Weekly Recap:

by Eric Criscuolo & Michael Reinking, CFA

Published on 2/27/26

Jupiter has the fastest rotation of all eight planets (Bring Back Pluto!) in our solar system- one full rotation every 10 hours. 28,000 MPH at the equator. 28 times faster than the earth (thank you Planetary Society). It feels like financial markets are rotating faster.    

Before diving in to strained astrophysics-financial asset analogies, let's step back to earth, more specifically to Italy first. Last week, the USA Women’s hockey team won Olympic gold with a thrilling OT win. Then the Men’s team followed the same script to complete the Hockey sweep. The 232 members of the entire Team USA contingent won a national record 12 gold medals and 33 overall and provided some amazing family memories for the MAC Desk. Awesome.

In between the two gold medal wins was news from our favorite Supreme Court on our favorite topic: tariffs. After a few months of waiting for a decision, the Court ended last week by striking down President Trump’s IEEPA tariffs. The decision was not unexpected however, as Polymarket odds for this outcome had been around 70% for a while. The administration quickly slapped new 10% tariffs on under a new authority, then upped them to 15%.

The questions now are what tariff regime will replace the one struck down, and what’s the ultimate status for refunds. TBD. The S&P 500 spent most of last week ping-ponging between its 50 and 100 day moving averages and remained trapped in a larger 250pt range between 6750 and 7000.

We’ve written a lot about the rolling wave of sell-offs that have swept across industry groups, triggered by concerns of AI-driven disruption. As we started this week, the latest winter storm blasted the northeast, but a report by Citrini Research sent another storm through the markets that continued to push that wave inland. The write-up, which was more a scenario-analysis or thought-experiment versus a dire prediction, laid out a near-term hypothetical of AI triggering massive disruption, spiking unemployment and economic displacement.

With a market already concerned, for a while, about how to model the impact of AI- good and bad- the report helped bring a sea of red across the tape on Monday. Software got smoked again and Financials were hit hard as the reports’ unemployment scenario smacked consumer credit areas like cards and banks, piling on to the already-present concerns radiating from Private Credit. More disruption concerns appeared after Anthropic said its Claude Code could be used to modernize COBOL, the ancient computer language that runs a scary huge amount of finance infrastructure. Maintaining that pre-historic system has created big business for some tech and consultant names.   

This is the MAC Desk though and we want to keep the positive vibes from the Olympics going. While the start of the week was ugly, the overall move was modest. The S&P finished down 1%, an average bad day, so to speak. Also, some of the weakness could be attributed to under-staffed trading desks due to the storm and the options expiration from last week as positioning was shuffled. After a night of sleep, equities bounced the next day and recouped most of Monday’s losses. Software stabilized, which continued through Thursday. The source of much angst, Anthropic, provided an olive branch, after its corporate event was more about forging partnerships than ushering in total economic disruption. Everyone’s new favorite ETF, the IGV software fund, rallied three straight days before turning lower Friday.

This brings us to the other big item this week: Nvidia earnings. The pillar of the AI story reported Wednesday night and posted stellar numbers. However, that was largely expected, and one of the reasons why the S&P has been rangebound. The bar is incredibly high for prices to inflect meaningfully higher. Despite 70% topline growth, Nvidia fell 5%, and declined another 4% today.

Besides the numbers, the biggest takeaways from the results were (1) demand shows no signs of slowing down, (2) Nvidia CEO Jensen Huang said “the Chat GPT moment of agentic AI has arrived”, and (3) software providers can greatly benefit from this, contrasting with prevailing narrative, though there may be starkly different outcomes for Winners and Losers. There were some big software earnings to go along with the Nvidia print. Salesforce and Snowflake rose Tues-Thrs before giving some of that back on Friday.  Autodesk rose the last four days. IBM and Intuit in three of the last four. We’ll be watching to see if a countertrend builds here- hardware weaker, software stronger. Friday didn’t help anyone but software was mixed for the week while chips/equipment were mostly lower. If we see that occur, it would add to the significant rotations in the equity market we’ve already seen.    

Despite all the movement and concerns, the S&P 500 is down less than 1% this week with Friday pulling the index underwater. Month-end and an MSCI rebalance pushed flows around towards the end of the day as stocks made a push higher into the Close. Equities were struggling earlier in the day before comments from President Trump on various geopolitical issues send them lower (“not happy with how they (Iran) negotiate”; “I don’t want to, but sometimes you have to (use military force)”; “maybe we’ll have a friendly takeover of Cuba”).

The 100 day moving average continues to provide support and the 50-day is proving a difficult level from which to see any sustained upside.

The equal-weight was positive, outperforming by ~1% for the week. Small and mid-caps underperformed. Banks were hit hard as the KRE Regional Bank ETF fell 5% on Friday. Thematic groups were volatile but retail favorites and high-beta areas weren’t shunned. Many Quantum computer names were flat to higher on positive technical developments in the space, but many fell 5-10% on Friday. Rare Earths were mostly higher this week despite the Friday decline and Space names were tracking higher until selling off to end the week.

Despite the drama, 7/11 sectors ended the week higher. The defensive Utilities, Healthcare and Consumer Staples led, joined by Energy again on the geopolitical concerns. Financials and Tech lagged, with Financials seeing sharp losses bookend gains in the middle of the week.

For the month of February, the S&P 500 was down 1% while staying rangebound (monthly chart below). It was only the second down month in the last 10, but both have come in the past four as the index drifts sideways near 7000.

The equal-weight gained 3% in February as mega caps, software and financial stumbles were overcome by broader strength overall. Mid caps>small caps>large caps. The Growth factor was down about 4% across the large caps with Value up 2-3%. The 3% gain in the Vanguard High Dividend ETF (VYM) underscores the Winners and Losers.

Sector performance provides further highlights of the divergence. Seven of eleven sectors were solidly higher for the month. Two defensive sectors, Utilities (+10%) and Consumer Staples (+8%) were leaders this month. Real Estate- a high dividend payer that benefits from the declining yields and struggled last year, was also a standout this month. Two cyclical sectors- Materials and Energy, stayed strong. The Chemicals group continued to lead Materials while Energy benefited from commodity strength, weather and geopolitical tensions.

Four sectors weighed on the indexes. Software and mega caps brought down Comm Services and Tech. The NYSE FANG+ Index dropped 6% in February, with only Apple (modestly) and Netflix ending higher. High-flying memory names like Micron and Sandisk sold off over a few days in early February with overall weakness in Tech, recovered some but not all of that decline before declining to end the month.  

Discretionary was also lower this month. Once again, mega caps were weak as Tesla and Amazon were down ~10%. The rest of the sector was mixed with some decent performance from retailers and Homebuilders as mortgage rates continued to decline.   

Financials were under pressure at the beginning and end of this month in particular. After breaking below all three major moving averages at the start of the month the XLF ETF has failed to regain those levels, though support has held ~$51.

The AI wave fell earlier upon data service businesses and Insurance brokers/service providers which has been the big drag on the sector. Crypto-leveraged names- exchanged, brokers, service providers- were also under pressure. A new round of Private Credit concerns (the latest from renewed chatter around the MFS bankruptcy) as well as concern of AI-triggered layoffs swelling (e.g. Block’s announcement this week) continue to weigh on the sector. Meanwhile, long-term yields are falling, potentially impacting NIM.  

The Russell 2000 has a large Financials weight versus the S&P 500 (17% vs. 13%) and much less Tech (12% vs 33%) exposure and the admittedly crowded heat map from Finviz below shows the pressure across the financial sector in February, as well as the decent performance across most other sectors.

Looking at the distribution of gains so far this year shows the breadth of performance against the weakness of the largest stocks. 66% of S&P 500 stocks are beating the index (tall line), and since the index is about flat, that also means about 66% are positive on the year.

Commodities & Crypto - Commodities mostly higher, Can’t Spell Crypto without “Cry”

This week there was a lull in economic data ahead of next week’s labor market update. There were plenty of eye-catching headlines about the labor market this week but the data that we’re seeing still points to the low hire low fire environment. This week’s weekly ADP report showed that average hiring over the last four weeks improved to 12.75k from an upwardly revised 11.5k last week. This is the fourth consecutive w/w increase since troughing on January 10th. Initial claims ticked up modestly to 212k from 208k last week but remains low by historical standards. Continuing claims moved modestly lower. 

After a big drop in January, which was partially revised away, Consumer Confidence bounced back to 91.5 driven by an increase in the expectations index while the present situation continued to move lower (see below). There was an improvement in expectations around labor market conditions and income, but I would highlight that this was before any Citrini induced nightmares. Inflation expectations were little changed but remained elevated while this is still cited as impacting family financial situations which worsened after a surprise increase in January. 

The regional surveys were mixed throughout this week. Notably this morning’s Chicago PMI remained above the demarcation line of growth (50) for the second consecutive month, a level it has been below since 2023. This could have a positive readthrough to Monday’s ISM Manufacturing which also moved above that demarcation line in January and potentially signaling the long-awaited improvement in manufacturing.

The biggest piece of economic data this week was this morning’s PPI release which came in well ahead of estimates with headline up 0.5%/2.9% m.m/y.y vs. 0.3%/2.6% cons. Core PPI was hot for the second consecutive month up 0.8% and 3.6% vs. 0.3%/3%. This was driven by an increase in final demand services which was up 0.8%. This report can be volatile while it captured some headlines there have only been modest adjustments to PCE estimates and rates didn’t react to the report. 

Treasuries continued to rally this week adding to gains for the month. Markets shrugged off today's inflation data and there seems to be a bit of a flight to safety amidst credit, geopolitical and labor market concerns. The USD index bottomed at the end of January and has moved modestly higher throughout the month.

Next week we flip the calendar to March. But before that, Berkshire Hathaway will issue its Q4 earnings and 2025 Annual Report on Saturday. This will include the first shareholder letter from new CEO Greg Abel, the first time someone other than Mr. Buffet has penned the letter in 60 years.

Earnings next week will be heavy with big retail and consumer-focused names: Norwegian Cruise Lines, AutoZone, Best Buy, Target, Ross Stores, Abercrombie, Brown Forman, Bath and Body Works, American Eagle, BJ’s Wholesale, Burlington Stores, Kroger, Costco and Gap are just some of the companies reporting. Tech names will include ASML, Broadcom, Marvell and CrowdStrike.

Labor market data will headline the macro releases with February non-farm payrolls released next Friday. The ADP February employment report, Challenger Job Cuts and weekly jobless claims will be released earlier in the week.

For non-labor data, ISM Manufacturing and Service PMIs for February will be released. The Fed’s Biege Book, which provides commentary of economic conditions across the 12 Fed Districts, will be out. Other releases include Retail Sales, Consumer Credit balances and Import/Export prices.

Internationally, China’s National People’s Congress begins next week, where they should lay out economic goals including GDP. Data includes European CPI, Retail Sales and Unemployment, global Manufacturing and Services PMIs and German Factory Orders. Enjoy your weekend.

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