Outlook As of Friday, February 20, 2026, the S&P 500 has risen just over 1% year-to-date and 14% over the trailing 12 months. Much of this performance has been driven by the "Magnificent 7" technology stocks, which remain a staple in many portfolios. Currently, the collective market value of these seven companies represents one-third of the S&P 500. While the appreciation of these stocks has benefited investors, some now consider their concentration a potential risk. Furthermore, there has been ongoing discussion regarding small-cap, value, and international stocks, which have been relatively overlooked and may present different opportunities. The MSCI International Value Index—a broad non-U.S. index focused on value rather than growth—has trailed the S&P 500 over the past decade. As of February 20, 2026, the annualized returns were 11.8% (MSCI Int'l Value) and 15.5% (S&P 500). However, some investors are beginning to question the valuations of the Magnificent 7 due to factors such as AI-related developments. Meanwhile, the MSCI International Value Index has gained 50% over the past year, drawing increased attention. Should investors be concerned about owning the Magnificent 7? Given the financial strength and growth prospects of these businesses, holding these names is not necessarily a primary risk. In our view, they do not appear to be trading at "bubble" levels. That said, the degree to which these names are overweight in a portfolio is a consideration worth discussing with a financial advisor to ensure proper diversification. . . .
U.S. financial markets experienced a pivotal week shaped by significant tariff policy developments, a series of meaningful economic data releases, and shifting expectations surrounding Federal Reserve policy. Tariff Developments The central event of the week was the U.S. Supreme Court’s ruling that invalidated President Trump’s use of the International Emergency Economic Powers Act (IEEPA) to impose broad tariffs. The court clarified that the law does not grant authority for such sweeping measures. This ruling removed a key source of uncertainty for businesses and reduced expectations for tariff-related price pressures, triggering a reaction across equity markets. Despite the court’s ruling, the administration quickly announced plans for a new 10% global tariff, before raising it to 15% on Saturday, signaling an intention to preserve tariff revenue under alternative legal authority. Officials also noted that disputes over potential refunds of previously collected tariffs may take “weeks, months, years” to resolve, prolonging policy uncertainty.1 Markets weighed the immediate relief created by the ruling against the possibility of renewed trade friction and re-emergence of cost pressures, along with challenges around tariff refunds. Economic Data Economic releases during the week pointed to slowing momentum in several areas. - The U.S. Real (inflation-adjusted) GDP grew only 1.4% in Q4, a notable deceleration from the prior quarter as government spending, exports, and consumer demand weakened.2
- Updated inflation data showed the Federal Reserve’s preferred inflation gauge, the core PCE, rose 3.0% year over year, driven by persistent services inflation. While the headline PCE rose 2.9% year over year.3
These indicators painted a picture of an economy that is slowing but not contracting, with inflation still elevated enough to keep policymakers cautious. Policy Outlook: Fed Expectations Fed minutes released during the week showed meaningful division among policymakers regarding future rate adjustments. Some officials signaled openness to further easing if inflation continues to cool, while others warned that price pressures remain persistent enough to justify holding rates higher.4 At the same time, the committee now faces uncertainty about whether tariff rollbacks could accelerate disinflation or whether new tariffs might reintroduce upward price pressure. Interest rate futures reflected this uncertainty, fluctuating between expectations for mid-year rate cuts and a more delayed easing path. Overall, markets leaned toward cautious optimism this week. The recent developments reduced immediate downside risks while setting the stage for ongoing volatility as investors navigate the evolving landscape of trade policy, incoming economic data, and monetary policy direction.
[1] Supreme Court strikes down Trump tariffs in rebuke of signature policy [2] GDP News Release [3] PCE Dec. 2025.pdf [4] Minutes of the Federal Open Market Committee, January 27–28, 2026 | 
