Markets Rally on Tariff Ruling Despite Slower Growth and Sticky Inflation

Week Ending February 20, 2026

Markets finished the week higher after navigating a mix of slower economic data, persistent inflation pressures, geopolitical tensions, and a late week boost from a U.S. Supreme Court decision striking down certain White House tariffs.

While headlines were heavy, the overall tone reflected resilience. Investors absorbed softer growth numbers and policy uncertainty but ultimately focused on easing trade pressures and continued strength in parts of the technology sector.

U.S. markets ended solidly higher, international markets advanced, and Canadian equities participated in the rebound.

Market Overview

Weekly Market Performance (February 16, 2026 to February 20, 2026)

• S&P 500: +1.07%
• Nasdaq Composite: +1.51%
• Dow Jones Industrial Average: +0.25%
• MSCI EAFE International Developed Markets: +0.75%
• S&P TSX Composite Index Canada: +0.80%

U.S. Markets: Tech Leadership and a Friday Surprise

Markets began the shortened trading week quietly as investors continued evaluating artificial intelligence related disruption across parts of the software and financial sectors. Gains were modest early on as sentiment remained cautious.

Midweek, markets gained momentum following the release of Federal Reserve meeting minutes. Investors interpreted the commentary as measured and data dependent, reinforcing expectations that policymakers remain cautious as inflation trends lower but remains above target.

Stocks came under temporary pressure as geopolitical tensions in the Middle East resurfaced and concerns emerged around private credit exposure in the financial system.

By Friday, sentiment shifted decisively. The U.S. Supreme Court struck down certain White House tariffs, a move that had been widely expected but arrived sooner than anticipated. Investors welcomed the potential for improved corporate pricing flexibility, and markets rallied into the close.

Economic data added complexity to the picture. Fourth quarter U.S. GDP rose 1.4 percent, below the 2.5 percent expected and slower than the 4.4 percent pace seen in the third quarter. The moderation reflected weaker federal and consumer spending. Inflation data remained somewhat sticky, reinforcing the likelihood of a gradual approach from the Federal Reserve.

Canada and the TSX

Canadian markets rose approximately 0.80 percent during the week.

The TSX benefited from its diversified structure, with strength in energy and materials helping offset global volatility. Commodity prices remained relatively firm, offering support to resource heavy sectors.

Financials were steady despite broader discussions around artificial intelligence and evolving business models. Investors also continue monitoring domestic economic developments, including moderating growth, inflation trends, and expectations for future Bank of Canada policy decisions.

Canada’s balanced sector mix continues to provide relative stability when technology heavy markets experience sharper swings.

Sector Snapshot

• Financials: Stable but sensitive to economic growth expectations
• Energy: Supported by steady oil prices
• Materials: Benefiting from resilient commodity demand
• Technology: Leading gains as investor confidence improved late week

What Is Driving the Market

Several themes shaped trading this week:

• Slower GDP growth raising questions about economic momentum
• Inflation remaining above central bank targets
• Geopolitical tensions contributing to midweek volatility
• Supreme Court tariff ruling improving corporate outlook
• Continued debate around artificial intelligence disruption

Why This Matters

This week illustrates how quickly sentiment can shift. Markets moved from caution midweek to renewed optimism by Friday as trade uncertainty eased.

Key takeaways

• Economic growth is moderating but remains positive
• Inflation is easing gradually, not rapidly
• Policy and legal developments can move markets quickly
• Diversification continues to matter
• Staying disciplined remains essential during headline driven volatility

Economic Snapshot

Investors remain focused on whether inflation can continue trending lower without triggering a sharper economic slowdown. GDP growth, employment data, and central bank commentary will remain key inputs in assessing the path forward.

This Week: Key Economic Data

Monday, February 23rd

• Factory Orders
• Remarks from Federal Reserve Governor Christopher Waller

Tuesday, February 24th 

• S&P Case Shiller Home Price Index
• Wholesale Inventories
• Consumer Confidence
• Remarks from Federal Reserve officials

Wednesday, February 25th 

• Remarks from Richmond Federal Reserve President Tom Barkin

Thursday, February 26th 

• Weekly Jobless Claims

Friday, February 27th 

• Producer Price Index
• Construction Spending

This Week: Companies Reporting Earnings

Tuesday, February 24th

• Home Depot
• Constellation Energy
• American Tower

Wednesday, February 25th

• NVIDIA
• Salesforce
• TJX Companies
• Lowe’s
• Synopsys

Thursday, February 26th

• Intuit
• Monster Beverage
• Dell Technologies
• Warner Bros Discovery

Friday, February 27th

• Berkshire Hathaway

"I'm not embarrassed anymore about anything that people, that human beings are going through."
– Mary J. Blige

Brothers and sisters, I have none, but this man's father is my father's son. Who am I talking about?

^{Last Week's Riddle: Olivia throws a softball as hard as she can, and even though it doesn’t touch anything and nobody touches it, the softball comes right back to her. How is this possible?
Answer: She throws it straight up in the air.}

Flashback to when Melissa walked past the greatest hockey player in the world and didn't even know it.  (At least I caught it on camera)

Footnotes and Sources

1. WSJ.com, February 20, 2026
2. Investing.com, February 20, 2026
3. CNBC.com, February 17, 2026
4. CNBC.com, February 17, 2026
5. CNBC.com, February 19, 2026
6. WSJ.com, February 20, 2026
7. WSJ.com, February 20, 2026
8. IRS.gov, May 29, 2025
9. Mayo Clinic, August 25, 2025

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