Daily market snapshot

Wednesday, 2/25/2026 p.m.

• Stocks gain with earnings in focus – North American equity markets closed higher Wednesday, as investors await earnings results from NVIDIA after today’s market close.* In Canada, Bank of Montreal and National Bank of Canada reported better-than-expected earnings and revenue this morning, supporting shares and the broader financials sector of the TSX.* South of the border, financials and technology were among the top performers, regaining ground after AI disruption concerns have weighed on these sectors in recent weeks.* Overseas, European markets traded higher, and Asian markets closed higher overnight, led by Japan’s Nikkei, which gained over 2%.* Bond yields were slightly higher Wednesday, with the 10‑year U.S. Treasury closing at 4.05% and the 10‑year GoC at 3.19%.*
   
• All eyes on NVIDIA earnings – Corporate earnings remain in focus on Wednesday, with investors awaiting results from tech giant NVIDIA after the market close today.* Analysts expect quarterly revenue of $66 billion—nearly 70% higher than a year ago—while EPS is expected to be $1.54, up 73% year-over-year if achieved.* In Canada, Bank of Montreal and National Bank of Canada reported better-than-expected earnings and revenue this morning, following an earnings beat from Bank of Nova Scotia on Tuesday.* At the index level, nearly 60% of companies in the TSX have reported fourth-quarter results, with earnings on pace to grow by 16% year-over-year.* In the U.S., 90% of companies in the S&P 500 have reported fourth-quarter results, with earnings on pace to grow by roughly 12% year-over-year—the fifth consecutive quarter of double-digit earnings growth, if it holds.* In 2026, earnings growth is expected to remain strong, with analysts calling for growth of 16% for the TSX and 14% for the S&P 500*. Despite recent market volatility, we believe the fundamental backdrop for equity markets remains supportive, underpinned by steady economic and corporate profit growth.*
   
• Overseas momentum has continued in 2026 – After a strong 2025, overseas equities have extended their momentum into 2026 and are outperforming Canadian and U.S. markets year‑to‑* Emerging‑market equities are leading: the MSCI Emerging Markets Index is up more than 13% year‑to‑date in Canadian dollar terms.* While the technology sector has lagged in Canada and the U.S., tech‑heavy regions such as Korea and Taiwan have posted strong gains year‑to‑date—approximately 47% and 22%, respectively—supporting the broader emerging‑markets index.* In developed markets, the MSCI EAFE Index is up more than 8% in 2026, aided by strength in Japan, where MSCI Japan has gained over 12% amid expectations for potential fiscal easing and an improvement in manufacturing activity, as the preliminary S&P Global Japan Manufacturing PMI rose to a near four‑year high in February.* We believe the global backdrop remains supportive for equities, and we recommend a globally diversified overweight to stocks versus bonds. In particular, we see opportunities in U.S. stocks, overseas developed small‑ and mid‑caps, and emerging‑market equities.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet}

Tuesday, 2/24/2026 p.m.

• Stocks rise, helped by tech rebound - Major North American equity indexes finished higher as sentiment around technology and AI showed early signs of stabilizing*. AMD gained roughly 8% following news of a multiyear partnership with Meta, while software stocks advanced after AI startup Anthropic announced new integrations that position its tools as complements to existing systems rather than replacements*. In Canada, Scotiabank shares traded slightly lower following its earnings report, though this comes after a roughly 50% gain over the past 12 months*. For the remainder of the week, investor attention will likely center on the evolving impact of AI across industries, NVIDIA’s earnings tomorrow, new trade considerations following the U.S. Supreme Court decision, and ongoing geopolitical developments. Oil prices continued to hover near seven‑month highs, marking their strongest start to a year since 2022, amid rising U.S.–Iran tensions*. Meanwhile, government bonds have benefited from February’s volatility and safe‑haven demand, pushing the 10‑year GoC yield down to 3.18%.*.
   
• AI disruption fears linger - While some concerns may ultimately prove overblown, several industries continue to face valuation pressures tied to AI‑driven disruption fears. The technology sector remains at the center, with the S&P 500 software industry down roughly 32% from its October peak*, though the group is seeing a rebound today. The pace of new AI tools and agent releases continues to accelerate, and we think the fast‑moving environment will inevitably create both winners and losers. Historically, major technological advances have driven productivity gains, faster economic growth, and rising living standards—even if the process of creative destruction can be messy. In the meantime, the rotation toward “old‑economy” areas of the market such as energy, materials, staples, and industrials is helping add resilience to diversified portfolios*. The next key catalyst for AI sentiment arrives Wednesday, when NVIDIA reports earnings after the market close.
   
• Markets weigh trade developments - Last week’s Supreme Court decision to strike down the U.S. administration’s global tariffs has introduced a new wave of uncertainty around trade policy. On one hand, the effective tariff rate appears set to move lower, offering a form of short‑term fiscal stimulus*. Overnight, U.S. Customs and Border Protection implemented a new 10% global tariff, less than the 15% rate President Trump had pledged, though the higher rate may still come later*. On the other hand, the administration has reiterated its commitment to reconstructing the prior tariff framework and is exploring alternative legal paths to reinstate tariffs*. This uncertainty around the rules and the status of potential refunds may lead some businesses to delay spending and hiring decisions. Still, as last year's experience showed, the broader economy has proven resilient*. For Canada, we don't think the new 15% global tariff rate will have a meaningful impact on the economy, as the CUSMA-compliant goods are exempt from tariffs and the Section 232 tariffs on steel, aluminum and lumber are not changed*. We continue to advise investors not to overreact to shifting headlines and to maintain a constructive outlook supported by steady economic growth and rising corporate earnings.

Angelo Kourkafas, CFA;
Investment Strategy

^{Source: *FactSet}

Monday, 2/23/2026 p.m.

• Stocks fall on U.S. tariff hike and AI disruption concerns – North American equity markets were broadly lower Monday, following an announcement from U.S. President Donald Trump that he would raise the global tariff rate implemented under Section 122 of the Trade Act to 15%.* Additionally, AI‑related disruption concerns contributed to market losses, with growth‑oriented sectors of the S&P 500 such as technology among the laggards.* Within technology, the software industry declined 4%, as investors have grown concerned that advances in AI could erode market share for existing software companies.* Private investment managers were sharply lower as well, as these firms are perceived as having private‑credit exposure to software companies.* Blackstone and KKR each fell more than 5%, and the S&P 500 financials sector overall was down more than 3% today.* Contrarily, defensive sectors such as consumer staples and health care outperformed, each gaining over 1%.* In Canada, the TSX fared better, posting only a modest decline and was supported by strength in the materials sector.* Bond yields closed lower, with the 10‑year U.S. Treasury yield at 4.03% and the 10‑year GoC yield at 3.19%.* In commodity markets, precious metals ended higher amid heightened policy and market volatility, with gold prices rising more than 3%.*
   
• Global tariff rate raised to 15% - On February 20, U.S. President Donald Trump announced a 10% global tariff under Section 122 of the Trade Act, following the Supreme Court’s decision ruling against tariffs implemented under the International Emergency Economic Powers Act (IEEPA). Over the weekend, President Trump stated he would raise the 10% tariff rate to 15%.* Tariffs imposed under Section 122 can remain in effect for up to 150 days, and we expect the administration to pursue investigations that could allow tariffs under Section 301 or Section 232 once the Section 122 tariffs expire. With CUSMA-compliant goods exempt from tariffs, we don't believe the newly announced 15% global tariff rate will have a meaningful impact on the Canadian economy. For Canada, the more impactful tariffs are the Section 232 tariffs on steel, aluminum and lumber, which remain intact. According to the Yale Budget Lab, prior to the Supreme Court ruling against IEEPA tariffs, the U.S. average effective tariff rate stood at 16%. Under the new 15% global tariff, the effective tariff rate is expected to fall modestly to 13.7%.** In our view, the newly announced 15% tariff rate is unlikely to have a meaningful impact on economic activity, and we expect tariff rates to remain elevated compared to history, even after the Section 122 tariffs expire as the administration pursues other avenues to implement tariffs. However, it does add to policy uncertainty. In this backdrop, we advise investors not to overreact to headlines, and we reiterate our constructive outlook for global equity markets, supported by strong corporate profit growth and healthy economic activity.
   
• Earnings in focus – Corporate earnings will be in focus this week, with more than 50 S&P 500 companies and 30 TSX Composite companies set to report. All eyes will likely be on NVIDIA’s results on Wednesday, as investors look for the latest update on AI spending trends. Additionally, we'll get a read on earnings trends within domestic banks, with each of the big six banks scheduled to report.* South of the border, with 85% of S&P 500 companies having reported so far, results have been strong. S&P 500 earnings per share are on pace to grow 12.7% in the fourth quarter, above expectations for roughly 7% growth entering the year.* The technology sector has been a primary driver of the strong fourth-quarter results, with the sector’s earnings on track to grow by more than 25% year-over-year—the highest among any sector in the S&P 500.* Despite robust earnings growth, the technology sector has lagged in 2026, down roughly 4% year-to-date, as concerns about AI disruption have weighed on the group, particularly software companies.* In Canada, roughly half of the TSX has reported thus far, with earnings on track to grow by 16.5% in the fourth quarter, led by the materials sector.* We believe a balance between growth- and value-style sectors will be key to investor success in 2026. As part of our Canadian opportunistic equity sector guidance, we recommend overweight positions in industrials, materials and energy, offset with underweights to communication services, consumer discretionary, consumer staples and technology. For our U.S. equity sector guidance, we recommend overweight positions to industrials, health care and consumer discretionary, offset with underweights in consumer staples and utilities.

Brock Weimer, CFA;
Investment Strategy

^{Source: *FactSet ** Yale Budget Lab}

• Stocks reverse early losses as Supreme Court strikes down Trump's global tariffs – Equities finished higher while bond prices declined following the Court’s 6–3 ruling that the U.S. president exceeded his authority by using a federal emergency‑powers statute to impose the tariffs*. The decision leaves unresolved whether previously collected duties—potentially up to $170 billion—must be refunded, sending that question back to a lower court and likely beginning a lengthy legal process*. The U.S. administration responded immediately, signaling its intent to achieve similar policy outcomes through alternative avenues. U.S. President Trump announced a new five‑month, 10% global tariff under Section 122 of the Trade Act, while the administration prepares to pursue investigations that could enable tariffs under Section 301 or Section 232. Retail and technology stocks outperformed, and government bond yields moved modestly higher amid concerns that potential refunds could widen federal budget deficits*. In our view, the ruling could act as an additional form of short‑term fiscal stimulus, complementing ongoing tax refunds and supporting near‑term growth. However, we continue to expect that overall tariff rates will remain elevated as the administration leverages other legal pathways. We advise investors not to overreact to the headlines and continue to maintain our constructive outlook, grounded in steady economic growth and rising corporate earnings.
• Geopolitics also an area of focus - Rising geopolitical tensions are also getting some attention after reports that the U.S. administration may consider a limited military strike on Iran to secure more substantive concessions on its nuclear program*. President Trump indicated that Iran had “10 to 15 days at most” to reach a deal. WTI crude is slightly lower today at $66 per barrel, though prices recently touched their highest level since August and remain on track for a 5% weekly gain*. While firmer oil prices could present upside risks to inflation, we note that they remain near the low end of their five‑year range. According to the U.S. Energy Information Administration (EIA), the global oil market is currently experiencing a significant oversupply, a dynamic the agency expects to persist through 2026. Finally, while geopolitical flare‑ups can create short‑term volatility, recent episodes have produced only limited and short‑lived market impacts*. That remains our base case today.
• U.S. economic data highlight Fed challenge - Today's batch of economic data, though old news at this point, provides mixed takeaways and highlights why some Fed officials are in no rush to rates. The U.S. growth slowed more than expected in the fourth quarter, with GDP increasing at an annualized 1.4% pace vs. the 2.8% consensus estimate*. Government spending was a notable drag due to the longest government shutdown in history, which though should reverse in the current quarter. For 2025, U.S. GDP still posted a solid 2.2% increase, and expectations point to a modest acceleration this year supported by tax refunds and strong business investment, including heavy AI-related spending*. Despite the dovish read from the weaker end to 2025 for the U.S. economy, lingering inflation pressures are likely to keep the Fed on the sidelines for a while longer. The Fed's preferred measure of inflation, the core personal consumption expenditures price index, rose 0.4% in December, the most in nearly a year, rising 3% from a year ago*. We are still looking for two rate cuts this year, but they will likely be back-end loaded.
• Tech sentiment stabilizes ahead of Nvidia's earnings - The holiday-shortened week is ending with a rebound in mega-cap technology stocks and a pause in the rotation and broadening theme that has defined market performance this year*. Within tech, the software subsector has undergone one of its most significant drawdowns in recent history, with its weighting in the S&P 500 falling sharply from about 12% to just over 8%*. Selling has been broad and indiscriminate, and in some cases, valuations may already reflect a substantial degree of AI disruption risk relative to current fundamentals. While pessimism may now be overstated, the prospect of the tech sector regaining sustainable leadership remains in question, particularly as the macro backdrop continues to favor a pro cyclical tilt in portfolios, in our view. All eyes will be on Nvidia's earnings on February 25 as the company's result and guidance will likely be an important catalyst for tech performance and AI sentiment*. We recommend equal weight positioning in tech and see opportunities in the industrials, consumer discretionary, and health care sectors.

Angelo Kourkafas, CFA
Investment Strategy

^{Source: *Bloomberg}

• Markets close mixed as investors weigh Walmart's outlook – The TSX closed higher, while U.S. equity markets pulled back on Thursday after Walmart reported fourth-quarter 2025 results before the open, offering a read on consumer health. Earnings and revenue narrowly exceeded forecasts, though guidance for 2026 came in below expectations*. Bond yields were also mixed, with the 10-year Government of Canada yield up to 3.23% and the 10-year U.S. Treasury yield down at 4.07%*. In international markets, Asia finished mostly higher overnight, as several markets reopened after the Lunar New Year holiday, while China's markets remain closed*. The U.S. dollar advanced versus major currencies*. In commodities, WTI oil traded higher amid supply concerns as U.S.-Iran tensions rise and talks stall*.
   
• Walmart results beat; outlook misses – Retail giant Walmart reported results that narrowly topped analyst estimates on both earnings and revenue this morning*. In our view, Walmart's revenue exceeding forecasts provides another data point that consumers remain resilient, despite weak sentiment*. More broadly, earnings have exceeded expectations as well: with more than 80% of S&P companies reporting, 75% have beaten estimates, with an average upside surprise of 7.2%*. Consequently, earnings growth estimates have been revised up to 12.4%, from 7.2% at quarter-end*. Earnings growth is expected to be broad-based as well, with 10 of the 11 sectors forecast to post higher earnings, led by technology and industrial companies*. We expect robust, expansive earnings growth to support a broadening of market leadership. Profit growth is expected to accelerate through 2026, with estimates calling for a roughly 14% rise in earnings*. With valuations elevated relative to history*, we believe continued earnings growth will be a key element for further stock‑market upside. We maintain a favourable view on equities and recommend overweighting stocks relative to bonds within a globally diversified allocation. We see opportunities in U.S. large-cap stocks, developed overseas small- and mid-cap stocks, and emerging-market equities.
   
• Jobless claims lower than expected – U.S. initial jobless claims declined to 206,000 this past week, below the 225,000 consensus estimate*. On a trend basis, weekly jobless claims are averaging about 213,000 year-to-date, below last year's average of 226,000*. Continuing claims — reflecting the total number of people receiving benefits — edged up to 1.87 million, roughly in line with forecasts*. Job openings contracted to 6.5 million in December, compared with unemployment of 7.4 million*. With the unemployment rate still low at 4.3%, we view these data as consistent with recent trends reflecting a stabilizing labour market characterized by slower hiring and layoffs. We expect these labour-market conditions to persist in the near term, helping support gradual inflation moderation.

Brian Therien, CFA;
Investment Strategy

^{Source: *FactSet}