2026.2.18 US Market Close | A divergent market driven by corporate earnings amid Fed caution

On February 18, US markets hit new all-time highs, showing a divergent performance driven by individual corporate earnings despite the Fed's cautious stance on rate cuts. Market focus is shifting from macroeconomic indicators to corporate fundamentals, with a notable mix of fortunes among AI-related stocks. Major Indices - S&P 500: Up 0.56% - Reached a new all-time high as the Fed's caution on rate cuts was interpreted as a reduction in uncertainty. - Nasdaq: Up 0.78% - Closed higher, led by a strong performance in tech stocks. - Dow Jones Industrial Average: Up 0.26% - Joined the upward trend to close in the green. Key Issues - Fed's Cautious Stance Reaffirmed: The January FOMC minutes confirmed that a majority of Fed officials agreed there was no need to rush into rate cuts until they gain greater confidence in inflation's trajectory. - Increased Scrutiny within the AI Theme: The market is moving beyond the initial AI hype, now differentiating between companies that can translate AI potential into concrete profits and those that can't. - Shift in Focus from Macro to Micro: With some of the uncertainty around the Fed's monetary policy clearing up, investors are now paying closer attention to individual company fundamentals and earnings reports. - Clash of Growth Narratives and Financial Risks: Figma's stock surged on expectations of its AI-driven growth story, but financial risks, such as excessive stock-based compensation costs exceeding revenue, highlighted market concerns. Key Stocks - Analog Devices (ADI): Surged nearly 8% after announcing a Q2 earnings forecast that beat market expectations, driven by strong demand from AI data centers. - Palo Alto Networks (PANW): Plunged over 6.8% after lowering its full-year profit forecast, citing increased costs related to integrating acquired companies. - Figma (FIG): Rose 4.69% on optimism surrounding its growth narrative of evolving into a collaborative operating system powered by AI.