Weekly Market Update – February 13, 2026

Quick Takes

• It was a tale of two markets last week: U.S. stocks broadly retreated, while international markets continued a strong run. Meanwhile, a cooling inflation report boosted bonds and revived hopes for more Federal Reserve rate cuts later this year.
• For the week, the S&P lost -1.4% while the tech-heavy Nasdaq Composite dipped -2.1%, the worst weekly declines for both since November. Small- and mid-cap stocks outperformed again but still declined (-0.7% for the Russell 2000 and -0.7% for the S&P MidCap 400).
• Bonds had their strongest week in months as yields fell sharply following a cooler than expected January inflation reading. The 10-, 20-, and 30-year Treasury yields all fell about -16 basis points, marking their biggest weekly declines since early September.

Source: Bloomberg. Data as of February 13, 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.

Stocks Slide in the U.S. but Rise Overseas; Global Bonds Rally

It was a tale of two markets last week: U.S. stocks broadly retreated, while international markets continued a strong run. Meanwhile, a cooling inflation report boosted bonds and revived hopes for more Federal Reserve rate cuts later this year. Here’s how the week shook out across major corners of the global financial landscape.

U.S. Stocks: Broad Declines as AI Jitters Hit the Market

Major U.S. indexes fell for the week, weighed down by mounting concerns over the disruptive potential of artificial intelligence across multiple industries. Investors also had plenty to digest—from a heavy slate of corporate earnings to a full lineup of economic data, including January’s jobs and inflation reports.

• S&P 500: −1.4% (worst week since November)
• Nasdaq Composite: −2.1% (also its worst week since November)
• Russell 2000 (small caps): −0.9%
• S&P MidCap 400: −0.7% (held up best for the second straight week)

While small- and mid-cap stocks once again outperformed larger indexes, all major U.S. equity benchmarks ended in the red.

Earnings season continued to be a bright spot: with about 75% of S&P 500 companies reporting, blended fourth-quarter earnings per share climbed +13.2% from a year earlier, according to FactSet.

International Stocks: Breakout Gains Across Europe and Asia

Overseas markets painted a very different picture. Most international indexes surged, extending multi-week winning streaks and outperforming U.S. stocks by a wide margin.
Developed Markets

• MSCI EAFE Index: +1.9% (positive 12 weeks in a row)
• MSCI Japan Index: +6.2%, the strongest among developed markets

Japan’s gains were fueled by political clarity after the Feb. 8 lower house election, where Prime Minister Sanae Takaichi’s ruling LDP won a supermajority.
The MSCI UK Index rose +1.0%, building on the prior week’s gains as U.K. retail sales accelerated to 2.3% year-over-year—the fastest pace since last August—helping offset softer GDP growth estimates.

Emerging Markets

Emerging markets fared even better:

• MSCI Emerging Markets Index: +3.2% (best week since early October)
• MSCI Asia ex-Japan: +3.6%
• MSCI China Index: −0.3% (a rare laggard)

A weaker U.S. dollar, down -0.7% for the week, provided an additional lift to non-U.S. markets.

Bonds: Yields Fall and Treasuries Rally on Softer Inflation

Bonds had their strongest week in months as yields fell sharply following a cooler-than-expected January inflation reading.

• Treasury yields slid across the curve, with the 10-year, 20-year, and 30-year all dropping about -16 basis points, marking their biggest weekly declines since early September.
• The 2-year Treasury touched its lowest level since 2022, falling about -10 basis points in the week’s final two days.

With yields down, prices rose:

• Bloomberg U.S. Aggregate Bond Index: +0.9% (best week since early September; now positive 7 of the last 9 weeks)
• Bloomberg Global Aggregate ex-U.S. Bond Index: +1.1%, rebounding from the prior week’s loss

Investors began pricing in the possibility of a third Fed rate cut in the second half of 2026 as inflation continues to cool and core goods prices remain flat.

Economics: Hot Jobs, Cool Inflation, and a Mixed Bag for Consumers

The U.S. economic data released during the week was packed—and often contradictory.

Job Market Strength

January hiring beat expectations by a wide margin:

• 130,000 jobs added, roughly double consensus estimates
• But the prior month revised down to 48,000
• Unemployment rate: 4.3%, slightly lower than December’s 4.4%

While the strong headline number suggests momentum, full-year payrolls for 2024–2025 were revised down by nearly a million jobs, tempering enthusiasm.

Inflation Cools

January’s Consumer Price Index (CPI) came in softer than forecast:

• Headline CPI: +0.2% month-over-month, +2.4% year-over-year
• Core CPI: +2.5% year-over-year, the lowest since March 2021

Key everyday categories—including food, gasoline, and housing—showed slower price growth, giving consumers some relief.

Consumers Pull Back at Year-End

• December retail sales: flat vs. expectations for +0.4%
• Existing home sales: −8.4% in January amid severe winter weather
• Median home price: +0.9% to $396,800

The Bottom Line

The mixed economic data left investors with a nuanced picture: inflation cooling faster than expected, but consumer activity weakening at the start of the year. Still, earnings are holding up very well, the labor market appears to be stabilizing, and inflation continues to head lower towards the Fed’s 2.0% target. For U.S. stock investors, the rotation toward value and smaller stocks provides broader participation and offers more opportunities outside the giant-cap tech companies. Meanwhile, solid gains in non-U.S. stocks and bonds means continued rewards for diversified investors.

Chart of the Week

In a report delayed nearly a week by the partial government shutdown that ended February 3, January Nonfarm Payrolls increased by +130,000 for the month, double the +65,000 new payrolls Wall Street expected. However, the January beat was somewhat subdued by downward revisions for December nonfarm payrolls to 48,000 from 50,000 and November nonfarm payrolls to 41,000 from 56,000. Additionally, the Bureau of Labor Statistics (BLS) released final benchmark revisions for the period of April 2024 to March 2025. Those numbers saw the initial counts revised lower by a total of -898,000 (seasonally adjusted). That was a bit less than the -911,000 figure for the initial estimate last September but about what Wall Street expected. Still, January was the best month for payroll growth since December 2024, following a year in which job creation averaged just 15,000 a month. Healthcare was again the job leader, adding +82,000 payrolls, and social assistance increased by +42,000. Construction also saw a gain of +33,000 jobs following a year in which the sector saw little increase. Federal Government jobs led losses with a -34,000 decline, and Financial Services saw a decline of -22,000 payrolls. The Unemployment Rate slipped to +4.3% from +4.4% in December (unrevised). The Employment-Population Ratio increased to 59.8% from 59.7% in December. Average Hourly Earnings (AHE) increased +0.4% for the month, a tick above expectations for +0.3%, and up from +0.1% the prior month (revised lower from +0.3%). On an annual basis, AHE were up +3.7%, in line with expectations and the prior month after it was revised lower from +3.8%. The Fed would like to see wage growth slow to around +3% annually or less, a level it sees as consistent with low inflation. Average Weekly Hours Worked were 34.3 hours, up a tick from 34.2 the prior month, where it was expected to stay. November private sector payrolls increased by +37,000, down from 50,000 the month before after being revised down from +69,000, and well short of expectations for +75,000. While the Establishment Survey showed more jobs than expected, the Household Survey, used to calculate the Unemployment Rate, was even stronger–it showed a gain of 528,000 workers for the month as the Labor-Force Participation ticked up to 62.5% versus 62.4% the prior month. The bottom line is that the January employment report was a big, unexpected improvement, with the key indicators—payrolls, unemployment rate, average hourly earnings, and average workweek—all showing positive surprises. For investors, the downside is that the data likely solidifies the Federal Reserve staying on hold with interest rates.

U.S. Payrolls Rose By 130,000 In January, More Than Expected

Monthly job creation in the U.S. (Jan. 2022 – Jan. 2026)

Source: U.S. Bureau of Labor Statistics via FRED, CNBC.

The Week Ahead

Markets were closed Monday for Presidents’ Day. Despite the holiday-shortened week, the calendar has a full schedule of economic data releases. Housing data will be prominent with homebuilder sentiment (NAHB Housing Market Index) on Tuesday; weekly MBA Mortgage Applications and Housing Starts & Building Permits on Wednesday; Pending Home Sales Thursday; and New Home Sales on Friday. Plenty of manufacturing data is due as well, with Industrial Production, Durable Goods, GDP, and PMIs all reported throughout the week. But the highlight of the week will be the Personal Consumption Expenditures (PCE) price index on Friday from the Bureau of Economic Analysis. The Core PCE Price Index is the Fed’s preferred gauge of inflation, and they’ll want to see it corroborate last week’s slowing CPI data. Also of note, the Federal Open Market Committee (FOMC) releases the minutes of its last monetary-policy meeting on Wednesday afternoon.

Roughly 50 S&P 500 index companies are set to report Q4 earnings this week. Among them, Cadence Design Systems and Palo Alto Networks report results on Tuesday, followed by Analog Devices and Booking Holdings on Wednesday. Deere and Walmart release their earnings on Thursday.

Did You Know?

GRADUATING TO HIGHER SPENDING – While the job market has become relatively more difficult for college graduates than non-college graduates, from the start of 2023 through the end of 2025, the cumulative growth of spending by households headed by a college graduate increased +12.7% versus +10.3% for those headed by a non-college graduate. (Source: NY Federal Reserve)

RETAIL WHALES – Retail investor daily trading inflows increased +60% year-over-year in 2025 and were +17% above the prior peak from 2021 during the meme-stock craze. According to a Jefferies analysis, retail investors now account for over 20% of total U.S. trading volume versus less than 15% from long-only and hedge funds combined. (Source: Daily Chartbook)

DEFENSIVE SHIFT – Investors have rushed into the defensive consumer staples sector to start 2026. Through 2/4, the S&P 500 Consumer Staples sector was up +12.3% year-to-date versus a gain of just +0.5% for the S&P 500 Index; this is the strongest outperformance for consumer staples to start a year since 1990, when daily sector data begins. (Source: Bespoke)

This Week in History

THE GREAT STAGNATION – February 9 was the 60th anniversary of the Great Crash. Though mentioned little, the Great Crash occurred when on February 9, 1966, the S&P 500 reached a then‑record 94.06, marking the end of the powerful post‑WWII bull market. The S&P 500 nearly doubled during the 1958–1966 boom, rising from 52.32 (June 1962 trough) to 94.06 (Feb 9, 1966). From 94.06 in February 1966 to 102.42 in August 1982, the S&P 500 only gained a cumulative total of +8.9% over more than 16 years… on a nominal basis. But this period coincided with the Great Inflation of the 1960s–1970s. Inflation was high, volatile, and persistent, and in real (inflation-adjusted) terms, the S&P 500 remained well below the 1966 inflation-adjusted peak for more than 25 years. (Source: The Wall Street Journal)

Economic Review

• The rate of inflation for consumer goods and services rose less than expected in January, as the headline Consumer Price Index (CPI) was up +0.2% for the month, below Wall Street expectations to come in at +0.3%, which is the level it was in December. Year-over-year (YoY), CPI was +2.4%, below expectations to be +2.5%, and down from the +2.7% rate the prior month (unrevised). Core CPI, which excludes the more volatile food and energy prices, increased +0.3% for the month, matching expectations and up a tick from +0.2% the prior month. YoY Core CPI was +2.5%, matching expectations and a tick below +2.6% the prior month. That was the lowest annual rate in nearly five years for Core CPI.  The Energy index was down -1.5% for the month and -0.1% for the year. Shelter, which is about one-third of the CPI weighting, was up +0.2% for the month and up +3.0% from last year–both down -0.2 percentage points from the prior month.  The Food index was up +0.2% for the month and +2.9% for the year. The bottom line is that both headline and Core CPI were on the soft side, particularly the annual Core CPI reading. Treasury yields dropped on the report and expectations for a third rate cut this year moved up.
• The National Federation of Independent Business (NFIB) reported that their Small Business Optimism Index slipped to 99.3 in January, up from an unrevised 99.5 the prior month, and remaining above its 52-year average of 98. That was below Wall Street expectations for 99.8. Of the 10 component indexes, 3 increased, while 7 declined. The improvements were led by Expect Real Sales to Rise which increased +6 points to +16%. The two gains were Expected Credit Conditions to Improve and Now is a Good Time to Improve, which both improved +2 points. Expect Economy to Improve fell -3 points to +21% after jumping +9 points the prior month. Current Inventories and Current Job Openings both fell -2 points. Although there was a clear downward bias among the index components, business owners were still relatively upbeat. When asked to evaluate the overall health of their business, 14% rated it as excellent (up +5 points), 54% rated it as good (unchanged), 27% rated it as fair (down -7 points), and 4% rated it as poor (up +1 point).
• The US Treasury Department recorded a Federal Budget Deficit of -$94.6 billion in January, about in line with expectations of -$94.4 billion and compared to the -128.6 billion deficit recorded in January 2025. Receipts rose +9.1% (to $559.9 billion) on a year-ago basis, while Outlays rose 2.0% (to $654.6 billion). Individual Income Taxes were the largest source of receipts in January ($317 billion), followed by Social Insurance & Retirement Receipts ($170 billion). The largest outlays by function were Medicare ($149 billion), Social Security ($138 billion), Health ($77 billion), and Net Interest ($76 billion). The fiscal year-to-date deficit is $697.0 billion versus $839.6 billion in the same period a year ago. The report highlights the benefits of collecting customs duties as a means of reducing the deficit. At the same time, it also shows the burden of interest costs stemming from the high amount of debt issuance needed to fund government operations.
• The Commerce Department reported that US Retail Sales for December were flat (0.0%), versus Wall Street expectations for them to increase +0.4%, far behind the +0.6% increase the prior month (unrevised). Retail sales represent about one-third of all consumer spending and offer clues on the strength of the economy. Retail Sales Ex-Autos were also unchanged, below expectations for a +0.4% rise following a downwardly revised +0.4% increase the prior month (originally +0.5%). Sales Ex-Autos and Gas were flat, missing expectations for a +0.4% rise and down from the prior month’s +0.3% gain (after being revised down from +0.4%). The Control Group, a figure used to calculate Gross Domestic Product (GDP), fell -0.1%, far short of expectations for a +0.4% rise and down from +0.2% the prior month (revised lower from +0.4%). The bottom line is that retail sales disappointed virtually across the board of discretionary categories, and the November figures were also revised lower for most categories.
• The Employment Cost Index (ECI) rose a seasonally adjusted +0.7% in the fourth quarter, a tick under the expected +0.8%, which is where it was for the third quarter. The ECI is the Federal Reserve’s preferred measure of wage gains. Year-over-Year the index also declined slightly to +3.5%, from +3.6% the prior quarter. That is the slowest annual rate since the second quarter of 2021. Still, the Fed wants to see costs slow even further. Wages and Salaries account for about 70% of compensation costs, and it decelerated -0.1 percentage point to +0.7% for the quarter, and -0.1 percentage point on an annual basis to +3.4%. The bottom line is that it was an inflation-friendly report that is supportive of rate cuts.
• Imports Prices were up +0.1% in December, matching expectations and up from a -0.1% increase in September (the last published value, no data was provided for the months of the government shutdown). Import Prices ex Petroleum were up +0.4%, twice the expected +0.2%. Year-over-year, the cost of imports was flat (0.0%), under expectations for a +0.1% increase, suggesting that foreign exporters are holding the line on prices, despite tariffs. Export Prices were up +0.3%, above expectations for a +0.1% rise. Export prices accelerated to +3.1% over the past year, a tick above expectations for +3.0%.
• The National Association of Realtors (NAR) reported that Existing Home Sales fell -8.4% in January to a seasonally adjusted annual rate of 3.91 million units, far below expectations for 4.15 million units and down from the 4.27 million units reported the prior month (revised down from 4.35 million units). It was the biggest monthly decline since February 2022, due in part to snowstorms and low consumer confidence. Year-over-year existing sales were down -4.4%, versus a +1.4% annual rate the prior month. The Median Existing Home Price increased +0.9% from the prior year to $396,800, marking the 31st consecutive month of year-over-year increases. The Inventory of Homes for Sale slid -0.8% from the prior month to 1.22 million units, but is up +3.4% from a year ago. Unsold Inventory sits at a 3.7-month supply, up from 3.5 months the previous month and a year ago. This remains below the 6.0-month supply typically associated with a more balanced market. The Median Time on Market for properties was 46 days, up from 39 in December and 41 a year ago. First-Time Buyers accounted for 31% of sales, up from 29% in December and 28% a year ago. Cash Sales accounted for 27% of transactions versus 28% in December and 29% a year ago. For the month, sales fell in every region, down -9.0% in the South, -10.3% in the West, -5.9% in the Northeast, and -7.1% in the Midwest. The key takeaway from the report is that the existing home market remains supply constrained. That is pushing up prices and mitigating some of the affordability benefits linked to wage growth and lower mortgage rates.
• Weekly MBA Mortgage Applications slipped -0.3% for the week ending February 6, after falling -8.9% the prior week. The Purchase Index dipped -2.4% after falling -14.4% the prior week. The Refinance Index inched up +1.2% after sliding -4.7% the prior week. The average 30-Year Mortgage Rate held steady at 6.21% for a second straight week.
• Weekly Initial Jobless Claims fell -5,000 to 227,000 for the week ending February 6, worse than expectations for 223,0000. The prior week was revised higher by +1,000. The number of people already collecting unemployment claims (i.e., Continuing Claims) rose +21,000 to 1,862,000 for the week ending January 30, which was worse than expectations for 1,850,000. The prior week’s reading was revised lower to 1,841,000 from 1,844,000.  

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.