Market Summary: What Happened Yesterday and What Awaits Us Today (February 16)

Wall Street is torn between slowing inflation and tech pressures… Biggest weekly losses this year as markets await the Fed's decision

US stocks closed a turbulent week with mixed performance after fresh inflation data showed prices rising more slowly than expected last month. The figures provided some short-term reassurance to markets following a period of sharp volatility.

The S&P 500 and Dow Jones Industrial Average each edged up 0.1% at the close, while the tech-heavy Nasdaq Composite slipped 0.2%.

This followed a difficult Thursday session, when renewed concerns about the artificial intelligence sector triggered another sell-off in software stocks — part of what media outlets have dubbed the recent “software crisis.”

On a weekly basis, all three major indices recorded their largest declines since the start of the year. The Dow fell 1.2%, despite hitting record highs earlier in the week. The S&P 500 declined 1.4%, while the Nasdaq dropped 2.1%, marking its fifth consecutive weekly loss.

Inflation data provided partial support for markets. Annual inflation slowed to 2.4% in January — the lowest level since May and below economists’ expectations. Core inflation, which excludes food and energy, eased to 2.5%, its lowest reading since March 2021.

These figures raised hopes for potential monetary policy easing. However, strong labor market data — showing job creation more than double forecasts — reduced expectations for near-term interest rate cuts.

Treasury yields declined after the inflation release, with the 10-year yield falling to 4.05% from 4.11% in the previous session. This helped support risk appetite in certain sectors.

Corporate movements were notable. Coinbase shares surged 17% despite declining revenue amid lower cryptocurrency prices. Applied Materials rose 8% after beating earnings expectations, supported by strong demand for AI chips, while Arista Networks gained 5% on continued growth in AI-driven data center demand.

Conversely, Pinterest fell 17% after disappointing results, and DraftKings dropped 14% following weak revenue forecasts.

Major technology stocks remained under pressure. Nvidia and Apple each declined more than 2%, while Alphabet and Meta slipped over 1%. Microsoft and Amazon posted modest losses, while Tesla was the only member of the “Big Seven” to close slightly higher.

In commodities markets, gold recovered earlier losses to trade near $5,050 an ounce, while West Texas Intermediate crude settled around $62.85 per barrel. Bitcoin rebounded from roughly $65,000 to about $68,800, and the US dollar index edged down 0.1% to 96.85.

Market Outlook

Near-term market direction is likely to remain tied to incoming macroeconomic data, particularly inflation and labor market reports ahead of the next Federal Reserve meeting.

Continued easing in inflation could revive expectations for interest rate cuts, potentially supporting equities and gold while weighing on the dollar. However, persistent labor market strength and rising wages could push bond yields higher again, potentially triggering renewed volatility — especially in technology, AI, and cryptocurrency-related stocks.