Wall Street Mixed as Inflation Data Cools, AI Concerns Persist
U.S. Stock markets presented a mixed picture on February 13, 2026, as cooler-than-expected inflation data was offset by continued investor anxiety surrounding the potential impact of artificial intelligence on various sectors. The Dow Jones Industrial Average edged higher, while the Nasdaq Composite declined. This performance comes as investors weigh the implications of evolving technology and its effect on corporate earnings.
The Dow Jones Industrial Average (DJIA) closed at 49,500.93, a gain of 48.95 points, or 0.10%. The S&P 500 finished marginally higher, up 3.41 points to 6,836.17, a gain of 0.05%. However, the Nasdaq fell 50.48 points, or 0.22%, to close at 22,546.67.
The Labor Department reported that the Consumer Price Index (CPI) rose 2.4% year-over-year in January, the lowest reading since April 2025, and below the 2.5% analysts had predicted. On a monthly basis, the CPI increased 0.2%, also below the expected 0.3%.
Core CPI, which excludes food and energy costs, rose 2.5% year-over-year, in line with expectations. Monthly core CPI increased 0.3%, matching analyst forecasts.
Following the CPI release, U.S. Treasury yields declined across the board. The yield on the 2-year Treasury note fell 5 basis points to near its lowest level since 2022, while the 10-year Treasury yield dropped to 4.05%.
The data prompted some investors to revisit expectations for potential interest rate cuts, with a June reduction of 0.25% now appearing more plausible. However, the majority still anticipate two rate cuts by the end of 2026, although a growing number believe more than two cuts are possible.
“This represents fine news for the market and for Kevin Warsh to step into the role of the next Fed chair,” said Phil Blancato, chief market strategist at Osaic. “But this is just one month of data. If this trend continues, it will pave the way for rate cuts and controlling inflation.”
Despite the positive inflation data, all three major indexes declined for the week. The S&P 500 fell 1.4% for its second consecutive weekly loss, the Dow Jones lost 1.2%, and the Nasdaq dropped 2.1%.
Technology stocks weighed heavily on the market, with the “Magnificent 7” group of stocks declining 1.1%. Amazon experienced its ninth consecutive day of declines, its longest losing streak in nearly two decades. Software ETF’s rebounded 2.2%, but it wasn’t enough to fully offset the tech sector’s losses.
Analysts noted a phenomenon of “de-weighting” occurring in the market.
“Inflation is tied to the existing concerns among investors that AI will change the revenue potential in various industries,” said Cath Buchanan from Globalt Investments. “While the latest CPI numbers aren’t related to what’s anticipated in terms of industry shifts, the market is still trying to understand what the impact of artificial intelligence and its implementation into the economy will be, as it’s creating downward pressure on employment and downward pressure on inflation.”
Concerns about disruption from AI impacted the market throughout the week, extending beyond software stocks to include real estate, transportation, and financial services. Financial firms Charles Schwab and Morgan Stanley fell 10.8% and 4.9% respectively for the week, while software company Workday declined 11% and commercial real estate firm CBRE dropped 16% since the start of the week.
“Investors are dismissing companies seen as losers from AI, and the list of those affected by AI is growing daily, creating a divergence between the new and old economies, and U.S. Stocks versus the rest of the world,” noted Emmanuel Cau, an analyst at Barclays.
Investors are closely scrutinizing recent earnings reports to assess potential threats from AI. Applied Materials shares jumped 8.1% due to strong guidance reflecting robust demand for AI, while Pinterest tumbled 16.83% after reporting lower-than-expected revenue and analysts expressed concerns about AI risks to the company’s search platform.
European stock markets closed slightly lower as concerns about the potential impact of artificial intelligence (AI) prompted caution among investors, who also assessed a range of corporate earnings and economic data.
The STOXX 600 index of Europe ended a volatile week with a slight increase of 0.09%, closing at 617.70 points, down 0.82 points, or -0.13%.
The FTSE 100 in London closed at 10,446.35 points, up 43.91 points, or 0.42%. The CAC-40 in Paris finished at 8,311.74 points, down 28.82 points, or -0.35%. The DAX in Germany closed at 24,914.88 points, up 62.19 points, or 0.25%.
Since late January, a surge of new AI tools has rattled global markets as investors attempt to gauge the impact of the new models on traditional businesses. Large technology companies are forecasting increased spending on developing the technology.
Disappointing gross margins from Cisco Systems in the U.S. This week added to the anxiety.
Logistics companies, insurers, index providers, software firms, and asset managers in Europe were among the most affected by the sell-off.
The banking sector led the declines this week, falling 5.4%, its largest weekly drop in over 10 months.
While technology stocks rebounded 1.7% on Friday, they remained among the worst-performing groups this week.
Data showed that the European Union’s trade balance continued to shrink as import taxes impacted exports to the U.S. And increased imports from China reduced domestic production.
However, there was some positive news on the earnings front. European companies now expect a 1.1% year-on-year decline in quarterly earnings, an improvement from a previously forecast 4% drop, according to data compiled by LSEG. However, this is still expected to be the worst earnings performance in seven quarters as companies grapple with higher U.S. Import taxes.
The defense sector led gains on Friday, rising 3.3%. Safran, a French aerospace and defense group, jumped 8.3% to a record high after forecasting higher revenue and profits in 2026.
Capgemini shares increased 5.1% after the French IT services company reported full-year revenue above targets.
L’Oreal, the owner of Maybelline, fell 4.9% after fourth-quarter sales missed expectations. The personal and household goods sector overall declined 0.8%.
West Texas Intermediate (WTI) crude oil for March delivery rose 5 cents, or 0.08%, to close at $62.89 a barrel, and Brent crude for April delivery increased 23 cents, or 0.34%, to close at $67.75.
