Last week’s shortened four-day trading week delivered no shortage of headlines. Investors digested lower-than-expected Gross Domestic Product (GDP), rising geopolitical tensions involving Iran, a firmer-than-expected PCE inflation report, a significant Supreme Court tariffs ruling, and concerns surrounding liquidity in a major private credit fund.
Despite this extensive list of developments, equity markets moved higher — a reminder that markets often respond more to expectations and positioning than to headlines alone.
Stock Market Performance – Weekly Recap
U.S. stock markets posted modest gains during the shortened trading week, despite softer economic data and renewed policy uncertainty:
- Dow Jones Industrial Average: +0.19%
- S&P 500: +0.95%
- NASDAQ Composite: +1.42%
- Russell 2000: +0.51%
- Foreign Stocks: +0.59%
- Emerging Markets: +1.86%
Year-to-date leadership continues to shift. Emerging Markets are now higher by approximately 13%, while the NASDAQ has lagged, down 1.61%. The S&P 500 is modestly positive for the year at +0.82%.
Bond yields remain range-bound, with the 10-year U.S. Treasury yield at 4.086%, reflecting a market still balancing growth concerns against persistent inflation.
Economic Data Update: GDP Growth, Inflation, and Federal Reserve Policy
U.S. GDP Growth Slows in Fourth Quarter
Fourth quarter GDP was reported at an annualized rate of 1.4%, well below the consensus expectation of 2.85%. Analysts estimate that the recent government shutdown reduced growth by roughly one percentage point.
While the headline number disappointed, it is important to remember that economic growth rarely moves in a straight line. Temporary factors — such as shutdown disruptions — can materially impact quarterly readings without signaling a structural shift in the broader economy.
Inflation Update: PCE Index Comes in Above Expectations
The Federal Reserve’s preferred inflation measure, Personal Consumption Expenditures (PCE), rose to 3%, coming in warmer than expected. The increase was driven primarily by the goods component.
This bears monitoring. Goods inflation had previously cooled, helping offset stickier services inflation. A renewed uptick in goods prices could complicate the Federal Reserve’s path toward rate cuts.
For retirees, inflation remains one of the most important long-term risks, as it directly affects purchasing power. While inflation is far below its 2022 peak, it is not yet fully subdued.
Private Credit Liquidity Concerns Surface
Blue Owl Capital restricted withdrawals from its Blue Owl Capital Corp II private credit fund after facing liquidity pressures. The firm is a significant lender to technology companies.
Markets largely shrugged off the development, viewing it — at least for now — as an isolated situation rather than systemic stress. However, private credit has grown rapidly in recent years and lacks the transparency of public markets.
This is another area we are watching carefully. Episodes of liquidity restriction tend to surface when financing conditions tighten.
Supreme Court Ruling on Tariffs Raises Fiscal and Market Questions
The most consequential development of the week was the U.S. Supreme Court’s 6-3 decision ruling that the Trump Administration exceeded its authority under the International Emergency Economic Powers Act (IEEPA) when imposing certain tariffs.
The ruling raises questions about the estimated $130–$160 billion in tariff revenues already collected. The Court indicated that lower courts would address the disposition of those funds.
Should refunds ultimately be required, it could place additional strain on government finances and potentially increase reliance on short-term Treasury issuance.
Adding another layer, President Trump quickly signaled the Administration would pursue “alternative authorities” to implement a 15% tariff. It is likely too early to assess the full economic implications, as developments may evolve rapidly.
Market Outlook: Volatility, Policy Uncertainty, and Investor Resilience
It is difficult to recall a year — outside of the Great Recession period — in which the first two months featured so many moving parts across the global economy, fiscal policy, geopolitics, and financial markets.
Yet, despite the noise, markets continue to function, adapt, and reprice risk in real time.
What to Watch This Week: State of the Union and Major Tech Earnings
- State of the Union Address: President Trump will address the nation. Tariffs, affordability, geopolitics, fiscal policy, and the Supreme Court ruling will likely dominate attention.
- Earnings: Nvidia, Salesforce, and Snowflake headline another significant week for technology earnings.
Client Reminder – Tax Returns
As tax returns become available, please provide a complete copy of your 2025 income tax return to project your 2026 potential liability and to identify opportunities.
For secure submission instructions, please contact:
Ben Smith
bensmith@retirementrefined.com
Retirement Planning Perspective: Managing Risk in Uncertain Markets
While headlines remain intense and policy shifts frequent, markets continue to demonstrate resilience. Economic growth has slowed but remains positive. Inflation remains elevated but manageable. Interest rates are stable. Corporate earnings remain intact.
Periods like this reinforce why disciplined portfolio construction, proper diversification, and thoughtful risk management matter — particularly for those approaching or already in retirement.
As always, if you have questions about how these developments impact your personal financial plan, please reach out. Our focus remains: helping you retire with confidence and clarity.
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Thank you for reading!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.All market data sourced from The Wall Street Journal, February 20, 2026.
