Weekly Market Performance — February 20, 2026

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of February 16, 2026. U.S. stocks regained their footing in a holiday-shortened week, overcoming lingering concerns around AI‑related spending and geopolitical tensions to focus on mostly positive takeaways around the American economy. International stocks were mixed, with Europe extending gains on strong earnings and improving business activity, while Asia-Pacific trading was muted by Lunar New Year holiday closures. Across fixed income, rising Treasury yields pressured bonds, and commodities were supported by stronger energy prices amid U.S.-Iran geopolitical angst.

Stock Index Performance

U.S. and International Equities

U.S. Equities: U.S. markets returned to action following the three-day weekend to advance over the four-day week as dip buyers appeared to ease into stocks after last week’s decline. Sentiment continued to be tamped down by worries around whether massive artificial intelligence (AI) spending will pay off, although risk appetite also garnered some support from a flurry of macro data that suggested the American economy remains on solid footing. Although, market participants faced a couple of obstacles, shaking off some hawkish takeaways from the latest Federal Reserve (Fed) minutes and GDP data that halved consensus forecasts — expanding just 1.4% annualized last quarter versus expectations of 2.8% (the government shutdown last fall shaved off around 1% of growth, according to the Bureau of Economic Analysis). Surprise weakness in economic data was not the only hurdle as geopolitical angst surrounding potential U.S. military intervention in Iran weighed on markets as reports of stalled U.S.-Iran nuclear talks collided with Iran’s rapidly closing window for a deal. Nonetheless, Wall Street bulls remained resilient, ending the week on a positive note after the Supreme Court struck down some of the Trump administration’s tariffs. Immediately after the ruling, Trump’s quick pivot to stronger legal grounds for tariffs helped ease concerns that the nation’s fiscal position may be at greater risk. (For additional takeaways, check out our blog on the tariff ruling here.)

On the corporate front, Walmart’s (WMT) better-than-expected quarterly results were overshadowed by disappointing guidance, while NVIDIA (NVDA) and Meta (META) have teamed up for a processor deal.

International Equities: The European STOXX 600 Index posted its fourth straight weekly gain, extending a strong start to 2026. Over the last five days, despite geopolitical jitters weighing on sentiment, mostly supportive macroeconomic data and well-received earnings helped power equities higher. Among highlights, BAE Systems offered a solid earnings growth outlook, Spanish luxury personal care brand Puig climbed on better-than-expected revenue, and Nestle rose on an accelerating 2026 sales outlook. Sentiment received a boost from an upside surprise in business activity — broadly driven by manufacturing activity, with surprise growth in Germany also a standout — while geographically, U.K. shares outperformed on bolstered Bank of England rate cut bets after unemployment last quarter reached its highest level since early 2021.

Heavily thinned Lunar New Year trading across the Asia-Pacific region left stocks mixed, with exchanges in China, Hong Kong, South Korea, and Taiwan shuttered for much of the week. Japanese benchmarks took center stage, but were dented by extended profit taking after recent post-election gains and lingering AI concerns. However, losses were modest, with shares retracing some declines following the announcement of a $36 billion investment in U.S. oil, gas, and minerals projects, as well as strong export data and improving business sentiment. South Korea leapt in a two-day week with support from Samsung reportedly mulling AI memory price hikes, and broader support from OpenAI’s latest wave of funding. Meanwhile, Hong Kong dropped following its holiday break, with a rotation from so-called traditional internet companies to smaller, AI pure-play names evident.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index traded lower over the past week as Treasury yields moved higher. Recent equity market volatility has broadly remained contained, with public corporate credit markets positive year‑to‑date, but perhaps not entirely immune. Investment‑grade primary issuance is off to a record pace, reaching $346 billion year‑to‑date — more than 10% above the same period last year as investor demand remains strong, and some forecasts have been raised on robust issuance, stronger GDP forecasts, and a more accommodative funding environment. That said, AI‑related disruption is creating pockets of stress within high yield (HY). The tech sector is down more than 1%, with spreads wider by nearly 110 basis points, even as broader HY index spreads remain near record tights. Bank loans are showing similar signs of AI‑driven repricing. With software representing 13% of the loan index, concerns have expanded into other industries with workflows vulnerable to automation, including insurance and brokerage. This has led to wider secondary spreads in the most exposed industries and muted primary issuance, often requiring meaningful new‑issue concessions to clear the market. The sell-off in software‑linked loans has spread to adjacent sectors, while investors rotate toward tangible “real‑asset” industries such as basic industrials, energy, and chemicals — in some cases preferring more stressed capital structures to sectors facing disruptive technological shifts.

Corporate credit remains priced for perfection, with spreads at or near secular tights and offering limited compensation for credit risk. With issuance trends accelerating and idiosyncratic risks still under‑recognized, we maintain a cautious stance on corporate credit markets.

Commodities and Currencies: The broader commodities complex pared early-week losses to trade higher this week, broadly on the back of energy prices. West Texas Intermediate (WTI) crude oil rallied well over 5% to six-month highs as the U.S. military build up in the Middle East drew attention ahead of the White House stating Tehran has 15 days to reach a nuclear deal with Washington. Plus, data pointed to the steepest crude oil draw since early September, falling by 9 million barrels last week. Metals also traded higher, led by silver, on the back of a Friday rally fueled by uncertainty surrounding the next tariff steps following the Supreme Court’s ruling. In currencies, the dollar strengthened while the euro and pound weakened.

Economic Weekly Roundup

FOMC Meeting Minutes: Optimistic with a Dash of Concern. Overly optimistic? The combination of above‑potential growth with easing inflation is not common in Fed projections and likely reflects a strong assumed boost from productivity and AI‑related investment. The Fed almost never forecasts multi‑year above‑trend growth.

• The FOMC staff projected that real GDP growth will outpace potential growth through 2028, with the unemployment rate falling below the natural rate and staying there for multiple years.

  
  

• Consumer spending, wealth effects, and heavy AI‑related investment are keeping growth steady. The Fed expects above‑trend GDP growth over the next few years, supported by productivity gains and favorable financial conditions.

  
  

• Technology firms will likely finance massive AI‑related capital spending with higher debt issuance, yet the Fed views their current overall debt loads as low. The combination of heavy new borrowing but still “low” vulnerability is noteworthy.

  
  

• AI may not be just a growth engine but also a potential source of market fragility. The Fed acknowledges that the concentration of AI‑related economic gains in only a few firms could be a financial‑stability risk.

  
  

One of the more interesting items teased out from the minutes is that the Fed seems to think financial‑stability risks are building under the surface. Asset valuations are high, credit spreads are tight, and AI‑related investment has created new pockets of risk, especially in private credit, leveraged firms, and highly concentrated tech names. They specifically called out hedge funds. Hedge‑fund leverage and Treasury‑market vulnerabilities remain key concerns. Looking ahead, we should monitor potential spillovers from volatile global bond markets and currencies, and we believe the next cut to the fed funds rate won’t be until June.

The Week Ahead

The following economic data is slated for the week ahead:

• Monday: Chicago Fed National Activity Index (Jan), Factory Orders (Dec), Durable Goods Orders (Dec final), Capital Goods Orders and Shipments (Dec final), Dallas Fed Manufacturing Activity (Feb)

• Tuesday: ADP Weekly Employment Change (Feb 7), Philadelphia Fed Non-Manufacturing Activity (Feb), FHFA House Price Index (Dec), House Price Purchase Index (4Q), S&P Case-Shiller 20-City and National Home Price Indexes (Dec), Richmond Fed Manufacturing Index and Business Conditions (Feb), Conference Board Consumer Confidence Report (Feb), Wholesale Inventories (Dec), Wholesale Trade Sales (Dec), Dallas Fed Services (Feb)

• Wednesday: MBA Mortgage Applications (Feb 20)

• Thursday: Initial Jobless Claims (Feb 21), Continuing Claims (Feb 14), Kansas City Fed Manufacturing Activity (Feb)

• Friday: Headline and Core PPI (Jan), MNI Chicago PMI (Feb), Construction Spending (Nov and Dec), Kansas City Fed Services Activity (Feb)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

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This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

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Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

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High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

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