Weekly Market Update – February 27, 2026

Quick Takes

• In the early hours of Saturday, February 28, the U.S. and Israel launched a joint military operation that killed Iranian Supreme Leader Ayatollah Ali Khamenei along with several dozen other top officials. Iran responded by targeting American bases around the Gulf region, and hostilities continued on both sides through Sunday. Oil prices were up about +7% as futures markets opened on Sunday evening; S&P 500 futures were down about -1%.
• U.S. stocks lost ground last week as renewed anxiety over artificial intelligence and private credit concerns pressured major indexes. Yet overseas markets managed to post strong gains, offering diversified investors a dose of optimism amid turbulence for U.S. equities.
• Bond markets benefited from a flight to safety as falling yields pushed prices higher across most fixed-income categories. The Bloomberg U.S. Aggregate Bond Index and the Bloomberg Global Aggregate ex U.S. Index each returned +0.5% for the week.
• On the economic front, the Producer Price Index (PPI) for January came in hotter than expected, stoking new inflation concerns. But most of the rise in prices was from government purchases, while food, energy, and consumer goods saw disinflationary trends.

Source: Bloomberg. Data as of February 27, 2026.
Price Returns for Equity, Total Returns for Bonds.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.

U.S. Stocks Hit by AI Jitters While Global Stocks Shine

U.S. stocks lost ground this past week as renewed anxiety over artificial intelligence (AI) and broader credit concerns pressured major indexes. Yet overseas markets managed to post strong gains, offering diversified investors a dose of optimism amid a turbulent stretch for domestic equities.

U.S. Stocks: AI Angst and Credit Concerns Weigh on Markets

Major U.S. equity indexes slid for the week as worries about the disruptive potential of artificial intelligence (AI) rippled through markets. The declines began on Monday after a widely circulated research report rekindled fears that AI could upend large swaths of the economy. Sentiment briefly improved midweek ahead of NVIDIA’s highly anticipated earnings, but the rebound was short-lived. Despite beating consensus expectations, the chip giant had a two-day drop of nearly -10% on Thursday and Friday as investors took notice of its massive $95 billion in purchase commitments. NVIDIA’s struggles were part of a broader risk-off tone for the week.

The damage showed across the major U.S. equity benchmarks last week: 

• The S&P 500 dipped -0.4%.
• The tech-heavy Nasdaq Composite fell -1.0%.
• The small-cap Russell 2000 dropped -1.2% for the week. 

Software as a Service (SaaS) stocks—once investor favorites for their steady recurring revenue—continued to drag on performance as questions mount over whether AI will erode their business models. Even the celebrated “Magnificent 7,” which soared in 2023–2025, felt the pressure: the Bloomberg Magnificent 7 Index slipped -1.8% last week and is now down -6.8% year-to-date in 2026.

By Friday, selling pressure spread beyond technology. Banks were hit particularly hard after renewed concerns about private credit and rising loan delinquencies resurfaced. The KBW Nasdaq Bank Index sank -4.9% following a note from Wells Fargo analyst Mike Mayo, who warned of potential contagion, reviving the “cockroaches” metaphor JPMorgan CEO Jamie Dimon used last fall.

International Stocks: Global Markets Outperform U.S. Equities

While U.S. markets faltered, international equities delivered a standout week. A modest -0.2% pullback in the U.S. dollar provided a small boost to global returns as developed and emerging markets alike continued their upward momentum.

Developed markets, as tracked by the MSCI EAFE Index, gained +1.2%, notching a 14th consecutive weekly advance. Japan led the charge: the MSCI Japan Index jumped +2.7%, fully erasing its -2.1% decline the week prior. The MSCI United Kingdom Index rose +2.0%, adding to its own 14-week winning streak.

Emerging markets outpaced their developed peers. The MSCI Emerging Markets Index climbed +2.8% following last week’s +0.8% increase. South Korea and Taiwan each surged more than +7% for the week, while Thailand and Vietnam logged gains of more than +3% apiece. Not all regions participated, however: China continued to struggle as the MSCI China Index fell -0.8%, marking its fourth straight weekly decline amid the Lunar New Year–shortened trading schedule. Latin America also stumbled, with the MSCI Latin America Index slipping -0.8%, snapping nine consecutive weeks of gains.

Bonds: Treasurys Rally as Investors Seek Safety

Fixed-income markets benefited from the week’s risk-off sentiment. Treasury yields dropped sharply across the curve, pushing bond prices higher. The 2-year Treasury yield fell -10 basis points to 3.37%, while the 10-year yield slid -15 basis points to 3.94%, its lowest level since October 2024.

The Bloomberg U.S. Aggregate Bond Index returned +0.5%, rebounding from last week’s slight decline and marking gains in five of the past six weeks. Investment-grade corporate bonds also rose but lagged Treasuries. Riskier corners of the bond market showed strain: high-yield bonds slipped -0.2%, and leveraged loans dropped -1.3%, reflecting growing concerns about private credit defaults. Global bonds outside the U.S. matched U.S. core bonds, with the Bloomberg Global Aggregate ex-U.S. Index returning +0.5% for the week.

Economics: Inflation Heats Up, but Consumer Confidence Improves

Economic data offered a mixed picture. The Producer Price Index (PPI) for January came in hotter than expected, stoking new inflation concerns just as markets were recoiling from AI-driven volatility. Still, consumers showed signs of optimism. The Conference Board’s Consumer Confidence Index edged higher in February, buoyed by more upbeat expectations for future business conditions.

The Bottom Line

Last week’s market action underscored how sensitive U.S. stocks remain to ongoing uncertainty around artificial intelligence and the stability of private credit. While domestic equities struggled, international markets continued to shine, highlighting the value of global diversification. Bond markets benefited from a flight to safety as falling yields pushed prices higher across most fixed-income categories. Looking ahead, investors will be watching whether inflation pressures ease and whether AI-related volatility continues to ripple through markets.   

Chart of the Week

January wholesale inflation increased with the headline Producer Price Index (PPI) rising +0.5% for the month, above expectations for +0.3% and the downwardly revised +0.4% level the prior month (originally +0.5%). Year-over-year (YoY) PPI increased at a +2.9% rate, above expectations for +2.6%, but down from +3.0% the prior month (unrevised).  Core PPI, which strips out volatile food and energy costs, was up +0.8% for the month, compared to expectations for a +0.3% rise, and up from a +0.6% reading the prior month (revised lower from +0.7%). YoY Core PPI was up +3.6%, above expectations for +3.0% and up from the prior month’s +3.3% annual rate (unrevised). The index for final demand goods decreased -0.3% after a -0.1% dip the prior month, whereas the index for final demand services jumped +0.8%, mostly due to a +3.0% increase in Government Purchased Goods, which drove the Final Demand Trade Services index up +2.5%. The bottom line is that the headline and core PPI readings sparked concerns about wholesale inflation passing through to consumer inflation, but the underlying details actually showed disinflationary trends for goods, foods, and energy after government purchases and trade services are excluded.

Wholesale Prices Rose Much More than Expected 0.8% in January

U.S. Producer Price Index (PPI), Final Demand Year-over-Year (%)

Source: Bureau of Labor Statistics (BLS), Briefing.com.

The Week Ahead

Wall Street will be focused on geopolitics this week in light of the U.S. and Israel strikes on Iran this weekend that killed Supreme Leader Khamenei and other senior leaders. The oil market and U.S. dollar will likely see significant impacts, but investors should brace for increased volatility across capital markets.

On the economic front, the week’s calendar is on the light side with the highlight coming Friday when the Bureau of Labor Statistics releases the Employment Situation Report for February. This is the first normally scheduled release since early September, after months of delays from the partial government shutdowns. Investors will be looking to see whether January’s surprisingly strong non-farm payrolls growth was a one-off. The January advance read on Retail Sales is also due on Friday, along with January Consumer Credit.

Ahead of Friday’s data, the latest U.S. Purchasing Manager Indexes (PMIs) for February will be released by competitors Institute for Supply Management (ISM) and S&P Global on Monday (manufacturing) and Wednesday (services). These will be keenly watched for indications of the overall U.S. economic activity.

Overseas, attention will center on eurozone inflation data and the spring statement by the U.K.’s treasury chief. In Asia, the Bank of Japan’s policy outlook, Australia’s growth figures, and China’s annual parliamentary sessions will be watched.

Fourth-quarter earnings season is almost complete, with only about 30 S&P 500 companies left to report. Still, that includes results from some well-known companies, including Norwegian Cruise Line Holdings on Monday; Autozone, Best Buy, CrowdStrike Holdings, Target, and Ross Stores on Tuesday; Broadcom on Wednesday; and Costco Wholesale on Thursday.

Did You Know?

FOOD (DIS)INFLATION – The January PPI showed the Final Demand Foods index was down -1.5% for the month and -1.2% for the year. Anecdotally that is being seen as some food companies are announcing price cuts. General Mills (Cheerios, Betty Crocker, Pillsbury, etc.) cut the prices of two-thirds of its North American lineup. Meanwhile, PepsiCo said it is cutting the price of Lay’s, Doritos, Cheetos, and others by 15%. Kraft Heinz intends to cut prices on 40% of its products. (BLS, WisdomTree)

USA VS ROW – U.S. stocks trounced non-U.S. stocks over the last decade, but 2026 is on pace for near-historic underperformance relative to the Rest of the World (ROW). Obviously, it’s very early with just two months of the year on the board. However, the S&P 500 is basically unchanged YTD through February (up +0.7%), whereas the rest of the world—the MSCI All Country World ex US Index (ACWI) is sitting on a double-digit gain of +11.1%. On a total return basis the S&P trailed the ACWI ex US by -14.5% in all of 2025, the first double-digit annual deficit since 2009. (Source: Bespoke, Bloomberg)

CHINA VS ROW – It’s not just U.S. stocks lagging non-U.S. stocks in 2026, the MSCI China Index, in U.S. dollars, is down -1.4% in the first two months of the year versus the +11.1% gain for the MSCI All Country World ex US Index (ACWI). China is also badly trailing its emerging market peers, with the MSCI Emerging Markets Index up +14.7% year-to-date. (Source: Bloomberg)

This Week in History

PRINTING MONEY – On February 25, 1862, President Abraham Lincoln signed the Legal Tender Act, putting the U.S. government in the business of printing paper money. The Act also authorized the Treasury to sell 6% bonds callable in five years, maturing in 20, which are nicknamed “5-20s.” Philadelphia broker Jay Cooke then pursued what he called the “democratic distribution” of investments, slicing the 5-20s into denominations as small as $50, advertising them in newspapers, and hiring an army of “traveling agents” to sell them. He raised $361 million, introducing thousands of Americans to investing for the first time. (Source: The Wall Street Journal)

Economic Review

• The Conference Board Consumer Confidence Index increased to 91.2 in February from a sharp upwardly revised +89.0 in January (originally 84.5). That was far better than Wall Street expectations to come in at 87.1. In the same period a year ago, the index stood at 100.1. The Present Situation gauge fell to 120.0 from the prior month’s sharply upwardly revised 121.8 (originally 113.7). The Expectations gauge — which reflects consumers’ six-month outlook — rose to 72.0 from an upwardly revised 67.2 (originally 65.1). Sustained levels below 80 on the expectations index can signal a recession within the next year, while in good times the index can top 120 or more.  Importantly, the February improvement was driven by increased expectations, with all three components of the index—income, business, and labor market conditions—advancing from January.
• The Federal Reserve Bank of Chicago reported that US economic activity rose in January, with its Chicago Fed National Activity Index (CFNAI) rising to +0.18 from -0.21 in December (unrevised). That was far better than Wall Street expectations for a reading of +0.01 (readings below zero indicate below-trend-growth in the national economic activity). Only one of the four broad categories of indicators used to construct the index made a negative contribution, while all four increased from the prior month. The Production and Income category jumped to +0.19, up from -0.03 the prior month. The Employment, Unemployment, and Hours category contributed +0.01, an improvement from -0.11 the prior month. The Personal Consumption and Housing category was flat (0.00), up from -0.04. The Sales, Orders, and Inventories category contribution was -0.02, up from -0.04 the prior month. Overall breadth of the index improved with 47 of the 85 individual indicators making positive contributions, versus 40 the prior month, while 38 made negative contributions. Improvements in the individual indicators were good as well, with 57 indicators improving, while 28 indicators made negative contributions. The CFNAI three-month moving average improved to -0.06 from -0.29 the prior month. During the last 20 years, there has been a 91% correlation between the three-month index level and the quarterly change in real GDP. 
• The Commerce Department reported that Factory Orders slipped -0.7% in December, matching expectations and down sharply from the +2.7% rise the prior month (unrevised). In contrast, Factory Orders Excluding Transportation were up +0.4%, up from +0.1% the prior month after being revised lower from +0.2%. The final read for December Durable Goods Orders for long-lasting items such as televisions, appliances, and transportation equipment was -1.4%, in line with expectations from where they were in the advance report. That followed an upwardly revised +5.4% rise (from +5.3%) the prior month. Durable Goods Orders Excluding Transportation were up +1.0%, a tick above the +0.9% advance reading and above the prior month’s unrevised +0.4% rise. The important Core Capital Goods Orders (capital goods excluding volatile sectors like transportation and defense), a proxy for business spending, was up +0.8%, up from the expected +0.6% advance reading and matching the sharply upward revised +0.8% increase the prior month (originally +0.4%).  Core Capital Goods Shipments, which are factored into GDP, rose +1.0%, above expectations of the +0.9% advance reading and the unrevised +0.2% reading the month before. The inventory-to-shipments ratio was 1.56 compared to 1.57 the month before.
• The Census Bureau reported Wholesale Inventories rose +0.2% to $918.0 billion in December, matching expectations and the prior month (unrevised). Year-over-Year (YoY) inventories were up +2.9%, up from the +1.8% annual rate the prior month. That is still well below the typical +4% to +6% annual increase in strong economies. Inventories are goods produced for sale that have not been sold yet. Wholesale Trade Sales rose +1.0% to $722.1 billion, after rising +1.4% the prior month (revised up from +1.3%), and easily beat expectations for a +0.2% increase. YoY sales were up +5.2%. Wholesale inventories data isn’t adjusted for inflation. The Inventory-to-Sales Ratio ticked down to 1.27 months from 1.28 months. The ratio reflects how long it would take a company to sell all the goods sitting on warehouse shelves.
• The Chicago Purchasing Managers Index (PMI), a barometer for the region’s business and manufacturing conditions (also known as the Chicago Business Barometer), rose to 57.7 in February from 54.0 the prior month (unrevised). That easily beat Wall Street expectations for a 52.1 reading. Readings below the 50 level indicate contraction. The January and February expansionary readings follow 25 consecutive months of contraction and mark the highest level since May 2022. Five components rose, unchanged from the prior month. The improvement was driven by increases in Production, Employment, New Orders, and Supplier Deliveries. A decline in Order Backlogs provided a marginal offset. Production rose by +9.0 points to its highest level since November 2023. Employment rose by +7.7 points to its highest level since October 2021, and its first expansionary reading since November 2023. New Orders improved by +2.0 points to their highest level since January 2022. Employment popped +17.5 points to the highest level since December 2024. Order Backlogs rose +11.5 points to exceed 50 for the first time since December 2022. Prices Paid fell -9.0 points, the lowest level since January 2025.
• The Texas Manufacturing Outlook Survey rebounded sharply in January, with the General Business Activity up +10.1 points to -1.2, much better than expectations for -8.5 and up from -11.3 the prior month (revised down from -10.9). The Production index, a key measure of state manufacturing conditions, jumped to +11.2 from -3.0 the prior month. New Orders increased +18 points to +11.8, Capacity Utilization rose +12 points to +7.1, and the Shipments index jumped to +12.0 from -10.5. The Company Outlook rebounded into positive territory, at +2.9 from -12.3, while the Outlook Uncertainty index increased to +4.8. The Employment index rose +10.0 points to +8.2, while the Hours Worked improved to +0.7 from -7.8. Prices Paid was +37.1 while Prices Received rose +10.0 points to +18.5. The Texas Service Sector General Business Activity weakened for the month, falling to -3.2 from +2.7 the prior month (unrevised). 
• The Kansas City Fed Manufacturing Survey improved in February to +5 from an unrevised flat reading the prior month. The composite index is an average of the Production, New Orders, Employment, Supplier Delivery Time, and Raw Materials Inventory indexes. The month-over-month indexes all improved and were all positive except for the Employment index, which rose +2 points to -2. Production and New Orders jumped +15 points and +12 points to +9 and +16, respectively. Inventories for Raw Materials increased +10 points to +5. The Prices Paid index rose to +44 from +41, while the Prices Received index fell to +19 from +24. The Kansas City Fed Service Sector Outlook Survey improved to +6 from +2 and is now up for three straight weeks to its highest level since last May.
• The Richmond Fed Manufacturing Survey fell to -10 in February from an unrevised -6 the prior month and was worse than expectations to come in at -5.  All three subcomponent indexes declined, and all remain in contraction (negative) territory. The New Orders components fell -3 points to -9 and the Shipments component fell -8 points to -13. The Employment index fell -1 point to -7. The average growth rates of Prices Paid and Prices Received decreased. The Richmond Fed Service Sector Survey also dipped, falling to -10 from an unrevised -6 the prior month, which is where it was expected to remain.
• The Commerce Department reported Construction Spending for November and December as it continues to play catch-up from the government shutdown. In November Construction Spending declined -0.2%, down from -0.1% in October after it was revised sharply lower from the original delayed report of +0.5%. For December, Construction Spending jumped +0.3%, better than expectations for +0.2%. On a year-over-year basis, Construction Spending was down -1.4% and -0.4% for November and December respectively. Total Private Construction was up +0.5% in December following a -0.2% decline in November. Total Public Construction was -0.5% and -0.2% in November and December. Private Residential Spending improved +1.5% in December and was flat in November, while Private Nonresidential Spending was down -0.7%, after falling -0.5% the prior month. The report showed that Single-Family Construction was up +1.6% in December following +0.6% the month before. The key takeaway is that residential construction spending accounted for the entirety of the monthly increase in total construction spending.
• According to the S&P Cotality Case-Shiller 20-City Home Price Index, US housing prices increased by +0.47% in December, down from a positively revised +0.53% the prior month (originally +0.47%). That was above expectations for a +0.30% gain. This was the fifth month of price gains following five months of declines. Of the 20 cities tracked by the index, only Denver fell month-over-month (-0.19%) while San Diego rose the most (+0.86%), followed by Chicago (+0.72%). On a year-over-year (YoY) basis, the 20-city index was up +1.38%, above expectations for a +1.30% rise and up from a +1.42% annual increase the month before (revised higher from +1.39%). Chicago reported the highest annual gain (+5.34%), followed by New York (+5.08%), while Tampa again posted the lowest annual return (-2.85%), with Denver the next worst (-2.06%).
• The competing Federal Housing Finance Agency (FHFA) House Price Index (HPI) showed US home prices were up +0.1% in December after a +0.7% increase the prior month (revised higher from +0.6%). The results were below Wall Street expectations for a +0.3% rise. The government data showed home prices up +1.8% year-over-year, down from the prior month’s +2.1% annual rate. House prices were up in 6 of the 9 regions on a monthly basis, and 7 of 9 were up on an annual basis. The monthly changes ranged from -1.0% in the South West Central division to +1.1% in the Mid Atlantic division. The 12-month changes ranged from -0.6% in the Mountain division to +5.2% in the East North Central division.
• Weekly MBA Mortgage Applications inched up +0.4% for the week ending February 13, after slipping -0.3% the prior week. The Purchase Index fell -4.7% after falling -2.7% the prior week. The Refinance Index rose +4.1% after rising +7.1% the prior week. The average 30-Year Mortgage Rate fell to 6.09% from 6.17% the prior week, the lowest point in this dataset since September 9, 2022.
• Weekly Initial Jobless Claims rose +4,000 to 212,000 for the week ending February 20, which was better than expectations for 216,0000. The prior week was revised higher by +2,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) fell -31,000 to 1,833,000 for the week ending February 20, which was better than expectations for 1,858,000. The prior week’s reading was revised lower to 1,864,000 from 1,869,000.

Asset Class Performance

Source: Bloomberg.
Asset‐class performance is presented by using market returns from an exchange‐traded fund (ETF) proxy that best represents its respective broad asset class. Returns shown are net of fund fees for and do not necessarily represent performance of specific mutual funds and/or exchange-traded funds recommended by The Retirement Planning Group. The performance of those funds may be substantially different from the performance of the broad asset classes and to proxy ETFs represented here. US Bonds (iShares Core US Aggregate Bond ETF); High‐Yield Bond (iShares iBoxx $ High Yield Corporate Bond ETF); Intl Bonds (Vanguard Total International Bond ETF); Large Growth (iShares Russell 1000 Growth ETF); Large Value (iShares Russell 1000 Value ETF); Mid Growth (iShares Russell Mid-Cap Growth ETF); Mid Value (iShares Russell Mid-Cap Value ETF); Small Growth (iShares Russell 2000 Growth ETF); Small Value (iShares Russell 2000 Value ETF); Intl Equity (iShares MSCI EAFE ETF); Emg Markets (iShares MSCI Emerging Markets ETF); and Real Estate (iShares US Real Estate ETF). The return displayed as “Allocation” is a weighted average of the ETF proxies shown as represented by 24% US Bonds, 10% International Bonds, 6% High Yield Bonds, 13.8% Large Growth, 13.8% Large Value, 3.6% Mid Growth, 3.6% Mid Value, 1.2% Small Growth, 1.2% Small Value, 16.8% International Stock, 4.2% Emerging Markets, 1.8% Real Estate.
* The term basis points (bps) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 0.01%. Bond prices and bond yields are inversely related. As the price of a bond goes up, the yield decreases.