The Profit Margin: February 17, 2026
Statistic of the Week
While many eyes are on the Winter Olympics, another historic contest recently took place on New Jersey’s Navesink River. The Van Norstrand Challenge Cup—an ice boat race between the North Shrewsbury Ice Boat & Yacht Club and the Hudson River Ice Yacht Club—has been held only four times in 140 years. After the New Jersey team won each of the previous races, the Hudson River club captured the cup this year.
Global Perspective
While investors and economists closely track inflation in the U.S., concerns are growing that China may be entering a deflationary period. Prices declined for much of 2025 and only began to rise again in October. In January, China’s Consumer Price Index increased at an annualized rate of just 0.2%, underscoring the weakness in price growth.
Market Moving Events
Tuesday: Empire State Manufacturing
Wednesday: Housing Starts, Building Permits, Durable Goods, Industrial Production, FOMC Meeting Minutes
Thursday: Jobless Claims, Trade Deficit, Leading Indicators
Friday: GDP, Personal Income and Spending, PCE, New Home Sales
Commentary
Despite encouraging labor market data and a softer-than-expected CPI reading, domestic equity markets moved lower last week. The Dow Jones Industrial Average led performance, declining 1.23%, though it remains positive on a year-to-date basis.1 The S&P 500 fell 1.39%, slipping back into negative territory for the year.2 And the Nasdaq dropped 2.99%, marking its fifth consecutive weekly decline—the longest losing streak since May 2022.3 Even as the major indices weakened, there was a notable rotation within the market, with investors favoring defensive sectors such as utilities, consumer staples, and materials. As equities declined, bond prices moved higher, pushing yields lower. The 10-year Treasury yield ended the week at 4.05%, its lowest level in three months.4
The primary forces driving markets remain inflation, labor market conditions, and the evolving impact of artificial intelligence. Last week’s headline CPI reading came in below expectations (see chart), while the core measure matched estimates.5 Data gaps from the October–November government shutdown are distorting the trend, as missing data for those months effectively assumes no inflation. This week’s PCE release—the Fed’s preferred inflation gauge—should provide further clarity. The employment report offered a mixed picture. The unemployment rate fell to 4.3% and labor force participation edged higher,6 though revisions to prior data suggest underlying labor market momentum remains soft. Meanwhile, uncertainty around how artificial intelligence will reshape the economy continues to drive sector-level volatility, as investors weigh the impact of technological disruption.
Chart of the Week
The Consumer Price Index fell to a five-year low of 2.4%, slightly below analyst expectations. On a monthly basis, CPI rose 0.2%. Core inflation, which excludes food and energy, came in at 2.5%, in line with estimates.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week: Clearnomics,
Bureau of Labor Statistics
Statistic of the Week:
The New York Times
Global Perspective:
The Economist
Commentary:
1. Bloomberg
2. Bloomberg
3. Bloomberg, Investor’s Business Daily
4. MarketWatch.com, Investor’s Business Daily
5. Bureau of Labor Statistics
6. Bureau of Labor Statistics