Daily market snapshot

• Markets edge lower as investors weigh Walmart's outlook – Equity markets pulled back on Thursday after Walmart reported fourth-quarter 2025 results before the open, offering a read on consumer health. Earnings and revenue narrowly exceeded forecasts, though guidance for 2026 came in below expectations*. Bond yields declined, with the 10-year Treasury yield at 4.07%*. In international markets, Asia finished mostly higher overnight, as several markets reopened after the Lunar New Year holiday, while China's markets remain closed*. The U.S. dollar advanced versus major currencies*. In commodities, WTI oil traded higher amid supply concerns as U.S.-Iran tensions rise and talks stall*.
   
• Walmart results beat; outlook misses – Retail giant Walmart reported results that narrowly topped analyst estimates on both earnings and revenue this morning*. In our view, Walmart's revenue exceeding forecasts provides another data point that consumers remain resilient, despite weak sentiment*. More broadly, earnings have exceeded expectations as well: with more than 80% of S&P companies reporting, 75% have beaten estimates, with an average upside surprise of 7.2%*. Consequently, earnings growth estimates have been revised up to 12.4%, from 7.2% at quarter-end*. Earnings growth is expected to be broad-based as well, with 10 of the 11 sectors forecast to post higher earnings, led by technology and industrial companies*. We expect robust, expansive earnings growth to support a broadening of market leadership. Profit growth is expected to accelerate through 2026, with estimates calling for a roughly 14% rise in earnings*. With valuations elevated relative to history*, we believe continued earnings growth will be a key element for further stock‑market upside. We maintain a favorable view on equities and recommend overweighting stocks relative to bonds within a globally diversified allocation. We see opportunities in U.S. large- and mid-cap stocks, developed international small- and mid-cap stocks, and emerging-market equities.
   
• Jobless claims lower than expected – Initial jobless claims declined to 206,000 this past week, below the 225,000 consensus estimate*. On a trend basis, weekly jobless claims are averaging about 213,000 year-to-date, below last year's average of 226,000*. Continuing claims — reflecting the total number of people receiving benefits — edged up to 1.87 million, roughly in line with forecasts*. Job openings contracted to 6.5 million in December, compared with unemployment of 7.4 million*. With the unemployment rate still low at 4.3%, we view these data as consistent with recent trends reflecting a stabilizing labor market characterized by slower hiring and layoffs. We expect these labor-market conditions to persist in the near term, helping support gradual inflation moderation.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet}

• Stocks close higher following solid manufacturing and housing-market data – U.S. equity markets traded higher on Wednesday amid a busy economic calendar. Durable goods orders and industrial production were both better than expected, pointing to momentum in U.S. manufacturing.* Additionally, housing starts for the final two months of 2025 were higher than expected, with single‑family starts rising to a 10‑month high.* From a leadership perspective, consumer discretionary and energy were among the top performers— with the latter supported by a spike in oil prices—while interest‑rate‑sensitive sectors such as utilities and real estate lagged.* Bond yields closed higher following the strong economic data, with the 10‑year U.S. Treasury yield at 4.09% and the 2‑year yield at 3.46%.* In commodity markets, oil prices were up roughly 5% as investors react to reports that U.S.–Iran talks have stalled.*
   
• Market implications of a falling U.S. dollar – Despite stabilizing more recently, the U.S. dollar faced renewed pressure in 2026, extending the weakness that defined most of 2025.* In our view, fears about the dollar’s demise are overstated, as the currency has largely returned to the pre‑pandemic range in which it traded for most of 2015–2019, and we expect it to retain its role as the global reserve currency.* Nonetheless, the multiyear uptrend has been broken and currency volatility has risen. Historically, a weaker U.S. dollar has coincided with strong equity returns in both U.S. and international markets. The MSCI Emerging Markets Index has posted a median quarterly gain of 7.1% in quarters when the dollar has fallen versus a median quarterly gain of 0.7% when the dollar rises.** The MSCI EAFE Index has posted a median quarterly gain of 5.6% during periods of dollar weakness versus a 0.1% decline when the dollar rises.** Additionally, U.S. large‑ and mid‑cap stocks have posted median quarterly gains of over 5% during periods of dollar weakness versus gains of less than 3% in quarters of dollar strength.** For investors, we think maintaining a globally diversified portfolio remains prudent, as a weaker dollar environment could support ongoing strength in international stocks. As part of our opportunistic asset allocation, we recommend overweighting U.S. large‑ and mid‑cap stocks, international developed small‑ and mid‑cap stocks, and emerging‑market stocks. To read more about our views on the dollar, check out our new report: Unpacking the dollar's swings.
   
• Durable goods orders point to underlying improvement in manufacturing activity – Headline durable goods orders fell 1.4% in December, slightly better than consensus expectations for a 1.5% drop.* The decline in the headline index was driven by a 25% drop in the volatile commercial aircraft category.* Core durable goods orders (excluding transportation) rose 0.9% in December, above expectations for a 0.3% gain.* New orders for computers and related products increased 3% in December and are up nearly 14% year over year, suggesting AI‑related spending remains strong.* Additionally, this morning’s January industrial production reading showed a 0.7% monthly increase, above expectations for a 0.4% gain.* In our view, taken together with the recent improvement in the ISM Manufacturing PMI, these data point to stabilization in the U.S. manufacturing sector after a multiyear period of weakness.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet **FactSet, total return in USD. Quarterly returns 1991 – 2025. Dollar measured by ICE U.S. Dollar Index.} 

• Stocks close slightly higher – U.S. equity markets edged out a modest gain on Tuesday, with all three major averages finishing higher, reversing losses at the open.* Leadership was narrowly led with financials and real estate the top performers, each gaining roughly 1%.* The technology and industrials sectors also posted modest gains, while all other sectors of the S&P 500 closed lower.* Bond yields were little changed Tuesday, with the 10-year U.S. Treasury yield closing at 4.06%, while the 2-year yield rose slightly to 3.44%.* After a move lower to begin the year, the U.S. dollar stabilized on Tuesday, rising by 0.2% versus a basket of developed-market currencies.* In commodity markets, oil prices closed down nearly 1%, while precious metals prices were lower as well, with gold off by nearly 3%.*
   
• International equity momentum continues in 2026 – International equities have sustained their strong momentum from 2025, delivering additional gains so far in 2026. The MSCI EAFE Index, which measures the performance of developed international markets, has risen nearly 8% year‑to‑date, supported in large part by strength in Japan, where stocks are higher by more than 13% in U.S. dollar terms.* Emerging‑market equities have also produced solid results in 2026. While U.S. technology stocks have paused after strong prior performance, the same cannot be said for emerging‑market technology. The MSCI Emerging Markets Index has gained 11% year‑to‑date, driven by technology‑heavy regions such as Korea, where stocks are up nearly 34% this year.* A modestly weaker U.S. dollar has provided an additional tailwind to international returns, particularly within developed markets.* In our view, global diversification will remain a key investment theme throughout 2026. Combined with our expectation for a healthy global economic backdrop, we recommend that investors take a diversified approach to overweighting equities relative to bonds. Specifically, we see attractive opportunities in U.S. large‑ and mid‑cap stocks, international developed small‑ and mid‑cap stocks, and emerging‑market equities.
   
• Strong earnings season winds down – Fourth‑quarter earnings season is drawing to a close, with more than 75% of S&P 500 companies having reported so far.* This week, investor attention will likely turn to consumer‑spending trends, with retail giant Walmart scheduled to report on Thursday.* At an index level, results have been solid, with fourth‑quarter S&P 500 earnings on pace to grow 12% year‑over‑year—well above expectations for roughly 7% growth coming into the quarter.* Earnings growth has also been broad‑based: nine of 11 sectors of the S&P 500 are on track to post positive year‑over‑year results, led by the technology, industrials, and communication services sectors.* Despite delivering robust earnings growth, technology and communication services sectors have lagged in 2026, each down more than 3%.* In our view, this reflects the high bar of expectations these companies face along with recent concerns that AI advances could erode market share of existing businesses, particularly in the software space. Conversely, value‑oriented sectors—consumer staples, materials, energy, and industrials—have outperformed this year, with all four sectors up more than 10%.* As part of our opportunistic equity sector guidance, we continue to recommend diversifying across both value‑ and growth‑oriented areas. We remain overweight health care, industrials, and consumer discretionary, offset by underweights to utilities and consumer staples.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}

There will be no Daily Snapshot on Monday, February 16, 2026, in observance of the Presidents Day holiday.

• Stocks little changed to end the week – U.S. equity markets closed near the flatline on Friday following a mostly in-line consumer price index (CPI) report for January, which showed headline CPI rising 2.4% year-over-year while core CPI posted a 2.5% annual gain, the lowest core reading since 2021.* Leadership tilted toward value- and interest-rate sensitive sectors, with utilities and real estate among the top performers, while growth sectors such as technology and communication services lagged.* The Russell 2000 small-cap index also outperformed, gaining roughly 1%.* Bond yields closed lower in response to signs of ongoing disinflation, with the 10-year U.S. Treasury yield declining to 4.05%, its lowest level since last fall.* Overseas, Asian markets closed lower overnight, while European markets traded modestly lower as well.*
   
• Disinflationary trend remains intact – Consumer price index (CPI) inflation for January showed continued easing in price pressures, with headline CPI rising 0.2% for the month and 2.4% year-over-year, while core CPI increased 0.3% in January and 2.5% on an annual basis.* The 2.5% annual gain in core CPI marks the lowest reading since 2021.* Core goods prices were flat for the month, driven by a 1.8% decline in used vehicle prices, while goods prices outside the transportation category saw firmer pressures, with core goods excluding used vehicles rising 0.4%, potentially reflecting pass-through effects from tariff-related costs.* On the services side, shelter prices rose a modest 0.2% for the month, while upward pressure in categories such as transportation services contributed to a 0.4% monthly increase in overall services prices.* With inflation still running above the Fed’s 2% target and this week’s jobs report indicating signs of stabilization, we believe the Fed will remain on hold in the near term. However, if inflation continues to moderate over the back half of the year, we see scope for the Fed to deliver another one to two interest-rate cuts in the second half of 2026.
   
• Leadership rotation underway to start 2026 – After leading U.S. markets higher for most of the past three years, growth sectors such as technology are among the laggards year-to-date.* Within technology, the software industry has been hit particularly hard, with the S&P 500 software and services industry group down roughly 20% in 2026 amid rising concerns that advances in AI could erode market share for established software companies.* While technology has lagged, “old economy” sectors such as materials, industrials, energy, and consumer staples have rallied, each gaining more than 12% year-to-date.* Additionally, while the S&P 500 is roughly flat this year, the Russell Mid-cap Index and Russell 2000 (U.S. small-cap) Index are each up over 5%.* International markets have also shown continued strength, with the MSCI EAFE Index (international developed) up more than 8% and the MSCI Emerging Markets Index up over 11%.* In our view, the long-term growth story behind AI remains intact, and we maintain a favorable outlook for U.S. large-cap stocks. However, we think the recent rotation into international equities and value-oriented sectors underscores the importance of diversification. In addition to U.S. large-caps, we see attractive opportunities in U.S. mid-cap stocks, international small- and mid-cap equities, and emerging-market stocks.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}