‘Heads I win, tails I win’ market environment

Key takeaways

Strong and weak data

Last week’s jobs report was relatively strong, housing data was weak, and inflation generally remained contained.

Winners and losers

Software stocks dropped, cyclical stocks have performed, and semiconductor stocks haven’t experienced a downturn.

Tariffs, Treasuries, AI

Tariffs have impacted a small share of goods, US Treasury demand has been strong, and AI valuations have normalized.

It’s estimated that roughly $1.8 billion was gambled on the Super Bowl.¹ About 70% of that came from prop bets on something other than the traditional wagers on the outcome of the game.² It’s hard to know how much of that money was tied to bets on the length of the national anthem, the color of the Gatorade poured on the winning coach, or whether the opening coin flip would land heads or tails. What we do know is that heads or tails is the better bet. With a true 50-50 probability, the coin flip is one of the few wagers that resembles a fair game.

We bring this up following another challenging week in markets.³ It’s not because we think people should gamble their money rather than invest it — quite the opposite. The market, over time, has been a far more reliable proposition than any Super Bowl prop bet in our view. The analogy is useful, however, for thinking about the recent flow of economic data. It has felt like a “heads I win, tails I win” environment. On one side, weaker growth increases the likelihood of earlier or deeper Federal Reserve (Fed) easing. On the other side, stronger growth reinforces the view that the business cycle remains intact. Either outcome can be supportive of markets, provided inflation stays contained.

Strong and weak data

Last week, the jobs report was relatively strong,⁴ while the housing data was weak.⁵ It’s difficult to have a recession when unemployment remains low, even if certain interest rate-sensitive sectors are under pressure. At the same time, last week’s Consumer Price Index (CPI) report showed that inflation remains generally contained, including on the goods side.⁶ That gives the Fed the cover to lower rates. In theory, lower rates could potentially help with more rate-sensitive areas of the economy, including housing. More broadly, lower rates tend to support stocks if economic growth doesn’t collapse.

Winners and losers

We recognize how that message may land given the carnage we’ve seen in select parts of the market this month, particularly in software stocks.⁷ That pain is real. At the same time, it’s worth noting that cyclical stocks such as industrials and energy have performed well over the past month.⁸ Semiconductor stocks also haven’t experienced anything resembling a broad downturn.⁹ The market has become more discerning within software, separating likely winners from losers. It also remained constructive on the scale of investment coming across technology and the businesses positioned to participate in that growth.

Addressing investors’ fears

We’ll close with three final thoughts about what investors feared last year.

• First, one of the biggest questions we’ve received was whether tariffs are inflationary. On the goods side, the answer is yes, but goods represent a relatively small share of the consumer basket, and any price impact tends to be short-lived. The recent benign inflation data supported that view.¹⁰
• Second, there were persistent concerns that global investors were abandoning US Treasuries and that the US would struggle to fund its debt. We were skeptical. Last week’s 30-year Treasury auction was significantly oversubscribed, and the 30-year yield fell below 4.7%.¹¹
• Third, there was the question of the so-called artificial intelligence (AI) bubble. Some excess has clearly been worked off in certain names, but not everything needs to be a bubble. Even after recent volatility, major indexes aren’t far from all-time highs,¹² and valuations in some growth companies now appear to be coming down to more reasonable levels. For long-term investors, that may be an opportunity.

What to watch this week

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Originally Posted February 17, 2026

‘Heads I win, tails I win’ market environment by Invesco US

 Footnotes

1. Source: American Gaming Association, Feb. 2026.
2. Source: American Gaming Association, Feb. 2026.
3. Source: Bloomberg, L.P., Feb. 12, 2026, based on the four-day return of the S&P 500 Index, which declined 1.41%.
4. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on US employees on nonfarm payrolls.
5. Source: National Association of Realtors, Jan. 31, 2026, based on existing home sales.
6. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on the US Consumer Price Index.
7. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Software Industry GICS Level 3 Index, which declined 17.14%. The index tracks large-cap US companies primarily engaged in software development, including Application Software and Systems Software sub-industries.
8. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Industrial Sector GICS Level 1 Index and the S&P 500 Energy Sector GICS Level 1 Index, which advanced 6.72% and 16.19%, respectively. The S&P 500® Industrials Sector GICS Level 1 Index represents the industrial sector within the S&P 500 index, as defined by the Global Industry Classification Standard (GICS). It includes companies involved in capital goods, commercial and professional services, and transportation. The S&P 500 Energy Sector GICS Level 1 Index is a market-capitalization-weighted index comprising companies within the S&P 500 that are classified under the GICS® Energy Sector. It covers firms involved in oil and gas exploration, production, refining, and equipment.
9. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Semiconductors & Semiconductor Equipment Industry Group GICS 2 Index, which advanced 0.66%. The index measures the performance of large-cap US companies within the semiconductor industry, categorized under the Information Technology sector. It tracks firms involved in producing semiconductor materials, equipment, and manufacturing devices.
10. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on the US Consumer Price Index.
11. Sources: US Treasury and Bloomberg, L.P., Feb. 13, 2026.
12. Source: Bloomberg, L.P., Feb. 12, 2026, based on the S&P 500 Index and the Dow Jones Industrial Average.

Important information

NA5220487

All investing involves risk, including the risk of loss.

Past performance does not guarantee future results.

Investments cannot be made directly in an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

Businesses in the energy sector may be adversely affected by foreign, federal, or state regulations governing energy production, distribution, and sale, as well as supply-and-demand for energy resources. Short-term volatility in energy prices may cause share price fluctuations.

The Consumer Price Index (CPI) measures the change in consumer prices and is a commonly cited measure of inflation.

A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.

The Dow Jones Industrial Average is a price-weighted index of the 30 largest, most widely held stocks traded on the New York Stock Exchange.

The Federal Open Market Committee (FOMC) is a committee of the Federal Reserve Board that meets regularly to set monetary policy, including the interest rates that are charged to banks.

The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s.

Gross domestic product (GDP) is a broad indicator of a region’s economic activity, measuring the monetary value of all the finished goods and services produced in that region over a specified period of time.

Inflation is the rate at which the general price level for goods and services is increasing.

Monetary easing refers to the lowering of interest rates and deposit ratios by central banks.

Personal consumption expenditures (PCE), or the PCE Index, measures price changes in consumer goods and services. Expenditures included in the index are actual US household expenditures. Core PCE excludes food and energy prices.

Purchasing Managers’ Indexes (PMI) are based on monthly surveys of companies worldwide and gauge business conditions within the manufacturing and services sectors.

The S&P 500® Index is an unmanaged index considered representative of the US stock market.

In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic, and political conditions.

The opinions referenced above are those of the author as of Feb. 13, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.