On February 20, 2026, investors awoke to a flurry of financial news: U.S. GDP growth had missed expectations, the S&P 500 was swinging between gains and losses, and gold was surging toward historic highs. But beneath the headlines, deeper shifts in the market were unfolding—shifts that could reshape portfolios and investment strategies for years to come.
The morning began with a jolt. The U.S. government reported GDP growth of just 1.4% for the fourth quarter, well below the anticipated 2.5%. According to CNBC, the miss was partly blamed on the government shutdown at the end of 2025, which economists say took a bite out of economic activity. "The government shutdown hurt growth at the end of 2025. The economy will likely bounce back in early 2026, but it isn’t harmless to do prolonged shutdowns," said Heather Long, chief economist at Navy Federal Credit Union, as quoted by CNBC. For the full year 2025, GDP grew at 2.2%, slightly down from the previous year’s 2.4% pace.
Despite the disappointing GDP figures, Wall Street’s initial reaction was surprisingly upbeat. The S&P 500 opened up 0.51%, with the SPDR S&P 500 ETF (SPY) climbing 0.52%. The Dow Jones Industrial Average tacked on 0.23%—a gain of 112 points—while the tech-heavy Nasdaq surged 0.86%, or 202 points. However, the optimism proved fleeting. By midday, markets had reversed course: the S&P 500 slipped 0.27% (down 18 points), SPY dropped 0.22%, the Dow fell 0.18%, and the Nasdaq gave up 0.39%.
What was behind the market’s mood swings? According to CNBC, investors seemed to shrug off both the weak GDP print and the U.S. Supreme Court’s decision to strike down President Trump’s sweeping tariffs. The high court’s move, they noted, was largely expected, and many believe the White House will attempt to reapply similar tariffs through other mechanisms. In the meantime, President Trump responded by imposing a new 10% global levy, a move that added another layer of uncertainty to global trade.
Amid this volatility, UBS offered a dose of optimism. As reported by Investing.com, the bank maintained an Attractive view on U.S. equities, projecting the S&P 500 to reach 7,700 by December 2026. "Good profit growth, supportive Fed policy, and the rollout of AI" were cited as key drivers. UBS set an interim S&P 500 target of 7,300 for June 2026 and forecast earnings per share (EPS) of $277 in 2025 and $310 in 2026—representing robust growth of 11% and 12%, respectively. Fourth-quarter results were tracking toward an impressive 14% year-over-year growth, though the magnitude of earnings beats was "a touch cooler than in recent quarters but still encouraging," strategists led by David Lefkowitz wrote.
Yet, UBS also cautioned that the bull market’s leadership was shifting. For years, a handful of megacap tech stocks—the so-called Magnificent 7—drove most of the gains. But now, earnings growth is broadening beyond these giants. In 2025, the Magnificent 7 accounted for nearly two-thirds of earnings growth; in 2026, they’re expected to contribute about 50%. This broadening was echoed by MarketWatch, which reported that the equal-weighted S&P 500 index was outperforming the traditional market-cap-weighted S&P 500 by the widest margin at this point in the year since the early 1990s. For investors used to riding the coattails of tech titans, this change could be momentous.
Still, not all was rosy in the tech sector. UBS downgraded the Information Technology and Communication Services sectors to Neutral, citing concerns about the sustainability of AI data-center capital spending. After surging more than fourfold over the past three years, this spending now consumes nearly all hyperscalers’ operating cash flow. Aggressive investment, driven by fierce competition, may not always yield attractive returns, and the trend could be "more vulnerable to downside risks if outside investors start to worry," UBS strategists warned. They noted, "We think this makes the risk-reward less appealing for the model developers and some of the companies that have benefited from the capex."
Nevertheless, the appetite for tech stocks remained strong among other analysts. Citigroup reiterated a buy rating on Microsoft, arguing that its shares are trading at decade-low valuations and offer a rare discount to the S&P 500 on a forward price-to-earnings basis. Goldman Sachs expressed bullishness on Broadcom ahead of its earnings report, while Morgan Stanley maintained a cautious but steady outlook on CoreWeave, highlighting the need for the company to resolve data center delays and secure additional capacity.
One company in particular is drawing outsized attention: Nvidia. With its earnings report due next week, expectations are sky-high. Citi analysts are urging investors to add to their Nvidia positions, viewing the company as a bellwether for the entire AI sector. CEO Jensen Huang recently described demand for Nvidia’s new Blackwell platform data center products as "off the charts," a sentiment that has only fueled investor enthusiasm. Wedbush analysts, meanwhile, are already looking ahead to the company’s next milestone: the Rubin (R100) architecture, expected to keep Nvidia at the forefront of AI innovation into 2027.
While stocks wavered, gold and other commodities soared. On February 20, gold prices rallied $66 higher to $5,044, while silver reached $80.76. Bitcoin edged up to $67,924. The surge in gold was driven by a confluence of factors: geopolitical risks, expectations for Federal Reserve rate cuts, and sky-high government deficits. Analysts at SAMCO Securities, cited by Business Standard, believe gold could test $7,000, while SBG Securities sees the potential for $10,000 gold based on monetary policy and a weakening U.S. dollar. "Three cuts could push gold to $7,000 by year-end (SBG’s base case) and a more dovish Fed may send gold to $10,000," SBG noted, according to Investing.com. Ed Yardeni of Yardeni Research added, "We are still targeting $6,000 by the end of this year and $10,000 by the end of 2029," emphasizing that the metal is being driven by a broad "geopolitical risk-on trade."
UBS expects two additional 25-basis-point Federal Reserve rate cuts in 2026, and history shows that equities tend to outperform when the Fed is easing and the economy avoids recession. "We think this bull market has further to go and maintain our year-end S&P 500 price target of 7,700," UBS strategists said.
With the Federal Reserve’s interest-rate policy looming large, some analysts warn that the outperformance of the equal-weighted S&P 500 could be disrupted. As MarketWatch reported, the market’s internal divergences reflect a historic shift—the kind that could upend generations of investing orthodoxy. For now, though, the consensus remains: while risks abound, the combination of resilient earnings, supportive monetary policy, and the relentless advance of AI continue to drive markets forward.
As investors peer into the rest of 2026, they face a landscape of shifting leadership, policy uncertainty, and new opportunities. For those willing to adapt, the next chapter of the market’s story promises to be anything but dull.