by Gavyn Jensen-Schneider, Research Associate

Major indices faltered in a week marred by geopolitical conflict. The S&P 500 finished the week down -2.02%, while the Nasdaq fell -1.24%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.14%, up +19 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, was unchanged at 3.62%.

The conflict in Iran has dominated this week’s headlines as both a geopolitical and economic concern. Historically, investors have reacted to conflict with a “flight to safety,” moving away from higher-risk assets toward lower-risk investments like US Treasuries. The conflict in Iran has had a different reaction; 10-year Treasury yields have climbed since news of the strikes on Iran broke. The 19 basis point increase in yield signals lower investor demand for Treasuries. Rather, the market reaction suggests elevated inflation concerns due to rising oil prices. Approximately 20% of the world’s oil supply is shipped through the Strait of Hormuz at the mouth of the Persian Gulf, though oil shipments through the strait have essentially stopped since the conflict erupted. As Middle Eastern oil producers scramble to find alternative shipping routes or halt further oil production, Brent Crude Oil prices have climbed from $72.50 a barrel to over $90 a barrel, an increase upwards of 25%.

The Friday morning release of the February employment report added to an already busy week for markets. Nonfarm payrolls for the month declined -92k, a much lower result than the increase of +60k Wall Street was expecting. The unemployment rate ticked up this month to 4.4% considering the cooler employment numbers. The subpar report muddies the labor market narrative, as analysts were looking for further labor market stabilization on the heels of a strong January employment report. Instead, the state of the labor market will continue to be closely monitored as market watchers try to anticipate the Federal Reserve’s next policy move.

The fourth-quarter earnings season has nearly reached its end, with 98% of S&P 500 companies having reported. According to FactSet, average earnings growth for the index was 14%, while average revenue growth was 9.5%. Both metrics were well ahead of their consensus estimates of 8.3% and 7.7%, respectively. The fourth quarter of 2025 was the 10^th consecutive quarter of earnings growth, and the 21^st consecutive quarter of revenue growth for the S&P 500.

The upcoming week will be highlighted by economic data releases. February CPI inflation is scheduled for a Wednesday morning release, while January PCE inflation will follow on Friday. The second reading of Q4 GDP as well as the January job openings JOLTS report are also wedged into a busy slate of releases. Alongside economic data, markets will be diligently following the ongoing conflict in Iran and monitoring its impact on oil prices and inflation.

by Gavyn Jensen-Schneider and Jared Plotz

Markets had an up and down week, motivated by swings in investor sentiment concerning how AI disruption may manifest. The S&P 500 finished the week down -0.43%, while the Nasdaq fell -0.92%. The 10-Year Treasury yield, an interest rate indicator, closed at 3.95%, down -14 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, fell 1 bp to 3.62%.

The AI disruption trade continued to ripple through the market after Anthropic unveiled Claude Code Security. This new tool searches within a firm’s codebase to find vulnerabilities, alerting human reviewers of these issues, and suggesting potential patches for implementation. Cybersecurity names such as CrowdStrike, Datadog, and Palo Alto Networks were all affected by Claude Code Security release, with the iShares Cybersecurity and Tech ETF falling by -5% on Monday.

The effects of AI on the labor market came into focus this week after analyst group Citrini Research published a narrative “report” describing a hypothetical future with heavy AI adoption. This piece, which received attention both inside and outside of Wall Street, describes a possible future in which many white-collar jobs are replaced by AI agents, lowering consumer spending and economic growth. While many feel this report is overblown, the widespread attention it has received highlights investors’ apprehension of where AI may take the economy, and whether it may unfold too quickly.

That uncertainty became all the more interesting after software company Block, which owns Cash App and Square payment systems, announced a 40% reduction in its workforce on Thursday. CEO Jack Dorsey said that “[Artificial] Intelligence tools have changed what it means to build and run a company…. A significantly ‌smaller team using the tools can do more and do ‌it better.” Block’s stock shot up +15% after announcing these job cuts, effectively offsetting the stock’s recent decline due to AI disruption fears. Block is one of the first companies to attribute a reduction in force directly to AI, and analysts will be watching to see if other firms follow suit.

Nvidia delivered another exceptional quarter in Q4, reporting on Wednesday that revenue surged >70% year-over-year and remained strong sequentially, fueled by relentless data center demand by hyperscalers, enterprises, and sovereign customers racing to secure AI processing capacity. The company’s Blackwell chips led the way, though management highlighted that the first Vera Rubin samples have begun shipping. Earnings once again topped expectations, reflecting favorable pricing dynamics, disciplined execution through a complex supply expansion, and unprecedented free cash flow generation. Management guided next-quarter revenue ahead of consensus, signaling sustained customer momentum in the near term. While the stock initially popped 4% when results were released, it ultimately pulled back amidst broader market volatility and investor uncertainty around outlooks for 2027.

Earning season enters its final stretch in the upcoming weeks, as well over three fourths of S&P 500 companies have reported for the quarter. Most of the companies that remain are stragglers from a variety of industries, however, companies in the consumer discretionary and retail sector—including Walmart, Target and Costco—are scheduled to report next week. The February employment report, which included the unemployment rate and nonfarm payrolls, headlines the economic data scheduled for next week

by Gavyn Jensen-Schneider, Research Associate

Trade and economic data were in the limelight during the shortened holiday week. The S&P 500 finished the week up +1.07%, while the Nasdaq rose +1.51%. The 10-Year Treasury yield, an interest rate indicator, closed at 4.09%, up +4 basis points (bps) from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, rose +3 bps to 3.63%.

Friday saw the release of Q4 preliminary GDP growth at 1.4% year over year, behind the Wall Street consensus of 2.5%, and a large slowdown from Q3 growth of 4.4%. Blame for this slowdown has been cast primarily upon the 43-day government shutdown, the longest in US history. According to Congressional Budget Office estimates, this shutdown reduced Q4 GDP by 1.5%, implying a growth rate of nearly 3.0% had the shutdown not occurred. The “missing” GDP growth will materialize—at least in part—in next quarter’s GDP reading as Federal employees receive back pay and government services resume.

Additional economic data came in the form of the December Personal Consumption Expenditure (PCE) inflation index, the preferred inflation measure of the Federal Reserve. Core PCE, which excludes volatile food and energy prices, grew 3.0% year over year, a slight uptick from November’s 2.8% reading, but in line with Wall Street analysts’ expectations. Sticky inflation data, along with the publication of meeting notes from the Fed’s January meeting, put inflation back in the spotlight. Most Federal Open Market Committee members noted their concerns about inflation stubbornly remaining above the 2% target, while noting that the labor market risks were diminishing. The “hawkish” read from these notes suggests the Fed will be unlikely to cut interest rates soon, at least until a new Fed Chair is installed.

Joining the busy Friday morning economic data releases was a long-awaited Supreme Court ruling on tariffs. The Court heard oral arguments in Learning Resources Inc. v. Trump, a case which challenges the President’s authority to implement tariffs under the International Emergency Economic Powers Act (IEEPA), back in November. The High Court ruled 6-3 in favor of Learning Resources, upholding a lower court ruling that “IEEPA does not authorize the President to impose tariffs.” The ramifications of this will be closely watched in the months ahead, as upwards of $175 billion dollars collected via IEEPA tariffs could be returned to US importers.

This doesn’t spell the end of tariffs, however, as the Administration has other avenues for their implementation. On the heels of the Supreme Court ruling, the President announced a 10% global tariff using Section 122 of the Trade Act of 1974. Using this act, the President can implement a tariff of 15% or less for 150 days to address a trade deficit, though the extension of Section 122 tariffs would require an act of Congress. Other options include Section 301 of the Trade Act of 1974, which allows for tariffs in response to “unreasonable” trade practices, but requires an investigation; Section 232 of the Trade Expansion Act of 1962, which allows tariffs on imports deemed a threat to national security; and Section 338 of the Tariff Act of 1930 (also known as the Smoot-Hawley tariffs), which targets countries that have discriminated against US business with up to a 50% tariff, no investigation required.

Next week is headlined by Nvidia’s Q4 earnings report, as analysts look to its performance as a benchmark for AI and datacenter demand. Software names will also be in the spotlight, given their struggles in recent weeks. Tax and business software provider Intuit, as well as business and financial technology provider Block, will report on Thursday. Economic data releases will be headlined by Consumer Confidence for February and the Producer Price Index for January.