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Tariff Whiplash and AI Rotation Define a Volatile Week

xUS equities navigated another volatile week defined by rapid policy reversals, AI sector rotation, and renewed trade uncertainty. The S&P 500 and Nasdaq 100 finished higher on Friday after the Supreme Court struck down President Trump’s reciprocal tariffs, though gains were uneven beneath the surface.

Week:

S&P500: +1.1% FTSE100: +1.8%  Gold: +3.7% Bitcoin: -1.2%

YTD: S&P500: +0.7%  FTSE100: +7.1%  Gold: +18.7% Bitcoin: -24.9%

Tariff Whiplash and AI Rotation Define a Volatile Week

Source: Connect Weekly | Week ending 20 February 2026

US equities navigated another volatile week defined by rapid policy reversals, AI sector rotation, and renewed trade uncertainty. The S&P 500 and Nasdaq 100 finished higher on Friday after the Supreme Court struck down President Trump’s reciprocal tariffs, though gains were uneven beneath the surface. Small caps lagged into the close as markets digested the implications for growth, inflation, and Fed policy.

What drove markets this week

Tuesday opened with choppy trading as investors reacted to President Trump’s escalating rhetoric around Greenland and Europe. Precious metals rallied while risk assets dipped. Airline stocks initially benefitted from lower oil prices before geopolitical headlines reversed sentiment.

Wednesday brought a relief rally after Trump signalled a potential framework agreement involving Greenland, easing immediate tariff fears. The move sparked a broad-based recovery, with the Russell 2000 extending its outperformance streak.

Thursday saw markets climb further, supported by steady PCE data and renewed strength in AI-linked infrastructure names. Chipmakers and select tech stocks regained footing, while financials and energy rotated lower.

Friday: Court ruling lifts markets

Markets jumped after the Supreme Court struck down Trump’s prior reciprocal tariffs. Consumer discretionary and communications stocks led the move higher. The Russell 2000 whipsawed before closing lower, while the S&P 500 and Nasdaq 100 ended the day in the green.

Core inflation surprised slightly to the upside and Q4 GDP data showed softer growth, reinforcing the delicate balance between disinflation and slowing momentum.

Looking ahead

All eyes now turn to Nvidia’s earnings this week, a key test for the AI trade after weeks of volatility. The chipmaker’s results and forward guidance will be scrutinised not just for revenue growth, but for visibility into 2026 data centre demand, capex pipelines, and any impact from export restrictions.

The timing is critical. The Magnificent 7 cohort is trading near a key technical level, with several names sitting around major moving averages that have historically acted as inflection points. A strong Nvidia print could reassert leadership and stabilise the broader tech complex. A miss, however, risks turning recent consolidation into a deeper correction.

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