Monthly Market Report February 2026

Index	1 Month %	Year To date %	One Year %
S&P 500 Total Return	-0.76	0.68	16.99
NASDAQ Composite**	-4.82	-2.47	23.53
S&P Developed Ex-US BMI*	5.69	12.19	42.88
Dow Jones Commodity (DJCI)	2.34	11.81	22.76
S&P US Aggregate Bond*	1.30	1.49	6.22

February proved to be a sobering month for equity investors as the "AI honeymoon" faced its first major reality check. While the start of the year carried plenty of momentum, a combination of skepticism over tech spending and stubborn inflation data shifted the market’s mood from "risk-on" to "safety-first."

Large-Caps Stumble as AI Scrutiny Intensifies

The S&P 500 struggled to find its footing this month, ultimately closing down 0.8%. The primary headwind was a growing unease regarding the massive capital expenditures tied to Artificial Intelligence; investors are beginning to demand clearer timelines for when these investments will actually hit the bottom line.

Adding insult to injury, the final trading day saw a hotter-than-expected Producer Price Index (PPI) reading. This reignited inflation jitters and threw cold water on hopes for imminent Fed rate cuts, leading to a third consecutive weekly decline for the benchmark index.

The Great Rotation: Small and Mid-Caps Shine

While the "Magnificent" heavyweights lagged, the rest of the market found room to run. We saw a distinct shift in leadership toward smaller companies as investors diversified away from overextended tech names.

Index	February Performance
S&P MidCap 400	+4%
S&P SmallCap 600	+2%
S&P 500 (Large-Cap)	-0.8%

Sector and Factor Trends: Defensive is "In"

The retreat from Big Tech optimism sparked a return to defensive positioning. Utilities were the standout performer, surging 10% as investors sought yield and stability. Conversely, growth-oriented sectors like Communication Services and Consumer

Discretionary ended the month in the red.

This defensive tilt was reflected in factor performance as well:

• Winners: Quality, Dividend, and Low-Volatility strategies.

• Styles: Value significantly outperformed Growth, marking a notable reversal from the trends of 2025.

Fixed Income and Commodities: The Flight to Safety

Amid whispers of "stagflation," the bond market saw a surge in demand. The 10-year U.S. Treasury yield dropped below 4% for the first time since last November. When the macro outlook gets murky, investors tend to hug their Treasuries tight.

Precious metals also enjoyed a banner month. Driven by safe-haven demand, the S&P

GSCI Precious Metals Index advanced 12%, with gold and silver seeing heavy trading volume as a hedge against equity volatility and currency concerns.

Bottom Line: February was a month of transition. The market is no longer willing to give tech giants a "blank check" for AI spending, and the "higher-for-longer" interest rate narrative is proving difficult to shake.

Source: S&P Dow Jones Indices LLC and/or its affiliates. Data as of February 27, 2026, except * as of February 26, 2026. Index performance based on total return (USD). Past performance is no guarantee of future results.

**NASDAQ Data as of March 02, 2026, Overview for COMP

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors and Synergy Wealth Management are separate entities.