Market Commentary | February 2026

Wildermuth Commentary February 2026.pdf

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Optimism, Volatility…and a Lot of Noise

January reminded investors that markets don’t move in straight lines. Stocks pushed to new highs early in the month, sold off sharply, and then rebounded again—ending a bit higher for the month. It was a volatile start to the year, driven in large part by renewed tariff threats tied to President Trump’s push on Greenland. Markets reacted quickly, then just as quickly moved on.

That pattern repeated itself throughout the month. Headlines triggered selloffs, volatility spiked, and then prices stabilized as investors stepped back in. Despite political noise, markets behaved as though the underlying economic story hadn’t materially changed.

Economic data has been mixed. Job growth has slowed, but investors have largely dismissed that as a function of lower immigration and government layoffs rather than weakness in private-sector demand. At the same time, GDP growth remains strong, consumer spending is holding up, and sentiment surveys are inching higher. That combination has helped push the Dow and S&P 500 to new records and fed investor risk appetite.

What’s notable is where the strength is showing up. Recent market strength hasn’t been driven purely by mega-cap tech. In fact, technology has lagged this month, while more cyclical sectors—materials, industrials, energy, and consumer discretionary—have led. That kind of rotation usually reflects confidence that growth can broaden rather than stall.

Bond markets are telling a similar story. The yield curve has steepened as short-term yields fall faster than long-term yields, suggesting expectations for modest rate cuts without a recession. Investors appear to believe the economy can slow without breaking.

So far, that’s the bull case—and it’s coherent. But the noise is still there.

Tariff threats tied to Greenland briefly revived a “Sell America” trade, hitting equities, the dollar, and Treasurys before markets recovered. Dip-buying shows confidence, but also a willingness to assume disruption will be short-lived. Trade policy uncertainty hasn’t disappeared; it’s simply being priced as temporary until proven otherwise.

More unsettling is what’s happening outside equities. Gold is up more than 20% this year, silver even more, with both hitting record highs. These aren’t moves driven by jewelry demand or industrial usage. They reflect hedging—against geopolitical risk, a slow erosion in the real value of money, or policy mistakes. If everything is as solid as equity markets suggest, it’s hard to explain the urgency to hide in metals.

Valuations don’t leave much room for mistakes. Earnings expectations for 2026 are high, especially in tech, after a remarkable multi-year run driven by AI investment. The rally doesn’t feel fragile, but it is crowded. A lot of money is making the same bet.

That doesn’t mean a downturn is around the corner. The economy looks fine. The usual checks and balances are still working, and regulatory restraint and ongoing capital investment remain real tailwinds.

For now, investors appear comfortable leaning into the upside, with optimism the prevailing mood. That’s not irrational—the backdrop supports it. The question is simply how much is already priced in, and how forgiving the market will be if expectations slip. In an environment this consensus-heavy, surprises don’t have to be dramatic to matter..

Daniel Wildermuth

Portfolio Manager, Quartz Astra Strategies

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DATA SOURCES

Market Data: https://www.wsj.com/market-data


INDEX DESCRIPTIONS

The Standard & Poor’s 500 Index is a capitalization-weighted index that is generally considered representative of the U.S. large capitalization market.

The NASDAQ Composite Index is a capitalization-weighted index that is comprised of all stocks listed on the National Association of Securities Dealers Automated Quotation System stock market, which includes both domestic and foreign companies.

The Dow Jones Industrial Average is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.

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