NextFin News - The U.S. financial markets concluded a pivotal week on February 13, 2026, characterized by a tug-of-war between favorable macroeconomic data and the structural shifts of U.S. President Trump’s second-term economic agenda. Throughout the week of February 9–13, major indices demonstrated resilience, with the S&P 500 and the Dow Jones Industrial Average eking out gains to remain near record levels.
This performance was primarily catalyzed by the Bureau of Labor Statistics’ release of January Consumer Price Index (CPI) data, which showed inflation cooling to 2.4% year-over-year, beating the consensus forecast of 2.5%. According to HOKANEWS, this softer-than-expected reading ignited fresh momentum across equities and digital assets, as market participants recalibrated expectations for the Federal Reserve’s interest rate trajectory.
But pressure on the technology sector continues to expand, and tech investors are becoming increasingly cautious. High-Altitude Correction in Tech• Nasdaq Leads Declines: The Nasdaq Composite came under heavy pressure on Thursday and Friday. This retreat was driven by waning investor patience regarding the Return on Investment (ROI) of AI capital expenditures.
The optimism surrounding disinflation was tempered by the tangible impact of the administration's trade maneuvers. In the industrial sector, the week was marked by significant disruption as U.S. President Trump’s 50% tariffs on aluminum imports began to deeply penetrate supply chains.
According to Discovery Alert, top aluminum buyers like Arconic Corp were forced into aggressive spot market positioning, seeking $218 million in purchases to bypass collapsing annual contract mechanisms. This divergence between a bullish broad market and a strained industrial base highlights the "bifurcated economy" that has come to define the early months of 2026, where tax-driven earnings growth competes with tariff-induced input cost escalation.
The cooling inflation print has fundamentally shifted the narrative for the upcoming week. With the CPI now at 2.4%, the Federal Open Market Committee (FOMC) faces increasing pressure to accelerate its easing cycle.
Current market pricing, as reflected in the CME FedWatch Tool, suggests that traders are now betting on at least two additional rate cuts in the first half of 2026. This sentiment is supported by a cooling labor market; while the January jobs report showed a gain of 130,000 positions—beating the 55,000 forecast—the broader trend indicates a stabilization of hiring. According to U.S. Bank, monthly hiring has slowed materially from the highs of early 2025, providing the Fed with the necessary "cover" to prioritize growth over inflation containment.
Despite the disinflationary tailwinds, the upcoming week faces significant headwinds from the administration's "One Big Beautiful Bill Act" (OBBBA). While the act has boosted corporate earnings by an estimated $100 billion, the Congressional Budget Office warns of a $3.4 trillion expansion in federal debt over the next decade. This fiscal expansion is keeping long-term bond yields elevated, with the 10-year Treasury yield hovering near 4.3%.
Investors in the coming week will be closely watching the February 13 government funding deadline for the Department of Homeland Security. Any sign of legislative gridlock or a return to the partial shutdowns seen earlier in February could trigger a flight to safety, potentially benefiting gold and the U.S. Dollar Index, which currently holds steady at the 97.00 level.
Sector-specific volatility is expected to remain high, particularly in the automotive and technology industries. The recent trade deal between Canada and China, which allows Chinese electric vehicles (EVs) into the Canadian market in exchange for canola oil tariff reductions, serves as a "canary in the coal mine" for U.S. manufacturers.
According to the Center for American Progress, the Trump administration’s disinvestment in EV infrastructure and aggressive tariff stance has isolated the U.S. market, forcing North American partners to seek alternative strategic alliances. For the week ahead, investors will monitor whether U.S. automakers like Ford and GM—which have already taken multi-billion dollar write-downs—can signal a technological pivot to remain competitive in an increasingly electrified global market.
Looking forward, the primary trend for late February appears to be one of "cautious expansion." The combination of a 2.4% CPI and a resilient, albeit slowing, labor market creates a favorable backdrop for equity valuations.
However, the "Trump Premium"—the added cost of doing business under a high-tariff regime—will continue to weigh on margins for manufacturing and retail. Analysts expect the S&P 500 to test new resistance levels near 6,100 if the Producer Price Index (PPI) report, due later in the month, confirms the cooling trend seen in consumer prices. Conversely, any escalation in trade tensions with the European Union or Japan could quickly reverse these gains, as seen during the "Liberation Day" volatility of 2025.
Here is our more detailed market recap for this week and outlook for the week ahead：
Weekly Market Recap: A "Reality Check" for AI and Tech
This week, the US stock market experienced significant volatility as the "Year of the Snake" officially kicked off. While traditional value stocks remained resilient, the technology sector faced a rigorous valuation test amid growing skepticism over AI's near-term profitability.
1. High-Altitude Correction in Tech
• Nasdaq Leads Declines: The Nasdaq Composite came under heavy pressure on Thursday and Friday. The Nasdaq Composite fell 2.1% this week, underperforming other major indices. The focus has shifted from "AI potential" to "AI ROI," as investors demand proof of revenue from massive infrastructure spending.This retreat was driven by waning investor patience regarding the Return on Investment (ROI) of AI capital expenditures.
• Apple & Tech Giants Slump: Apple shares fell 5% on Wednesday alone, wiping out over $200 billion in market cap. Other giants like Amazon and Meta also saw declines exceeding 2%. Volatility in AI darlings like NVIDIA surged as markets began to question if the "AI hype" has outpaced fundamental earnings growth.
2. Mixed Economic Signals & Fed Sentiment
• Inflation Still Sticky: The January CPI (released mid-week) came in at 2.4%. While showing a general cooling trend, it wasn't enough to convince the Fed to signal early rate cuts, keeping the "Higher for Longer" narrative alive.
• Labor Market Resilience: Low jobless claims continue to support a "Higher for Longer" interest rate narrative, which acts as a valuation headwind for growth-heavy tech portfolios.
3. The Great Sector Rotation
A distinct shift from Growth to Value was evident this week. The Dow Jones outperformed the tech-heavy Nasdaq this week, as capital rotated into "Old Economy" sectors. Capital flowed out of overcrowded Big Tech names and into Energy, Industrials, and Financials. Consequently, the Dow Jones Industrial Average outperformed the Nasdaq, hitting intraday record highs earlier in the week.
Outlook for Next Week (Feb 16–20, 2026)
Note: US Markets will be closed on Monday, Feb 16, for Presidents' Day.
1. Market Trend Forecast: Volatile Bottom-Fishing
• Testing Support Levels: The S&P 500 has slipped below its 50-day moving average. Next week, the index will likely test its 100-day moving average (approx. 6,811). Failure to hold this level could trigger a deeper technical correction for tech stocks.
• Thin Liquidity Risks: Due to the holiday-shortened week, lower trading volumes early on may amplify price swings.
2. Key Catalysts to Watch
• Fed Minutes (Thursday): Investors will pore over the minutes for clues on 2026 monetary policy. A "hawkish" tone—expressing concern over stubborn inflation—could push Treasury yields higher and further penalize tech valuations.
• The "NVIDIA Shadow": The market is holding its breath for NVIDIA’s earnings (scheduled for Feb 25). Expect heightened sensitivity next week; any rumors regarding AI order cuts could trigger pre-earnings sell-offs.
• Core PCE Data (Friday): As the Fed’s preferred inflation gauge, this data will set the tone for the March FOMC meeting.
Strategic Insights for Tech-Heavy Investors
For those primarily exposed to the Technology Sector:
*DCA Over Panic Selling: Current declines appear to be a correction of "excessive expectations" rather than a fundamental collapse. For long-term AI bulls, sharp dips next week may offer entry points for high-quality leaders in compute and software.
*Pivot to Defensive Tech: In a volatile environment, "Big Tech" firms with robust cash flows and buyback programs (e.g., Apple, Microsoft) tend to be more resilient than speculative AI startups.
*Caution on Leverage: With the VIX (Volatility Index) hovering above 20, option premiums are high and price swings are erratic. Reducing leverage is advised to avoid being stopped out during intraday noise.
Quick Tips for the upcoming week:
• AI Evolution: As 2026 is predicted to be the year of "Agentic AI," look for companies that are successfully integrating AI into their core business workflows, rather than just selling "hype."
• PCE Data: Keep a close watch on the Core PCE release on Friday (Feb 20); it will be the final major data point before the Fed's March meeting. So Friday’s PCE data will be the ultimate "decider" for the bulls and bears. Expect a defensive stance from the market until those numbers are released.
