Weekly Market Update for February 20, 2026

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.