| 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.
