Stocks and Bonds Vary in Thin Holiday Trading: Market Summary

February 16, 2026

Market Update: Stocks and Bonds Show Restraint

(Bloomberg) – In a quiet trading session influenced by holiday schedules, stocks and bonds displayed a subdued demeanor following a positive inflation report from the U.S. on Friday. The data stirred optimism regarding potential interest rate cuts by the Federal Reserve later this year.

Futures for the S&P 500 remained steady, while Europe’s Stoxx 600 index saw a slight uptick of 0.1%. Notably, NatWest Group experienced a 4.8% increase as Citigroup raised its price target for the bank. Bond futures for German government bonds were solid, particularly after U.S. yields fell to their lowest levels since December on Friday.

The trading volume was somewhat light, largely due to the U.S. celebrating President’s Day and mainland Chinese markets being closed for the Lunar New Year. Nonetheless, traders are keenly focused on the trajectory of U.S. interest rates, anticipating a rate cut in July and possibly in June, particularly as inflation is decelerating more than expected.

“The backdrop for stock prices after the CPI is positive,” remarked Andrea Gaberone, head of global equities at KBC Securities. However, he noted that “sentiment around key sectors exposed to AI is quite critical, which could lead to more volatility in the future.”

This sentiment was echoed by various strategists, as they strive to differentiate between AI’s potential winners and losers.

According to a team at JPMorgan Chase led by Mislav Matejka, there is a need for caution around stocks that may be at risk of being “cannibalized” by AI advancements, particularly in areas like software and media.

Meanwhile, futures for the tech-heavy Nasdaq 100 dipped by 0.2%. In response to the evolving landscape, companies are creating new strategies to capitalize on these fluctuations. Goldman Sachs, for example, has introduced a basket of software stocks designed to support firms that stand to gain from AI adoption while shorting those that could be at risk.

As AI continues to disrupt markets, especially in the U.S., the sustainability of revenues is under scrutiny.

“Currently, companies are reporting approximately 13% growth this earnings season,” said Natalia Lipikhina, head of EMEA equity strategy at JPMorgan. “This is part of the reason we maintain a positive outlook on the S&P.”

Looking ahead, traders will be monitoring new data from Tuesday’s ADP private payroll report and Wednesday’s minutes from the Fed’s January meeting for fresh economic insights.

In broader terms, a Bloomberg strategist suggested that global stock markets could see a decline, mainly as the faltering outlook for AI impacts mega-tech and other sectors vulnerable to disruption. A drop in stock prices could extend gains in bonds.

Elsewhere, gold prices fell below $5,000 an ounce as traders took profits from recent highs.

The dollar remained stable, while Bitcoin struggled to maintain its recent momentum, declining by 1.5% to $68,505 after a week of losses.

Company Highlights

Warner Bros. Discovery is reportedly revisiting sale discussions with Paramount Skydance amid new offers from competitors.
Alibaba Group announced significant enhancements to its AI model, stepping up competition with startups and leading firms.
NatWest’s stock saw its largest increase since October, following a raised price target from Citi analysts.
Orsted A/S climbed up to 4% due to favorable analyst upgrades despite uncertainties in the U.S. sector.
Volkswagen plans a 20% cost reduction by the end of 2028, though sources of this information have not been disclosed.
Macquarie Asset Management is set to acquire Cube Holdings in a deal valued at around A$11.7 billion ($8.3 billion).

Market Movements

Stocks:

S&P 500 futures showed little movement as of 4:49 p.m. New York time.
Dow Jones Industrial Average futures were unchanged.
MSCI World Index also remained static.
Nasdaq 100 futures dipped by 0.2%.
S&P/BMV IPC fell by 0.2%.

Currencies:

Bloomberg Dollar Spot Index rose by 0.1%.
The euro decreased by 0.1%, extending its losing streak for five consecutive days.
The British pound fell 0.2% against the dollar.
The Japanese yen dropped by 0.6%.
The offshore yuan increased by 0.2%, reaching a three-year high.
The Mexican peso remained nearly unchanged.

Cryptocurrency:

Bitcoin decreased 0.5%, trading at $68,504.79.
Ether gained 1.6%, reaching $1,989.27.

Bonds:

The yield on 10-year government bonds remained stable at 4.05%.
German 10-year bond yields held steady at 2.75%.
The UK 10-year bond yields dropped by 2 basis points, marking the longest losing streak since January.

Merchandise: