

The Dow Jones Industrial Average achieved a historic milestone, crossing 50,000 for the first time and posting a closing record of 50,188 on Tuesday. However, the broader market struggled as weaker-than-expected retail sales data weighed on sentiment. Costco and Walmart declined on consumer spending concerns, while CVS dropped 3% after disappointing guidance.

Software stocks continued their descent on AI disruption fears. Salesforce fell 4% and ServiceNow dropped 5%, pushing the software sector ETF down over 2% and extending losses to nearly 30% below recent highs, remaining firmly in bear market territory.

Wednesday: Strong Jobs Report

The delayed January nonfarm payrolls report surprised significantly to the upside, showing 130,000 jobs added versus expectations of just 55,000. The unemployment rate ticked lower and participation improved, demonstrating economic resilience. However, markets showed limited reaction as the strong data reduces urgency for Federal Reserve rate cuts at the March meeting.

While the economic data was encouraging, software stocks extended losses and the major indices closed marginally lower. Vertiv surged 24% after strong earnings and 2026 outlook, benefiting from AI infrastructure buildout demand.

Thursday: AI Concerns Intensify

Thursday brought the week's sharpest selloff as investors confronted concerns that AI threatens to disrupt business models and potentially raise unemployment. The Dow plunged 669 points (1.34%), the S&P 500 dropped 1.57%, and the Nasdaq tumbled 2.03%.

Cisco Systems fell 12% after disappointing guidance. Software stocks continued bleeding, with Palantir down 5% (now down 27% year-to-date) and Autodesk declining 4% (down 24% for the year). Amazon entered bear market territory, now trading more than 20% below its November high in its longest slide in nearly 20 years.

Friday: Inflation Relief Rally

Markets rebounded Friday following cooler-than-expected inflation data. January CPI rose just 0.2% month-over-month versus 0.3% expected, with the year-over-year rate at 2.4%—the lowest since early 2024. The S&P 500 gained 0.62%, the Dow rose 0.42%, and the Nasdaq advanced 0.54%.

Treasury yields tumbled, with the two-year yield hitting its lowest level since 2022 as traders priced in higher odds of multiple Fed rate cuts this year. Small-cap stocks rallied 1.2%, benefiting from lower rate expectations. However, megacap tech remained weak, with that group losing 1.1% despite the broader market gains.

Key Developments

Earnings season is winding down with strong results overall—79% of companies beating earnings estimates and reporting 13% year-over-year growth. However, markets remain unforgiving of any weakness, particularly in technology.

The massive AI spending plans from major tech companies—exceeding $650 billion combined this year—continue to dominate discussions. While signaling long-term confidence, investors increasingly demand proof these investments will generate profits.

A significant rotation continues from growth to value, technology to traditional sectors, and large-caps to small-caps. The equal-weighted S&P 500 hit fresh all-time highs while the market-cap weighted index struggled, indicating broader market participation beyond megacap tech.

THIS WEEK AHEAD

Markets are closed today for Presidents' Day. With earnings season largely complete and major economic data behind us, attention turns to whether Friday's inflation-driven rally represents sustainable improvement or a temporary bounce.

The next FOMC meeting on March 17-18 looms as a critical event where the Fed will provide updated projections and signal the timing of rate cuts. Current market pricing anticipates more aggressive easing than previously expected.

What We're Watching

Markets face a tug-of-war between positive fundamentals—solid jobs growth, cooling inflation, robust earnings—and technology sector concerns around AI disruption and elevated valuations. The ongoing sector rotation suggests investors are repositioning for a different environment than the narrow tech rally of recent years.

We continue to emphasize maintaining diversified portfolios and avoiding reactionary decisions based on short-term volatility. The current environment rewards selectivity and patience.

As always, please reach out with any questions or concerns.

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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.