The S&P 500 index closed marginally higher on Friday, February 13, 2026, as investors reacted to a cooling inflation report that suggested a potential easing of interest rates. However, the broader market sentiment was tempered by ongoing concerns surrounding artificial intelligence and its potential impact on the technology sector, which saw heavyweight stocks decline.
The U.S. consumer price index (CPI) for January showed a slower-than-expected increase, rising 0.2% month-on-month and 2.4% year-on-year. This eased annual inflation rate is the slowest since May 2025 and aligns with market expectations for the Federal Reserve to consider interest rate cuts in the coming months. Data released by the U.S. Bureau of Labor Statistics indicated that core inflation, excluding volatile food and energy costs, also moderated, rising 0.3% from December to January and reaching 2.5% year-over-year.
Market Performance Overview
On Friday, the Dow Jones Industrial Average gained 48.95 points, or 0.10%, to close at 49,500.93. The S&P 500 added 3.41 points, or 0.05%, to reach 6,836.17. The Nasdaq Composite, however, closed lower, losing 50.48 points, or 0.22%, to settle at 22,546.67.
For the week, all three major indices recorded declines, with the S&P 500 falling 1.39%, the Nasdaq down 2.1%, and the Dow Jones off by 1.23%. These losses marked the biggest weekly retreats for these indexes since November.
Technology Sector Under Pressure
The technology and communications services sectors experienced a notable downturn, influenced by persistent fears of disruption stemming from artificial intelligence (AI). Investors remained jittery about the extent to which AI competition and the substantial investments required to support the technology could impact corporate profits. Major technology companies, including Nvidia and Apple, were among the biggest drags on the S&P 500.
“Large cap tech stocks continue to be an anchor on the market and any whiff of optimism continues to get rejected,” said Michael James, managing director at Rosenblatt Securities in Los Angeles. “We’ve been on wobbly legs a couple of weeks now and with the three-day weekend approaching, it’s not surprising to roll over into the end of the day.”
Despite the overall tech sector weakness, the S&P 500 software and services index managed to close up 0.9% on Friday, while the broader S&P 500 tech sector itself fell 0.5%.
Company-Specific Movements
In the semiconductor industry, Applied Materials saw its shares surge 8.1% after forecasting second-quarter revenue and profit above Wall Street expectations. The company’s CEO, Gary Dickerson, attributed the strong performance to “the acceleration of industry investments in AI computing.” Networking equipment provider Arista Networks also gained 4.8% following its forecast for annual revenue above expectations, driven by demand for AI infrastructure.
Healthcare stocks also provided a boost, with Dexcom rising 7.6% and Moderna climbing 5.3% after both companies reported impressive fourth-quarter earnings.
Conversely, some steelmakers faced pressure. Nucor fell just under 3%, Steel Dynamics slipped 3.9%, Alcoa decreased by 0.9%, and Century Aluminum shares tumbled 7.4%. This occurred despite White House trade adviser Peter Navarro denying reports of planned reductions in steel and aluminum tariffs, stating there was “no basis in fact” for such claims.
Economic Outlook and Future Trading
The cooling inflation data has led traders to slightly increase the probability of a 25-basis-point interest rate cut in June to 52.3%, up from 48.9%. However, market strategists anticipate continued volatility.
Phil Orlando, chief market strategist at Federated Hermes, predicted further choppy trading ahead. He cited the upcoming U.S. midterm elections in November and the potential replacement of Fed Chair Jerome Powell by Kevin Warsh in May as factors contributing to market uncertainty. Historically, Fed leadership transitions in midterm years have often coincided with significant market pullbacks.
Trading Activity and Market Breadth
On U.S. exchanges, 18.61 billion shares changed hands on Friday, compared to the 20.75 billion average for the preceding 20 sessions. On the New York Stock Exchange (NYSE), advancing issues outnumbered decliners by a 2.57-to-1 ratio, with 392 new highs and 93 new lows. The Nasdaq saw 3,156 stocks rise and 1,646 fall, with advancing issues outnumbering decliners by a 1.92-to-1 ratio.
The S&P 500 recorded 34 new 52-week highs and 6 new lows. The U.S. stock market capitalization is projected to reach $60.4 trillion by 2026.