Economic Update 2-17-2026

Economic data for the week included a strong January jobs report, albeit with methodological nuances, flattish retail sales, and weaker weather-impacted existing home sales. Consumer inflation came in cooler than expected, mostly due to lower energy prices.

Equities were mixed, with tech-related declines in the U.S. offset a bit by continued strength in international stocks. Bonds fared positively from movement away from risk and a weaker U.S. dollar. Commodities were mixed, with gold strength and energy weakness.

U.S. stocks fell back again last week, as uncertainty over AI’s impact on software company revenues over time continued to weigh on sentiment for technology-related stocks, in a pattern of ‘sell now’ and ‘figure out the details’ later, not uncommon in equities. By Wed., a stronger-than-expected jobs report was taken favorably by markets, in that the economy remained in decent shape, until the realization of perhaps fewer Fed interest rate cuts, which dampened the mood a bit. Friday’s CPI report coming in cooler than expected helped the mood slightly, but not outweighing the AI concerns. By sector, utilities saw a sharp gain of over 7% as interest rates fell and investors sought save havens, followed by materials and energy. Financials declined by -5%, particularly in the areas of insurance and asset management, also thought to be under threat of being undermined by AI tools. Real estate fared positively, up a few percent, along with lower interest rates.

Foreign stocks were led upward by Japanese stocks, which rose sharply out of the gate Monday morning, following Prime Minister Takaichi’s LDP decisive party win, which is hoped will continue to push ahead a pro-corporate agenda to improve global competitiveness. However, fiscal stimulus like tax cuts leading to additional debt has weighed on Japanese bond markets by pushing interest rates higher. Emerging markets fared decently, with gains in South Korea, Taiwan, and commodity-oriented countries, while China and India saw declines.

U.S. Treasury and investment-grade corporate bonds gained last week, due to higher volatility in equities as well as slower consumer inflation. High yield and senior floating rate bank loans underperformed, with flattish returns. International bonds saw gains across the board, along with a weaker U.S. dollar last week.

Commodities were mixed again last week, with gains in agriculture and precious metals, offset by declines in industrial metals and energy. Crude oil fell over a percent last week to $63/barrel, with little news to move the needle. Natural gas prices corrected by over -8% as more extreme winter weather shows signs of normalizing in the U.S.

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.