Closing Recap
Friday delivered a barrage of market-moving headlines, headlined by a significant miss in U.S. GDP and a monumental Supreme Court ruling against President Trump’s global tariffs. Despite a “stagflationary” data mix – where Q4 GDP slowed sharply to 1.4% while Core PCE inflation accelerated to 3.0% – U.S. equities managed a relief rally. The S&P 500 (+0.69%) and Nasdaq (+0.90%) pushed higher as markets brushed off Trump’s afternoon press conference detailing alternative tariff plans. In commodities, safe-haven flows dominated; Gold surged past $5,080 on US-Iran geopolitical fears and trade uncertainty, while Bitcoin remained a laggard, struggling near $68k amidst record ETF outflows.
Key Takeaways (The Week in 60 Seconds)
- Supreme Court Blocks Tariffs: In a 6-3 decision, the Court ruled Trump exceeded his authority under a 1977 emergency law, declaring tariffs a core legislative taxing power.
- Stocks Rise Despite Stagflation Signals: U.S. indices finished the week higher (S&P 500 +0.69%, Nasdaq +0.90%) despite a worrying mix of weak growth and sticky inflation. The S&P 500 managed to brush off a significant GDP miss and hot PCE data, buoyed by a late-week relief rally.
- Stagflationary Data: Q4 GDP printed at a weak 1.4% (dragged down 120bps by the government shutdown), but Core PCE inflation ran hot at 3.0% YoY, complicating the Fed’s easing path.
- Rate Cuts Priced Out: The hot inflation print forced markets to reassess; a July Fed rate cut has now fallen below 100% pricing.
- Historic Sector Divergence: Every S&P 500 Software stock is below its 200-day moving average, while 89% of Semiconductors are above it – the widest gap on record.
- Gold Shines: Gold jumped $83.50 (+1.67%) to $5,080.90, bolstered by US-Iran strike fears and trade uncertainty.
- Silver Surges: XAG/USD is up over +7% for the week, pressing near $84.60 on safe-haven flows.
- Bitcoin ETF Exodus: Spot Bitcoin ETF balances have posted their largest drawdown on record (down ~100.3k BTC since October).
- Nvidia Earnings on Deck: All eyes shift to NVDA’s Q4 report next Wednesday as the ultimate test for the AI bull market.
- Week Ahead Focus – Nvidia & Inflation: The focus shifts to the AI trade with Nvidia Earnings (Wed), alongside critical Australian CPI (Wed) and Tokyo Inflation (Fri).
Looking Ahead
The “vibe” for next week is defined by AI Validation and Trade War “Plan B.” The Supreme Court may have blocked Trump’s emergency tariffs, but the White House is already floating backups (using 1930/1974 Trade Acts). This promises sustained volatility for the Dollar and global importers. However, macro noise will take a backseat on Wednesday when Nvidia reports earnings, serving as the ultimate litmus test for a heavily divided tech sector.
Weekly Market Narrative: The Court, The Fed, and The Stagflation Threat
Wall Street navigated a minefield of news this week to finish in the green. Friday’s session was defined by a massive divergence in economic data: Q4 GDP missed badly at 1.4% (blamed on the shutdown), while the Fed’s preferred inflation gauge, Core PCE, accelerated to 3.0%. Typically, this “stagflationary” mix would hammer stocks, but the market found a lifeline in the Supreme Court.
| Index | Last Closing Level | Daily Change | Daily Change % | Weekly Trend |
| DJ Industrials | 49625 | 230.81 | 0.0047 | Neutral |
| S&P 500 | 6909 | 47.61 | 0.0069 | Bullish |
| Nasdaq | 22886 | 203.34 | 0.009 | Bullish |
| Russell 2000 | 2663 | -1.31 | -0.0005 | Flat |
The Court’s ruling that President Trump exceeded his authority with national emergency tariffs removed a major layer of uncertainty for the global economy. Although Trump mentioned “backup plans” involving other trade acts (Sec 301, 232), the market treated the ruling as a net positive for risk sentiment and a negative for the Dollar. Meanwhile, the “AI trade” continues to hold up the broader market, even as Bank of America warns that the S&P 500 remains expensive on 18 of 20 metrics. Bank of America warns the S&P 500 remains expensive across 18 of 20 valuation metrics. The internal market dynamics are unprecedented: Software indices are down 30% since November, trading at decade-low valuations, while Semiconductors sit near all-time highs.
Economic Data Calendar: February 16 – 20, 2026
After a week dominated by macro data and legal rulings, the spotlight turns to corporate earnings and international inflation prints.
MON (Feb 23): Eurozone Sentiment
- German Ifo Business Climate: A key sentiment check for the Eurozone economy.
TUE (Feb 24): China Returns & US Consumer Confidence
- PBoC Loan Prime Rate (LPR): China is expected to keep benchmark rates unchanged (3.00% and 3.50%), prioritizing liquidity operations over rate cuts.
- US Consumer Confidence: Will the weak GDP and high inflation dent consumer morale?
WED (Feb 25): Nvidia Earnings & Australian CPI
- Nvidia Earnings (Q4): The Main Event. Consensus expects revenue of $65.69B. With software stocks crashing, the entire tech sector is relying on Nvidia to confirm the AI hardware boom is still accelerating.
- Australian CPI (Jan): Critical for the RBA. After recent rate hikes, a hot number (above 3.8%) would force the RBA to remain hawkish.
- US ADP Employment: A precursor to the next NFP report.
THU (Feb 26): UK Politics & BoK
- UK By-Election (Gorton & Denton): A political test for PM Starmer. A Labour loss could trigger leadership turmoil, weighing on the Pound.
- Bank of Korea Decision: Expected to hold rates at 2.50%.
FRI (Feb 27): Tokyo CPI
- Tokyo CPI (Feb): A leading indicator for Japanese inflation. Further slowing (expected 1.5%) could dampen bets on a near-term BoJ hike, pressuring the Yen.
- US PCE (Jan): Note: Delayed release schedule may apply.
Asset Class Spotlight: Commodities, Currencies, Crypto & Treasuries
Precious Metals are acting as the ultimate geopolitical and policy hedge. Gold spiked to $5,080.90 on fears of a U.S. strike on Iran and the Supreme Court tariff chaos. Silver followed suit, climbing to $82.80 (+5% for the week) as dip-buyers firmly regained control. Energy struggled for direction. Despite Iran tensions, WTI Crude settled practically flat at $66.48 supported by President Trump’s threats of a potential strike on Iran.However, demand concerns from the weak US GDP print capped gains. The week was defined by a flight to safety in Gold and a choppy U.S. Dollar reacting to the Supreme Court ruling.
Bitcoin is flashing warning signs. Weighed down by an unprecedented ~100.3k BTC drawdown from spot ETFs and hawkish Fed minutes earlier in the week, BTC is nursing a 23.6% loss for 2026, struggling to hold the $68k level.
| Asset | Last Level | Friday’s Change | Weekly Change / Note |
| WTI Crude | 66.48 | 0.08 | +0.12% (Iran Strike Fears) |
| Brent Crude | 71.41 | -0.26 | Lagging WTI |
| Gold (Apr) | 5080.9 | 83.5 | +1.67% (Safe Haven Bid) |
| Silver | ~$82.80 | Volatile | +5.0% (Weekly Gain) |
| EUR/USD | 1.1793 | 0.0021 | +0.10% (Tariff Relief) |
| USD/JPY | 155.07 | 0.08 | +1.55% (Weekly) |
| 10-Year Note | 0.04096 | 0.021 | Yields Mixed on Data |
| Bitcoin | ~$68,154 | 0.018 | ETF Drawdowns Weighing |
FX Breakdown
- EUR/USD: The Euro initially popped above 1.1800 following the Supreme Court’s tariff block (which leaves Europe less vulnerable to trade escalation), but the rally faded as confusion set in over Trump’s backup plans. It closed the week down at 1.1781.
- GBP/USD: Edged higher on Friday due to the U.S. tariff ruling and strong UK Retail Sales (+4.5% in Jan). However, diverging rate expectations keep the Pound down -1.29% for the week.
- USD/JPY: Rallied +1.55% for the week to close at 155.07. Japanese national CPI slowed significantly to 1.5% YoY (slowest since March 2022), tempering expectations for near-term BoJ tightening.
The U.S. bond market is reacting to the threat of stagflation. With Core PCE hitting 3.0% (the highest since Nov 2003), the Fed is boxed in, pushing the 10-year yield back up near 4.10%. For crypto, this “higher for longer” rate environment is toxic; Bitcoin is bleeding institutional capital as risk-free rates remain elevated.
What to Watch Next Week
- Nvidia’s AI Litmus Test (Wednesday): With Software stocks trapped in a historic bear market (all below their 200-DMA) and Semiconductors holding up the market, Nvidia’s earnings will dictate the survival of the 2026 tech rally. Investors expect $65.69B in revenue, but forward guidance on next-gen AI chips will be the true market mover.
- The Tariff “Plan B” Trade: The Supreme Court blocked the emergency tariffs, but the White House is already exploring Sections 122, 301, and 338 of older trade acts to bypass Congress. Any official announcement of a new tariff structure will instantly inject volatility into the US Dollar (DXY) and global equities.
- Tokyo CPI & The Yen (Friday): With Japan’s national inflation cooling to 1.5%, the Bank of Japan’s tightening narrative is under threat. Friday’s Tokyo CPI is a leading indicator; if it prints soft again, expect USD/JPY to break higher, putting intervention back on the table for Japanese officials.
- The Fed’s Dilemma: Following the hot PCE (3.0%) and weak GDP (1.4%), the Fed is stuck. Watch Fedspeak closely this week. If officials start prioritizing inflation over growth, it could spark a “stagflation” sell-off in bonds and stocks.