Market Insights Recap — Week of February 23, 2026

Hello. I'm Steve Orr, Chief Investment Officer for Texas Capital's Private Bank.

Well, let's look at that Supreme Court ruling and recent data. Should we be reacting? Changing our portfolios? Let's find out.

Friday morning, Supreme Court said the Trump administration cannot use the IEEPA statute for reciprocal tariffs, mostly about fentanyl. The court remanded the case to lower courts to work out possible refunds. What a mess that's going to be. The administration made it clear from the beginning it would use other statutes to replace IEEPA tariffs if they were disallowed. So temporary tariffs are already in place pending investigations for other statutes that Congress enacted over the years that are permanent. So there's lots of complaining from trade partners and threats to scrap "agreements" that really were just outlines on cocktail napkins. Nothing is set in stone.

The markets expected this decision, and they took it in stride. In fact, markets are taking a lot in stride lately and kind of boring. Last Friday, the S&P 500 closed where it was back in late October. In that four-month span, the indexes traded in a pretty tight 5% range. That is boring. We did manage a few all-time highs in the index along with several others. They sit very close to their recent highs. Looking at prior cases of these small movements in the index returns over the next six months, they're positive but kind of below average, which perfectly matches the bumpy ride we expect in a mid-term election year. Now, the ripping 35% run from that Liberation Day into October, one of the best in years for the S&P and the Nasdaq. So a pause to rebuild energy. Not a bad thing. And the market has plenty to worry about otherwise. Will the administration finish section 301 tariff reviews in five months? What will the scale of Iran attacks be? Earnings season, a good one, is largely in the rearview mirror, except for Wednesday's NVIDIA Monster. April brings a liquidity drain as taxes are paid into the government. And now there's doubt about Powell leaving the Fed chair in May.

Now don't forget this is a mid-term election year, just the usual bumpy ride with a 15% correction thrown in during the summer. No problem. Now one certainty, though, is the recent outperformance of the S&P 493 versus the Magnificent Seven. But the three-headed monster for the stock market is pretty well-behaved. That's what you really care about: The dollar and 10-year Treasury yield, they're near their lows over the last year. Crude oil, barely above its recent average. So two out of three bode well for stocks going forward. 

The economy is doing its part to help markets. The fourth quarter GDP report didn't really rattle either. The headline numbers showed growth of only 1.4%, a big drop below those expectations of 2.5%. But the government shutdown accounted for just over 1%, so markets knew to add that back in, and that real GDP in the fourth quarter did just fine. We expect this quarter to include that rebound and probably be about 1% higher than normal. Personal Consumption Expenditures, that's the Fed's favorite inflation gauge. They continue to run right around 3%. And I expect inflation to stay near 3% over the next few months. Producer prices, those are what wholesale people pay, manufacturers pay. Their inflation rate has turned higher over the last couple of months. It leads consumer prices by about 12 months. So be careful for higher prices coming in the next year. 

Overall, the economy's in solid shape. It's going to do better than last year. And looking ahead to 2027? Bear this in mind. We've never had a recession in the third year of a presidential term. And the S&P has not declined in the 12 months after mid-term elections since 1938. So whatever the noise and sentiment is over the next few months, we can be patient. Our indicator dashboard is keeping us fully invested; 'til next time.