Despite a modest rebound in United States (US) stock markets on Friday night following a cooler-than-expected inflation report, all three major US indices finished the week lower. The S&P 500 fell 1.39%, the Nasdaq 100 lost 1.37%, and the Dow Jones closed 614 points lower (1.23%) after hitting a fresh record high earlier in the week.

The January inflation report on Friday night showed headline inflation falling to 2.4% year-over-year (YoY), its lowest level since May. The core consumer price index (CPI) also eased to 2.5%, marking its lowest reading since March 2021, down from the previous 2.6%.

The cooler inflation reading, combined with softer retail sales data released last week, largely offset the impact of the firmer non-farm payrolls report, bolstering expectations for Federal Reserve (Fed) rate cuts.

In the stock space, Amazon shares closed lower on Friday at $198.79 (0.41%), marking a ninth consecutive daily decline, the stock’s longest losing streak since July 2006. The primary driver of this sell-off is investor anxiety following the company’s recent earnings report, where it guided for a staggering $200 billion in capital expenditure for 2026, a figure far exceeding Wall Street’s expectations of around $150 billion.

Having now fallen 23% from its early November high of $258.60, Amazon is fast approaching multi-month trendline support near $191.

Looking ahead, US stock markets (including the NYSE, Nasdaq, and major indices like the S&P 500 and Dow Jones) are closed today in observance of Presidents’ Day holiday. The ‘Big Beautiful Bill’ tax refunds begin this week, with hopes that some of these funds will boost flagging tech stocks.

Meanwhile, the US earnings season continues with reports due from companies including DoorDash, Coca-Cola, Walmart, Deere & Company, and Dropbox before NVIDIA provides the unofficial earnings season finale on 26 February.

The economic calendar this week is packed, featuring the following: 

• Federal Open Market Committee (FOMC) meeting minutes
• Advanced fourth quarter (Q4) gross domestic product (GDP)
• The core personal consumption expenditures (PCE) price index
• Flash purchasing managers’ indices (PMIs).

Date: Saturday, 21 February

The US economy expanded at an annualised rate of 4.4% in the third quarter (Q3) 2025, marking its strongest advance in two years and accelerating from the second quarter’s (Q2) 3.8%. This impressive growth was fuelled by resilient consumer spending and robust exports. While imports and inventory adjustments provided some offsets, the overall performance highlighted the economy’s resilience, even amidst tariff uncertainties and softening labour markets.

However, the 43-day US government shutdown last year casts a notable shadow over the upcoming Q4 GDP release, with expectations for Q4 2025 GDP to fall sharply towards 3%. Interestingly, the Atlanta Fed’s GDPNow estimate, updated 10 February 2026, projects a slightly stronger 3.7% annualised rate for Q4.

A partial rebound from the shutdown’s impact is anticipated in first quarter (Q1) 2026, also supported by the tailwinds of President Trump’s ‘One big, beautiful Bill.’

The US interest rate market starts the week pricing in roughly 59 basis points (bp) of Fed cuts for 2026, with the first 25 bp move almost fully priced for June and a second in October.