Commentary for February, 2026

Hello all - we hope you had a nice January.  

It was a very lackluster month for the markets.  The Dow was up slightly with a 0.2% gain, the S&P 500 lost 0.9%, and the Nasdaq, which has a higher concentration of tech stocks, had a rough month with a 3.4% loss. 

Here’s a look at how the markets moved this month:

Here’s a look at how the various market sectors performed this month.

The markets are becoming a little more volatile, though still not at a very high level.

Tech was again a big topic this month, with AI being the focus.  The take on AI has ranged from it being a savior, a disruptor, and even a job-killer.  

The software industry is seen as being ripe for disruption from AI, where the thinking is that AI can do most of the work these companies did.  This sector, which has names like Microsoft,  Oracle, and Adobe, started selling off hard last month and it stayed lower this month. 

On the other hand, businesses that appear immune from AI disruption have done very well.  The natural resources sector has received a lot of attention because of this.  These are companies like Exxon, Newmont Mining, and Freeport McMoran.  

You can see in the chart below just how well this sector is performing. 

Also, we noticed an interesting correlation between the performance of the software sector and Bitcoin.  Take a look at the chart below and you can see how closely they trade together.

Finally, the metals have done very well, too.  They lost some ground after a very sharp rally in January, but they recovered this month and resumed their climb.  

Here’s a look at gold, whose price continues to skyrocket:

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MARKETS

While AI was one big story, the tariffs were another big story affecting the markets.

Markets initially rallied on the news since it would be less costs for businesses.  However, it looks like President Trump has other ways of implementing tariffs, so there may be only little relief. 

 

Either way, the markets are expecting more volatility to come from the uncertainty around tariffs now.

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INFLATION

The inflation numbers released this month showed that on an annual measurement, inflation was mild.

However, when we look at inflation month-by-month, prices are clearly still rising.

When excluding food and energy (what economists call the “core” inflation), prices are still higher every month.

Inflation at the business level came in higher than expected, too.

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, too.

The unemployment picture improved over last month, but it still looks weak as very few jobs are being added.

The amount of job openings continues to fall, too. 

Could this be the result of AI, like we talked about earlier in this commentary?  The drop in job openings for “professional services” is alarming.

As for the broader economy, the economy grew at a pace much lower than many economists anticipated.  

Here’s a look at the most recent GDP report, which was far below the 3-4% many were expecting (though the government shutdown is believed to have reduced this figure by 1.5%).

While the GDP showed weakness, a look at both the manufacturing and service sides of the economy showed strength.

Retail sales were flat.

Durable goods were lower, too, but when excluding a few large aircraft orders, the durable goods weren’t that bad. 

Consumer confidence continues to be an issue.  It showed slight improvement in the recent report, but it has been trending lower.

Small business optimism rose slightly, too.

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Where does the market go from here?

***Post month-end market close update***

The attack in Iran at the end of February changed information we were planning to write in this section.  We were leaning cautious, and the attacks are likely to pressure the markets in the near term.  However, attacks like this have historically been good buying opportunities. 

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for January, 2026

Hello all - we hope you had a nice January.  Hard to believe it’s already 2026!  

With a lot of ups and downs, the markets closed the month in the green.  The Dow added 1.8%, the S&P 500 gained 1.5%, and the Nasdaq, which has a higher concentration of tech stocks, was up 1.0%.  

Theres an old Wall Street adage that says “So goes January, so goes the year.”  It means that if January is higher, the year will be higher, and vice-versa.  It has about an 85% accuracy rate, so as silly as it sounds, hopefully the positive January is a good sign for the year. 

Here’s a look at how the markets moved this month:

Here’s a look at how the various market sectors performed this month.

After extremely low volatility in the markets last month, volatility started ticking up this month.

Tech stocks saw a little more volatility this month, too.  The areas of tech benefitting from AI, like Nvidia or even Facebook, have held up well.  

On the other hand, companies where AI has the possibility of disrupting their business, like software stocks like Microsoft or Oracle or Adobe, did very poorly.  

Here’s a look at an index ETF focused on software-related companies:

Those big tech stocks have made up a bigger and bigger slice of the overall market.  However, the concentration of those 10 biggest companies in the market declined slightly this month.

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We continue to keep an eye on the commodity markets as there have been some interesting moves.  

The US Dollar continues to decline and now stands at the lowest level in four years.

When currencies do poorly, commodities and metals tend to do better.  Gold and silver continued on their incredible run, although a late-month selloff dented the performance slightly.

 

Here’s a look at gold, whose price continues to skyrocket:

Silver was even more remarkable.  It seems like an irrational bubble, but it keeps going higher.   It has benefited from the weaker currency, but it’s also used in many important products today, like AI data centers and electric cars.  China announced new restrictions on exporting silver beginning Jan. 1, so this also fed into the rapid rise.

Oil is starting to move higher, too.

Oil was initially lower after the Venezuelan government overthrow (yes, that was in January, but it seems so long ago!), since it meant the possibility of new oil eventually coming on the market.  

Below is a great chart showing how much Venezuela used to produce:

While Venezuela caused oil to move lower, new threats with Iran, plus the weaker dollar, caused oil prices to rise into the end of the month.  Look out for higher prices at the pump.

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MARKETS

So, what was going on with the markets this month?  Old causes of volatility returned, mostly coming out of Washington.  

The threat of tariffs reappeared in a big way this month, causing markets to drop sharply.

Stocks moved higher when the worst-case scenario was taken off the table, but the threat of tariffs being used as a tool in every foreign disagreement will stay in the back of investors’ minds. 

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GOVERNMENT SHUTDOWN

The threat of a government shutdown also resurfaced this month.  

As the month ended, it looked like some compromise might be in the works…

…but the betting markets still saw a very high chance of a shutdown occurring.

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FED

Then there was the Fed.  For the last several months, it’s been like an Apprentice-style reality show searching for the next Fed chief.  The various candidates bounced in and out of favor and were paraded on TV.

 

The candidates that seemed to be favored by Trump all supported lowering rate further, and the markets rose on those expectations.

However, it turns out the new Fed chief is likely to be Kevin Warsh.  To us, he always seemed less likely to lower rates, but he has a lengthy record as an economist and with the Fed and we thought he was the best choice.

Warsh never seemed to be in line with what Trump was looking for, so we aren’t sure why Trump picked him.  

Nevertheless, the market expectations for lower rates ended with the announcement and the markets reversed.  The dollar strengthened and the metals that had done so well, like gold and silver, all saw strong drops.  

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The Fed also held a policy meeting this month, announcing they were holding rates steady after lowering them at the previous three meetings.  This had little impact on the markets, though, because investors had expected this to me the case. 

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INFLATION

The inflation numbers released this month showed that on an annual measurement, inflation was mild.

However, when we look at inflation month-by-month, prices are clearly still rising. 

When excluding food and energy (what economists call the “core” inflation), prices are still higher every month.

Inflation at the business level came in higher than expected.

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, too.

The unemployment picture still looks weak as very few jobs are being added.

 

The manufacturing side of the economy showed another decline, while the service side saw another increase. 

Retail sales saw a nice improvement.

Durable goods looked good, too.

Consumer confidence continues to be an issue as it keeps falling. 

Small business optimism rose slightly, too.

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Where does the market go from here?

In the very short term, looking out a few weeks, we’re a little expensive and may have just started a short leg lower.  We’d need to see it go much lower before dipping our toes in again.   

One note for the year, historically the midterm year for a president is a decent year.

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.