WEEK IN PERSPECTIVE: Week ending February 20, 2026

Stocks Rise in Holiday-Shortened Week as Tech Rebounds, Cyclicals Lead

U.S. equities finished higher in a shortened trading week. The S&P 500 rose by 1.1%, and the Nasdaq Composite outperformed with a gain of 1.5%. In contrast, the Dow Jones Industrial Average increased by only 0.3%. The S&P 500 closed back above its 50-day moving average on Friday, while the Nasdaq ended a five-week slide.

Broad Market Participation

Mid- and small-cap stocks joined the advance. The S&P Mid Cap 400 gained 1.2%, and the Russell 2000 added 0.7%. This signals broad participation amid ongoing sector rotation. Mega-cap technology and communication services names, which had recently lagged due to earnings-related weakness, saw renewed buying interest. This uplifted benchmarks and ETFs, including Vanguard Mega Cap Growth (+1.5%) and the PHLX Semiconductor Index (+1.5%). However, software stocks continued to lag, with the iShares Expanded Tech-Software ETF down 2.4%.

Earnings and Corporate Guidance

Earnings and corporate guidance remained key catalysts, driving sharp moves across sectors. Cyclical groups led the market, with industrials (+1.7%), financials (+1.6%), and energy (+1.7%) posting strong gains. Defensive sectors retreated as consumer staples (-2.3%) and health care (-0.6%) pulled back after recent outperformance.

Economic Data Insights

Economic data offered a mixed read on the macro backdrop. Advance Q4 GDP slowed to 1.4%, well below the 3.0% consensus. Meanwhile, the Q4 Chain Deflator rose by 3.6%, underscoring persistent inflation pressures. In December, personal income increased by 0.3%, and spending rose by 0.4%. Both headline and core PCE inflation came in at 0.4%, keeping expectations for near-term Fed rate cuts subdued.

Geopolitical and Policy Developments

Geopolitical and policy developments added volatility to the markets. Oil prices swung sharply amid escalating U.S.–Iran tensions. A Supreme Court ruling on tariffs briefly pressured trade-sensitive stocks. These headlines, combined with earnings-driven moves, contributed to rapid rotations across sectors.

Market Resilience

Despite the crosscurrents, markets showed resilience. Mega-cap tech stabilized, mid- and small-caps participated broadly, and cyclical sectors drove gains. Defensive areas lagged as investors positioned selectively ahead of further earnings reports, inflation data, and geopolitical developments.

Week-to-Date Performance

• Nasdaq Composite: +1.5%

• S&P Mid Cap 400: +1.2%

• S&P 500: +1.1%

• Russell 2000: +0.7%

• DJIA: +0.3%

  
  

Conclusion

In summary, the recent market performance reflects a complex interplay of factors. We see a shift towards cyclical sectors and a recovery in tech stocks, despite ongoing challenges. This environment presents opportunities for strategic investment.

Let’s remember, as we navigate these changes, that our goal is to empower our clients to make their money serve their long-term aspirations and legacy.

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