The U.S. economy is buzzing… Inflation is calming down, economic growth is becoming more consistent, and Labor woes are adjusting, with unemployment at a steady 4.3%. Even the institution of world-wide tariffs has not disrupted the U.S. economies’ path. As inflation continues to cool, the threat of recession has also ‘cooled.’ “The worst calamity that everyone had in mind didn’t happen,” said Jeffery Cleveland, chief economist at Payden & Rygel. “People would say to me, ‘The only way you’ll get to 2% inflation is the unemployment rate has to spike.’” All indications point to a soft landing, defying many economists’ predictions of doom and gloom after the pandemic.
Inflation slipped in January, dropping to 2.4% from 2.7% in December 2025. The Labor Department’s better-than-expected Jobs report gave investors and traders a boost of confidence for the new year. Gasoline and electricity prices fell while natural gas, services and health care moved higher. After hitting a 9% inflation rate in 2022, it has fallen significantly in 4 years, even as consumer prices crept up.
The past week was unsettled as investors continued to worry over the long-term effects of artificial intelligence and its far-reaching influences. The markets were directionless with both the S&P 500 and Nasdaq off 1.4% and 0.2 in a week-long decline. The Dow Jones added 0.1%, up 49 points for the week. “With inflation now low and stable, America’s economy is set to turbocharge even further through long-overdue interest rate cuts from the Fed,” said Kush Desai, deputy White House press secretary. The 10-year Treasury note finished the week at 4.055%, the lowest in 3 months.
The market opened Tuesday, as U.S. financials were closed Monday in observance of Presidents Day, February 16th. The tech sector ‘hit the pause button’ after falling the past several days, to actually edge higher on Tuesday, boosting the S&P 500 and Nasdaq Composite, with each up 0.1%. However the contrarian artificial Intelligence stocks fell along with weakness as did the favored magnificent 7 stocks. Investors and traders fearful of the potential impact of AI companies were busy Tuesday pivoting from the sector into more value-oriented stocks with histories of steady growth. The Software sector perked up a bit after being ‘stung’ by concerns of the impact of AI companies. Recent buying opportunities have given investors a chance to reposition funds at a lower cost basis. “It’s likely that we will look back on the current volatility as a buying opportunity, though it’s difficult to estimate when volatility will be behind us,” said Louis Navellier, chief investment officer at Navellier & Associates. The blue chip Dow Jones Industrial Average finished just above flatline, up 0.1%, gaining 32 points in lackluster trading to start the week.
Heavy techs were ‘in play’ on Wednesday, as ‘bargain-hunting’ investors and traders were busy rotating their portfolios, scooping up value stock at bargain rates. The Dow Jones was up a modest 129 points. The S&P 500 was up 0.6% while the tech-heavy Nasdaq Composite struggled, now off 2.1% for the year. “What was expensive became cheap and what was cheap became expensive and the market’s starting to realize that,” said Jay Hatfield, chief executive officer at Infrastructure Capital Advisors.
RUMBLINGS ON THE STREET
David Kelly, chief global strategist at JPMorgan Asset Management, WSJ – “Artificial Intelligence does seem to be rather intelligent at coding. Companies aren’t going to just ditch the software that is embedded into all their systems overnight.
David Wagner, Portfolio manager and head of equity at Aptus Capital Advisors, WSJ – “It’s ‘shoot first, and ask questions later. One part of the market is a funding mechanism for another, and then the next day it switches.”
Robert Edwards, chief investment officer at Edwards Asset Management, WSJ – “You’ve got rate cuts coming, and you’ve got prices coming off highs, while everybody’s freaking out over tech and software. That’s the wall of worry, and that’s where opportunity comes in.”
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