Welcome to the monthly market update from Midland Wealth Management. I’m Emil Suqi, Portfolio Manager – Team Lead. Today, I wanted to take a few moments to share the Investment Team’s views regarding the economy and financial markets.

Market Recap – February 2026

February reinforced a theme we have emphasized for some time: markets can absorb unfavorable news, but they struggle with uncertainty. The month’s volatility has been less about a clear deterioration in the underlying economy and more about investors recalibrating around three moving variables: inflation persistence, geopolitical risk, and a market leadership structure that remains sensitive to a small set of large contributors.

From a performance standpoint, the month ended with a clear split across major indices. The Dow finished up 0.2% for February, while the S&P 500 finished down 0.9%, and the Nasdaq declined 3.4%.

Earnings and corporate actions were mixed, but instructive. Nvidia’s results were strong by conventional measures, yet the market reaction suggested a higher bar: investors are shifting from the AI buildout narrative toward the more demanding question of returns on capital and monetization. In the same session, Salesforce rose 3.6% after reporting results and announcing $50 billion in stock buybacks alongside a dividend increase. The takeaway is not that AI is “over.” It is that markets are increasingly differentiating between companies enabling the theme, companies monetizing it, and companies merely exposed to it.

Economic Update

On the macro side, inflation and labor data continue to point toward moderation, though not a straight line. The January CPI report showed inflation cooling to 2.4% year-over-year, down from 2.7% in December, and the slowest pace since May 2025. On employment, January payrolls increased by 130,000, and the unemployment rate held at 4.3%. Weekly jobless claims remained historically low, with initial claims at 212,000 for the week ending February 27th. Collectively, the data are consistent with a labor market that is still functioning but not accelerating—and an inflation trend that is improving, but still sensitive to supply-side risks.

That sensitivity showed up late in the month. On February 27, markets reacted sharply to a hotter-than-expected PPI read. Wholesale inflation rose 0.5% in January, while core prices rose 0.8%, both above expectations.

This is an important point for the broader narrative. Even as CPI cools, firmer inflation in the pipeline can delay the market’s comfort with near-term monetary easing. We continue to view this as consistent with a Fed that can eventually ease rates if labor conditions soften, despite long rates responding to matters of fiscal credibility.

Geopolitical Update

Now, as February has ended and we move into the first days of March, geopolitical risks have added a new layer to existing uncertainty. Following this past weekend’s escalation involving Iran, energy markets repriced aggressively. US crude traded around $72 per barrel, up 8%, with Brent crude up 10% to roughly $79.50. The focus has been the Strait of Hormuz, which carries roughly 20% of the world’s oil supply, a chokepoint that forces markets to price tail risks quickly when shipping and insurance are disrupted. The situation in the Middle East remains fluid, and we cannot rule out more escalatory attacks.

Outlook

The Investment Team is treating February as a reminder that there are several crosscurrents globally that can contribute to volatility. Index performance was uneven, inflation progress continued but remained data-dependent, and late-month inflation and geopolitical developments reinforced why diversification and disciplined risk budgeting matter in this market.

If you would like to discuss what these developments mean for your portfolio, please reach out to your financial advisor. A short conversation can help translate these market dynamics into practical next steps aligned with your objectives and time horizon.

As always, the team meets frequently to assess these dynamics and formulate strategy going forward. Thank you for joining us for this month’s update, and please contact your advisor or relationship manager with any additional questions.