Monthly Market Insights | February 2026

U.S. and Canadian Markets

Stocks climbed in January as the tailwinds of solid economic data offset the headwinds of geopolitical tensions that rattled investors during the month.

The Standard & Poor’s 500 Index advanced 1.37 percent, while the Nasdaq Composite rose 0.95 percent. The Dow Jones Industrial Average gained 1.73 percent. The Toronto Stock Exchange picked up 0.66 percent.^1,2

Innovation distinguishes between a leader and a follower. Steve Jobs, Inventor and Entrepreneur

A Choppy Rise

Stocks rose early in the month as 2026 kicked off, with the AI trade—led by chip manufacturers—setting the pace. But stocks came under pressure after the Justice Department announced an investigation into Federal Reserve Chair Jerome Powell over renovation costs for a Fed building.^3,4

Investors liked what they heard about inflation, which was followed by a solid retail sales report. However, geopolitical tensions and mixed results from money center banks put some pressure on stock prices.⁵

Investors were also encouraged when the White House said it was pursuing diplomatic approaches to resolve the international debate over Greenland while walking back talk about new tariffs.⁶

Stocks largely went sideways during the last week of trading as investors flocked to megacap tech names ahead of fourth-quarter reports, which pushed the S&P 500 above the 7,000 level for the first time.⁷

Market reaction was muted to the Federal Reserve’s widely expected decision to hold interest rates steady and news that the White House nominated former Fed insider Kevin Warsh as the next Chair of the Federal Reserve.^8,9

U.S. Sectors

Eight of the 11 S&P 500 Index sectors finished the month in the green as market leadership continued to broaden beyond tech names. Energy (+14.18 percent) was the clear double-digit leader, while Materials (+8.64 percent), Consumer Staples (+7.51 percent), and Industrials (+6.65 percent) also logged solid performances. Real Estate (+2.68 percent) and Communication Services (+2.00 percent) posted more modest gains but still outperformed the S&P 500 overall. Utilities (+1.31 percent) and Consumer Discretionary (+1.47 percent) managed small gains.¹⁰

Three sectors were under pressure, including Health Care (-0.04 percent), Information Technology (-0.06 percent), and Financials (-2.43 percent).¹⁰

Canada Recap

Canada’s S&P/TSX Composite Index carried over its 2025 momentum into the new year, setting multiple record highs early in the month. Mining and materials groups were among the best performers, while financial names also contributed to the rally.^11,12

Markets lost some momentum after the White House proposed raising tariffs following the release of the Canada-China Economic and Trade Cooperation Roadmap by Canadian officials. However, markets improved after officials clarified their position and said they were actively negotiating with the U.S.^13,14

Markets Recap
	January (%)	Year-to-Date (%)
S&P 500	1.37	1.37
Nasdaq	0.95	0.95
Russell 2000	5.83	5.83
S&P/TSX Composite	0.66	0.66
10-Year Treasury Notes	4.24	0.08
Fed Funds Rate	3.50-3.75	3.50-3.75
Yahoo Finance, January 31, 2026. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in February

In the month ahead, investors will continue to try separating the market’s signal from the noise created by daily headlines.

They will be watching whether interest in the stock prices broadens out beyond tech names, including AI.¹⁵

As AI begins to make its way into non-tech industries, more companies across more sectors of the economy are participating in the AI revolution.

A total of 306 S&P 500 companies mentioned AI on their third-quarter conference calls. Wall Street will be listening to companies' fourth-quarter conference calls with investors to learn if that number is expected to trend higher or lower in 2026.¹⁶

World Markets

The MSCI EAFE Index opened the year strong, picking up 5.19 percent.^17,18

In Europe, the United Kingdom (+2.94 percent) and Spain (+3.31 percent) led the way among the majors. Italy (+1.30 percent) and Germany (+0.20 percent) posted more moderate gains while France slipped 0.28 percent.¹⁸

Egypt (+14.24 percent) and Brazil (+13.70 percent) posted solid gains, while Mexico (+5.12 percent) also had a strong month.¹⁸

China’s Hang Seng Index rose 6.85 percent while Korea’s KOSPI rose 23.97 percent, extending its 2025 gains into the New Year. Meanwhile, Japan’s Nikkei rose 5.80 percent.¹⁸

World Market Recap for January 2026
Emerging Markets	January (%)	Year-to-Date (%)
Hang Seng (China)	6.85	6.85
KOSPI (Korea)	23.97	23.97
Nikkei (Japan)	5.80	5.80
Sensex (India)	-3.46	-3.46
EGX 30 (Egypt)	14.24	14.24
Bovespa (Brazil)	13.70	13.70
IPC All-Share (Mexico)	5.12	5.12
ASX 200 (Australia)	1.78	1.78
Europe
DAX (Germany)	0.20	0.20
CAC 40 (France)	-0.28	-0.28
IBEX 35 (Spain)	3.31	3.31
FTSE 100 (United Kingdom)	2.94	2.94
IT40 (Italy)	1.30	1.30
Yahoo Finance, January 31, 2026. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product (GDP)

The U.S. economy grew at a revised 4.4 percent annualized pace in the third quarter of 2025, ahead of economists’ expectations that GDP would remain unchanged from the Commerce Department’s 4.3 percent initial estimate. It was the fastest GDP growth in two years.¹⁹

The Canadian economy grew at a 2.6 percent annualized clip in Q3, faster than the 0.5 percent growth economists expected.²⁰

Employment

U.S. employers added 50,000 jobs in December, short of economists’ expectations. The unemployment rate ticked down to 4.4 percent in December, 0.1 percentage points lower than November’s pace and its first decline since June.²¹

Canadian employers added a net 8,200 jobs in December, stronger than expected. The unemployment rate in Canada rose to 6.8 percent.²²

Retail Sales

Consumer spending rose 0.6 percent in November over the prior month, according to the latest available federal data. November’s gain was slightly ahead of market expectations and marked a pickup from October’s downwardly revised 0.1 percent month-over-month decline.²³

While federal data for December retail sales was still unavailable as of late January, the Chicago Fed’s Advance Retail Trade Summary estimated that retail and food services sales (excluding autos and auto parts) rose 0.6 percent in December over the prior month. That marked a slight uptick from November’s upwardly revised 0.5 percent monthly increase.²⁴

Industrial Production

Industrial output rose 0.4 percent in December, beating expectations for a 0.1 percent uptick. Utility and manufacturing output drove much of the gains. Output grew 2.2 percent year over year in Q4, the fastest growth since 2022.²⁵

Housing

Housing starts fell 4.6 percent in October (the latest available federal data) over the prior month. New home sales declined slightly by 0.1 percent in October—also the latest available federal data—over the preceding month, following September’s 3.8 percent increase.^26,27

Homebuilder confidence for newly built single-family homes slipped 2 points in January over the prior month, to a score of 37. (A reading over 50 indicates most single-family homebuilders are confident in overall housing market conditions, while a lower reading indicates less builder optimism.)²⁸

Sales of existing homes rose 5.1 percent in December over the prior month, rebounding from November. Year-over-year sales increased 1.4 percent, an improvement from November’s 1.0 percent annualized decline.²⁹

Regionally, sales increased month over month in all four regions, with the largest gains in the South (+6.9 percent) and West (+6.6 percent), while the Northeast and Midwest (+2 percent each) experienced more modest increases. Year over year, sales gained in the South (+3.6 percent), fell in the Northeast (-1.9 percent), and were flat in the Midwest and West. The median existing home sales price in December was $405,400, 0.4 percent higher than a year ago. The supply of unsold homes tightened to 3.3 months in December, but increased slightly from 3.2 months of supply a year prior.²⁹

Consumer Price Index (CPI)

Consumer prices in the U.S. rose 2.7 percent in December from a year earlier, as expected, and were unchanged from November’s pace. Month over month, prices rose 0.3 percent, also in line with economists’ expectations. Core inflation, which excludes volatile food and energy prices, rose 2.6 percent year over year and 0.2 percent month over month—both cooler than expectations.³⁰

Consumer prices in Canada rose 2.4 percent in December year over year, quicker than expected and faster than November’s 2.2 percent annualized rate.³¹

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer increased 5.3 percent in November (the latest available federal data), exceeding economists’ expectations for a 4.0 percent rise. The gain was primarily powered by a 98 percent increase in civilian aircraft orders.³²

Private-sector data suggests a contraction in manufacturing order flow in December, which means federal data (once published) may show a flattening or slight decline in durable goods orders.³³

The Federal Reserve

As expected, the Federal Open Market Committee (FOMC) kept interest rates steady in January.³⁴

The meeting was noteworthy for the FOMC members' consensus on rates, which was a bit more divided at the December meeting. FOMC members voted 10-2 to keep the Federal Funds Rate steady at its current 3.5 percent to 3.75 percent target range. The vote followed three consecutive meetings at which the Fed cut rates.³⁴

The Federal Reserve’s next meeting is March 17-18, when the Fed will publish a Summary of Economic Projections.³⁴

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