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Market Update: February Snapshot
The S&P 500 is essentially flat for the year, which belies the ups and downs we've experienced in the first two months of 2026.
Two stories dominated the month. The first is tariffs, which took a dramatic turn on February 20 when the Supreme Court struck down the administration's primary tariff authority in a 6-3 ruling. Within hours, President Trump pivoted to a different legal mechanism: Section 122 of the Trade Act of 1974,imposing a new flat 10% surcharge on most imports, effective this week. He's already announced his intention to raise that to 15%, the ceiling allowed under the law, though the formal order wasn't in place as of press time. The whiplash is real: markets, businesses, and trading partners are all struggling to keep up.
The second story is AI with a new twist. This month the conversation shifted from who's winning the AI race to who might be losing jobs to it. Software companies, financial services firms, even logistics stocks sold off sharply as investors began pricing in the possibility that AI could displace meaningful portions of the workforce. The Federal Reserve is asking the same questions as the rest of us: Governor Lisa Cook said this week that traditional monetary policy tools may not be well-suited to handle AI-driven unemployment. That's not a warning sign so much as an acknowledgment that we're in genuinely new territory.
Which makes Nvidia's earnings report released yesterday evening an interesting data point. The numbers were spectacular: $68 billion in revenue, up 73% from a year ago, with guidance well above what Wall Street expected. Morgan Stanley called it the largest and cleanest beat in semiconductor industry history. And yet, Nvidia's stock fell 5% on Thursday. The market heard the good news and still sold off. Not because of anything wrong with Nvidia, but because the bigger question hanging over markets right now isn't whether AI is real. It's whether the enormous bets being placed on it will ultimately pay off.
The economic backdrop is mixed. Q4 GDP came in at a disappointing 1.4% —well below expectations—though the government shutdown that ran through most of the quarter accounts for roughly a full percentage point of that shortfall. The private economy held up better than the headline suggests. Inflation remains stubborn, with the Fed's preferred measure still running above its 2% target and rate cuts looking unlikely until mid-year at the earliest.
The picture, in short: corporate earnings are solid, Wall Street still expects a decent year, and there's no recession in sight. But policy uncertainty is elevated, and the AI story is rapidly evolving. As always, the right response isn't to make dramatic moves—it's to stay the course and make sure your plan is built for all kinds of weather. If you have questions or concerns you can ask us. Or a chatbot?
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