February 2026 Market Review & Commentary

We hope this finds you well and that you are able to maintain a sense of calm amid the rapidly changing news cycle. This February recap will differ slightly from our usual updates as it includes several housekeeping notes, important tax information, and broader forward-looking insights.

Recent Geopolitical Events:

The month of March began with significant global developments, notably the United States' entry into an unplanned military conflict with Iran. This has contributed to increased uncertainty and volatility in the markets, particularly within the oil sector. However, current data do not indicate a supply shock scenario. Several factors may help mitigate the global impact:

1.      Global oil inventories remain well supplied and are currently higher than at this time last year.

2.      OPEC has announced plans to increase April output by 50%.

3.      The United States imports virtually no oil from Iran.

February Market Update:

February started on a strong note, continuing the momentum from January as investors monitored economic data and assessed emerging trends. However, market enthusiasm diminished as attention shifted towards headlines regarding artificial intelligence (AI) and its potential effects on future corporate earnings, sector-specific impacts, and financial strategies. A surge in AI product launches prompted investors to re-evaluate likely industry winners and those most susceptible to disruption.

This broad market rotation, which began in January, persisted throughout February. The Nasdaq declined by (-3.38%) for the month, while the S&P 500 fell by (-0.87%). Notably, small-cap stocks outperformed large-caps, value outperformed growth, seven of eleven sectors outpaced the S&P 500, and international equities surpassed U.S. equities.

At the sector level, Utilities led with a gain of +10.3%, and Energy posted a positive return of +9.4%. Sectors experiencing the greatest declines were Consumer Discretionary (-5.4%), Information Technology (-3.9%), Communications (-5.1%), and Financials (-3.7%).

Looking ahead, attention is focused on the upcoming Federal Reserve meetings scheduled for March 17th and 18th, where the Summary of Economic Projections will be released. This publication is expected to offer guidance regarding the economy, employment, and inflation. As we navigate these evolving circumstances, market participants will be attentive to the Fed’s outlook and its implications for forward guidance.

Housekeeping & Tax Updates:

·         TurboTax Tip: For clients preparing their own returns, non-retirement accounts held with Schwab will receive a 1099 Composite Tax Form, which includes three classifications: 1099-INT (interest), 1099-DIV (dividends), and 1099-B (realized gains and losses).

·         When entering 1099-B data into TurboTax, you can combine more than four transactions for the year and enter the annual summary total, rather than inputting each transaction individually. This approach will save substantial time during data entry.

·         We have observed an increase in scams, cyber threats, phone scams, and online risks. We strongly recommend that clients pause and assess any situation that creates a sense of urgency or fear. Most scams attempt to elicit immediate action through these tactics. If you ever need advice or support, please reach out to our office directly.

·         Consider locking your personal credit file—a service offered by many companies—to prevent unauthorized loans or credit cards being opened in your name. Personally, I use Experian.com for this service and encourage you to evaluate your options.