Stocks Retreat on AI Concerns and Geopolitical Risks

The S&P 500 Index ($SPX) (SPY) today is down -0.44%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.57%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.66%.  March E-mini S&P futures (ESH26) are down -0.40%, and March E-mini Nasdaq futures (NQH26) are down -0.63%.

Stock indexes are sliding today, led by losses in chipmakers and AI-infrastructure stocks, amid renewed caution over the outlook for artificial intelligence.  Concerns remain that AI could disrupt entire sectors of the economy and that the huge investments into the technology may not pay off.  Stocks also face some negative carryover pressure from Wednesday, when the minutes of the Jan 27-28 FOMC meeting stated that “several” policymakers suggested the Fed may need to raise interest rates if inflation stays above its goal. 

Geopolitical risks are also weighing on stocks today.  WTI crude oil (CLH26) is up more than +1% at a 3-week high on comments from the head of the United Nations nuclear watchdog, who said the US military buildup in the Middle East means Iran’s window to reach a diplomatic agreement over its nuclear activities is at risk of closing.

Today’s US economic news was mixed for stocks, with weekly jobless claims falling to a 5-week low and the Feb Philadelphia business outlook survey unexpectedly climbing to a 5-month high, although the Dec trade deficit widened more than expected to a 5-month high.

US weekly initial unemployment claims fell -23,000 to a 5-week low of 206,000, showing a stronger labor market than expectations of 225,000.

The US Feb Philadelphia business outlook survey unexpectedly rose +3.7 to a 5-month high of 16.3, stronger than expectations of a decline to 7.5.

The US Dec trade deficit was -$70.3 billion, wider than expectations of -$55.5 billion and the biggest deficit in 5 months.

The market’s focus is on corporate earnings results and economic news. Later today, Jan pending home sales are expected to increase by +2.0% m/m.  On Friday, Q4 GDP is expected to expand by +3.0% (q/q annualized), and the Q4 core price index is expected to climb by +2.6%.  Also, Dec personal spending is expected to rise by +0.4% m/m and Dec personal income is expected to be up +0.3% m/m.  In addition, the Dec core PCE price index (the Fed’s preferred inflation gauge) is expected to be up +0.3% m/m and +2.9% y/y.  The Feb S&P manufacturing PMI is expected to slip by -0.1 to 52.3, and Dec new home sales will be released.  Finally, the University of Michigan Feb consumer sentiment index is expected to be revised slightly lower to 57.2 from 57.3.

Q4 earnings season is nearing its end, with more than three-quarters of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 75% of the 394 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 6% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.97%.  China’s Shanghai Composite is closed for the week-long Lunar New Year holidays.  Japan’s Nikkei Stock 225 closed up +0.57%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -5 ticks.  The 10-year T-note yield is up +1.7 bp to 4.100%.  T-notes are sliding today on better-than-expected US economic news that showed weekly jobless claims fell to a 5-week low, and the Feb Philadelphia business outlook survey unexpectedly rose to a 5-month high.  T-notes also have negative carryover from Wednesday’s hawkish minutes of the Jan 27-28 FOMC meeting, where “several” policymakers suggested the Fed may need to raise interest rates if inflation stays above their goal.  In addition, today’s jump in WTI crude oil by more than +1% to a 3-week high is lifting inflation expectations, a bearish factor for T-notes. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +1.4 bp to 2.753%.  The 10-year UK gilt yield is up +1.6 bp to 4.390%.

Swaps are discounting a 2% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

Chipmakers and AI-infrastructure stocks are under pressure today, dragging the broader market lower.  Seagate Technology Holdings (STX) is down more than -3%, and Intel (INTC), Micron Technology (MU), Western Digital (WDC), Lam Research (LRCX), Applied Materials (AMAT), KLA Corp (KLAC), and ARM Holdings Plc (ARM) are down more than -2%.  Also, Nvidia (NVDA), Marvell Technology (MRVL), Palantir Technologies (PLTR), and Qualcomm (QCOM) are down more than -1%. 

EPAM Systems (EPAM) is down more than -19% to lead losers in the S&P 500 after forecasting a full-year revenue growth rate on an organic constant currency basis of 3% to 6%, weaker than the consensus of 6.3%.

Avis Budget Group (CAR) is down more than -18% after forecasting full-year adjusted Ebitda of $800 million to $1.00 billion, weaker than the consensus of $1.07 billion. 

Pool Corp (POOL) is down more than -13% after reporting Q4 adjusted RPS of 84 cents, below the consensus of 98 cents, and forecasting full-year EPS of $10.85 to $11.15.  weaker than the consensus of $11.61. 

Wayfair (W) is down more than -12% after reporting Q4 active customers of 21 million, below the consensus of 21.4 million. 

Molson Coors Beverage (TAP) is down more than -8% after reporting Q4 net sales of $2.66 billion, below the consensus of $2.70 billion. 

Booking Holdings (BKNG) is down more than -7 to lead losers in the Nasdaq 100 after reporting Q4 adjusted EPS of $48.80, below the consensus of $48.86.

Carvana (CVNA) is down more than -6% after reporting Q4 adjusted Ebitda of $511 million, weaker than the consensus of $535.7 million. 

Cheesecake Factory (CAKE) is down more than -3% after reporting that Q4 restaurant comparable sales fell 2.2%, weaker than the consensus of -0.81%.

Omnicom Group (OMC) is up more than +13% to lead gainers in the S&P 50 after reporting Q4 revenue of $5.50 billion, well above the consensus of $4.52 billion.

Etsy (ETSY) is up more than +10% after selling its Depop business to eBay for about $1.2 billion.

Deere & Co (DE) is up more than +9% after raising its full-year net income forecast to $4.5 billion to $5.0 billion from a previous forecast of $4.00 billion to $4.75 billion.

DoorDash (DASH) is up more than +5% to lead gainers in the Nasdaq 100 after forecasting Q1 Marketplace gross order value of $31 billion to $31.8 billion, above the consensus of $30.75 billion. 

Dentsply Sirona (XRAY) is up more than +5% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $17.

Quanta Services (PWR) is up more than +4% after reporting Q4 revenue of $7.84 billion, better than the consensus of $7.40 billion, and forecasting full-year revenue of $33.25 billion to $33.75 billion, well above the consensus of $31.32 billion.  

Kinetik Holdings (KNTK) is up more than +3% after it said it is considering a sale after being approached by Western Midstream Partners. 

Earnings Reports(2/19/2026)

Akamai Technologies Inc (AKAM), Alliant Energy Corp (LNT), CenterPoint Energy Inc (CNP), Comfort Systems USA Inc (FIX), Consolidated Edison Inc (ED), Copart Inc (CPRT), Deere & Co (DE), EPAM Systems Inc (EPAM), Evergy Inc (EVRG), Extra Space Storage Inc (EXR), Insmed Inc (INSM), Live Nation Entertainment Inc (LYV), Newmont Corp (NEM), Pool Corp (POOL), Quanta Services Inc (PWR), Southern Co/The (SO), Targa Resources Corp (TRGP), Walmart Inc (WMT).