CWS Market Review – February 17, 2026

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Inflation Comes in Lighter than Expected

The stock market rallied for the second day in a row, although it was a modest gain (+0.10). The S&P 500 is still a little below its 50-day moving average. Growth stocks had another good day today. Apple was up over 3%.

Transportation stocks continue to do very well. Shares of FedEx hit a new 52-week high. Amazon snapped a nine-day losing streak today. Over that time, the company lost $450 billion in market value.

In 2020, the stock market peaked on February 19th. That’s when Covid hit. In a little over one month, the S&P 500 lost one-third of its value. Last year, the market peaked again on February 19th. This time the S&P 500 lost 19% in just seven weeks.

I don’t know what to expect on this February 19, but I’ll note that Walmart is scheduled to report its earnings on the morning of February 19. In my opinion, WMT’s earnings report is probably a better gauge of consumer spending than a handful of government reports. The company averages about $1.3 million in revenue every minute of every day 24/7.

This morning, shares of Walmart hit a new 52-week high, but the shares later pulled back. By the closing bell, WMT was down 3.8% for the day. For this earnings report, Wall Street expects earnings of 73 cents per share. That’s up from 66 cents per share one year ago.

On Friday, the government released a very encouraging inflation report. According to the report, inflation in January was less than expected.

Over the last year, headline inflation increased by only 2.4%. That’s down 0.3% from the prior report. It’s also the lowest 12-month inflation number since last May. For the month, consumer prices rose by 0.3%. That was 0.1% less than expected.

Here’s a look at the recent 12-month inflation data:

If we exclude food and energy, then the core rate of inflation is running at 2.5% over the last 12 months. That’s the lowest 12-month core rate in nearly five years. For the month of January, core inflation was 0.3% which was in line with expectations.

We have moderating shelter costs to thank for most of the good inflation news.

Though the category accounted for much of the CPI gain, shelter costs rose just 0.2% for the month, bringing the annual increase down to 3%. Shelter makes up more than one-third of the CPI.

Elsewhere, food prices increased 0.2% as five of the six major grocery group categories posted gains. Energy fell 1.5% while vehicle prices also were muted, with new vehicles up just 0.1% and used cars and trucks falling 1.8%. Airline fares jumped 6.5% while egg prices fell 7% and are now down 34% over the past year after a meteoric surge.

What does this mean for the Fed and interest rates? In the short-term, probably nothing. Traders see a very small likelihood that the Fed will lower rates in March or April. After that, there seems to be a growing consensus that the Fed will start cutting again at the June meeting. Of course, this would be after Jerome Powell heads out of town.

The Fed’s job is to aim for low inflation and full employment. The first part doesn’t concern me so much, but the second part does. Last week’s jobs report wasn’t bad, but we can’t escape the fact that the economy has only averaged a gain of 15,000 new jobs per month. That’s not going to cut it.

Let me add a few cautionary notes to this data. The partial government shutdown may have impacted some of the recent data. We also haven’t seen the full impact of the tariffs just yet. We also haven’t seen the inflation that many economists had expected but that could be waiting for us in a few months. Also, used car prices were a big drag on headline prices. Additionally, prices for services like airline tickets remain high.

On Friday, we’re finally going to get the Q4 GDP report, and some folks are expecting good news. The report had been delayed for several months. The GDP report, along with other reports, is creating a “data deluge” that markets are watching closely.

The consensus on Wall Street is for Q4 GDP growth of 2.8% to 3%. Please note that that’s the annualized inflation-adjusted figure. For Q3, the economy grew by 4.4%.

The New York Fed’s Staff Nowcast pegs Q4 growth at 2.7%, with a 50% chance of it coming in between 1.6% and 4.0%. The Atlanta Fed’s GDPNow model currently expects Q4 GDP growth of 3.7%.

One of the big questions I have is how strong was consumer spending. I sense that consumer spending slowed down some as we headed into the holiday shopping season.

We’re starting to head towards the back end of earnings season, and overall, this has been a very good earnings season for Wall Street. So far, 74% of companies have reported earnings, and of those, 74% have topped Wall Street’s earnings forecasts.

That “beat rate” largely aligns with the average beat rate of 76% over the last 10 years. Earlier in the earnings season, the beat rate was running a little higher.

The year-over-year earnings growth rate is currently running between 13.2% and 13.6% which is quite good. Another 57 companies are due to report this week, so these numbers are subject to chance. The important takeaway is that Corporate America is still profitable despite issues like tariffs and the government shutdown.

For Q1, Wall Street currently expects earnings growth of 11.1%, and revenue growth of 8.7%. If there are any cracks in the economy, businesses aren’t showing it.

Stock Focus: Church & Dwight

One stock I love to follow is Church & Dwight (CHD). Sure, it’s a little boring, but you really can’t go wrong with condoms and baking soda. The company owns several household products brands.

CHD is one of those stocks that’s rarely mentioned even though it’s been a massive winner over the years. Since 1996, CHD is up about 85-fold. That’s an average of 16% per year, and it’s lapped the S&P 500 (in green) several times.

Again, there’s nothing fancy here. These are the folks who make OxiClean.

Lately, however, CHD hasn’t been that great of a stock. Today it trades about 10% above its 2020 peak (cleaning product companies rallied strongly during the earlier days of Covid). Last year, was not a good one for CHD. The stock lost about 25% from its March high to its October low. To be fair, a lot of defensive stocks did not do well.

Since the start of this year, Church & Dwight has been in rally mode. The shares are already up 20% this year. CHD went from being a stock that could do nothing right to one that could do nothing wrong.

In January, CHD reported Q4 earnings of 86 cents per share. That beat estimates by two cents per share. For the year, CHD made $3.53 per share. The stock rallied 6% over two days following the report.

CHD also bumped up its dividend by 4%. This is the 30th year in a row that CHD has increased its dividend.

The company also said it expects to see earnings growth for 2026 of 5% to 8%. That works out to earnings of $3.71 to $3.81 per share. Assuming that’s accurate, that gives the stock an earnings multiple of 26 to 27.

As much as I like Church & Dwight, I’d prefer to see it at a better price. Say $85 to $90. Still, this is one to keep an eye on.

That’s all for now. We still have lots more earnings this week. The Q4 GDP report will finally be out on Friday. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on February 17th, 2026 at 7:23 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.