To The Moon

Is it a case of déjà vu all over again for US stock market from 23 Feb 2025 onwards after the landmark verdict from the US Supreme Court over Trump’s April 2025 Liberation Day global tariffs ?

It certainly looks so from where I am sitting.

To really ‘know’ if US stock market will go through another major correction from this week onwards, let’s take a look at recent US economic reports released, to help ‘hopefully’ draw some educated conclusions.

US CPI (YoY) - Headline vs Core for Jan 2026

Consumer Price Index (Jan 2026).

US’s first inflation report for 2026 was released on Fri, 13 Feb 2026, showing :

• Downside surprise on Headline inflation.

• Modest upside surprise on Core inflation. (see below)

The reports reinforces a gradual disinflation trend while keeping underlying price pressures sticky:

• Headline CPI (MoM) rose 0.2%, below the 0.3% gain expected by economists.

• Headline CPI (YoY) slowed to 2.4% from December’s 2.7%, also under the 2.5% consensus.

• Core CPI (MoM) however, increased 0.3%, in line with market expectation and above December’s 0.2%.

• Core CPI (YoY) eased to 2.5% from December’s 2.6%, matching consensus and marking the slowest annual core reading since early 2021.

Catalysts.

Cooling headline inflation was largely driven by:

• A -1.5% drop in Energy prices, specifically a -3.2% decline in gasoline.

• A moderated monthly increment to 0.2% in Shelter costs, that has been a persistent inflation driver in recent years.

The firmer 0.3% monthly core inflation number, signals that underlying price dynamics, especially in services remain sticky.

Analysts believe US policy makers will want more confirmation before committing to a faster rate-cut path.

FOMC - Minutes of Meeting in Jan 2026.

On 18 Feb 2026, the minutes of meeting to FOMC’s January 2026 meeting was released.

The minutes revealed a cautiously hawkish Fed, that is in no rush to cut interest rate and willing to hike if needed, with a split emerging between “hold” and “conditional cuts later in 2026” camps.

The committee appears split into 3 distinct camps:

• Easers: A group (including two formal dissenters, Waller & Miran) that argued policy is still "meaningfully restrictive" and wanted an immediate -25 basis-point cut to protect US labour market.

• Pausers: Majority voting members favoured holding rates steady to assess the -75 basis points of cuts already delivered in late 2025.

• Hawks: A single, vocal minority warned that further easing could be misinterpreted as a retreat from the 2% inflation target, potentially entrenching price pressures.

In the end,

• Fed funds held at 3.50–3.75%, described as closer to neutral, with most officials wanting more evidence of disinflation before any further easing.

• Upside risks to inflation seen as “significant,” with progress back to 2% expected to be slower and more uneven, and several members explicitly flagging that persistent inflation could warrant rate hikes rather than cuts.

• Focus has shifted away from labour‑market weakness toward persistent inflation, reinforcing a higher‑for‑longer stance and pushing market‑implied timing of cuts into mid‑2026 or later.

Jobless Claims.

Initial and continuing claims painted a picture of a still‑tight but gradually cooling labour market, with layoffs low yet re‑employment becoming a bit more challenging.

At worse, it could be described as an equilibrium of stagnation. How so ?

Weekly.

For week ending 14 Feb 2026, weekly jobless claims fell by -23,000 to 206,000 vs market expectations of 223.00 vs previous week’s claims of 229,000.

This is the lowest level of the year, signaling very low layoff rates. (see below)

Latest report suggests that the spike seen in late January 2026 (partially blamed on severe winter storms) was temporary, with the 4-week moving average also edged lower to 219,000, reinforcing the message of limited firing despite recent volatility.

Continuing.

For week ended 7 Feb 2026, continuing claims unfortunately rose by +17,000 to about 1.869 million vs market expectations of 1.86 vs previous week’s 1.85 million. (see above)

Latest report makes it the 3rd consecutive weekly increase and the highest level since early January 2026.

Insured unemployment rate held at 1.2%, hint strongly that job seekers are taking longer to find new positions even as overall unemployment remains low.

Overall data suggests US labour market remains tight with historically low layoffs.

Softening hiring and a slow grind higher in continuing claims point to a gradual, orderly cooling rather than a sharp deterioration.

US labour market is stable but lacklustre.

Personal Consumption Expenditure (Dec 2025).

On 20 Feb 2026, US Fed’s favourite inflation report the Personal consumption expenditure (PCE) for December 2025 was released.

US Bureau of Economic Analysis (BEA) need to catch up, as it should be releasing 2026 inflation reports instead.

US year end inflation reports showed a mild reacceleration, landing above consensus on both headline and core, thus tempering disinflation hopes amid sticky underlying pressures.

The readings are in contrast to that of a cooling CPI:

• Headline PCE (MoM) rose 0.4% in December, doubling November 2025’s 0.2% and landing above the analyst consensus of 0.3%.

• Similarly, annual headline PCE accelerated to 2.9%, up from 2.8% in the prior month. It was also higher than the 2.8% forecast by markets.

• Core PCE (MoM) also increased 0.4%, an acceleration from the 0.2% recorded in November 2025 and higher than the expected 0.3%.

• Core PCE (YoY) climbed to 3.0%, up from November 2025’s 2.8% in November and overshooting analysts’ consensus of 2.9%.

Key Drivers.

December "bump" in inflation was largely attributed to 3 factors: (see below)

• Services Stickiness: Services prices rose 0.3% monthly, led by persistent costs in housing and healthcare.

• Goods Rebound: Prices for goods, that had been a source of disinflation for much of 2025, rose 0.4% in December. Analysts believed early implementation of new trade tariffs as a primary catalyst for the shift in goods pricing.

• Resilient Spending: Despite higher prices, nominal personal consumption expenditures (PCE) increased 0.4%, showing that the American consumer remained active through the holiday season.

Coming on the heels of a hawkish FOMC minutes released earlier in the week on 18 Feb 2026, this PCE report effectively "shutting" on hopes for a March 2026 interest rate cut.

Economists noted that (a) convergence of low jobless claims and (b) rising PCE inflation creates a difficult "stagflationary" risk profile that US Fed must navigate as it prepares for its next policy meeting, scheduled for Mar 17-18.

Gross Domestic Product (Q4 2025).

On 20 Feb 2025, US Gross domestic product (1st preliminary) report for Q4 2025 was finally released. (see below)

The advance estimate showed that US economy grew at an annualized rate of 1.4% in the final quarter of 2025.

The result was a substantial "miss" vs market expectations of 2.8% and vs Q3 2025’s 4.4%; a sharp drop-off from growth seen in the preceding months.

Catalyst.

The key factor culprit for a lacklustre performance was the 43-day US government shutdown from 01 Oct 2025 - 12 Nov 2025.

US Bureau of Economic Analysis (BEA), estimated that reduction in government services provided alone reduced approx. 1.0% off headline growth.

With registered growth at 1.4%, US economy is no longer "sprinting", it is "limping" into 2026.

This set of “outdated” data increases pressure on US Fed to consider rate cuts later in 2026 in order to avoid a technical recession, even if inflation has not yet reached the 2% target.

S&P Global Manufacturing & Services PMI (Feb 2026).

On Fri, 20 Feb 2026, preliminary S&P Global Purchase Manager Index (PMI) for Manufacturing & Services for February 2026 was released. (see below)

S&P Global Manufacturing PMI.

Preliminary data for February 2026, ‘fell’ to 51.2 from January 2026’s 52.4.

According to the flash reading, it still signals an improvement in factory business conditions for a 7th successive month but the weakest upturn seen over this period.

Production growth waned to the lowest since July 2025 as new orders fell slightly for the 2nd time in the past 3 months. (see below)

S&P Global Services PMI.

The same could be said for S&P Global Services PMI for February 2026. Preliminary readings came in at 52.3 from 52.7 prior. (see above)

It’s the softest expansion in 10 months and misses consensus expectations of 53.0.

The key headwind that dampens activity within the service sector is weakened demand & exports.

New order growth softened, and export demand for services saw a significant decline.

US service providers reported the steepest reduction in foreign demand in over 3 years, due largely to global trade uncertainty and impact of retaliatory trade measures.

SCOTUS Verdict.

On Fri, 20 Feb 2026, US Supreme Court finally ruled 6-3 to strike down Trump's sweeping "global" tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA).

The highest federal court with ultimate appellate jurisdiction, deemed them an unconstitutional overreach of executive power without explicit congressional authorization.

Ruling Highlights

Chief Justice John Roberts wrote the majority opinion, joined by three liberals and Trump's appointees Gorsuch and Barrett, established a clear constitutional boundary between "regulating commerce" and "imposing taxes - emphasizing that IEEPA does not grant tariff authority and invoking the major questions doctrine.

Dissenters (Thomas, Alito, Kavanaugh) argued the ruling merely forced a shift to other statutes.

Post Verdict (Feb 20 – 23, 2026)

The ruling triggered a chaotic "reset" of US trade policy and a scramble within the White House to maintain leverage.

(1) "Plan B".

Within hours of the verdict, Trump labeled the ruling a "disgrace" and immediately invoked Section 122 of the Trade Act of 1974.  

• He announced a replacement 10% global tariff, that was unofficially raised to 15% over the weekend.  

• Unlike the invalidated IEEPA tariffs, Section 122 is limited to 150 days and cannot exceed 15% without explicit Congressional approval.

• This has created a "ticking clock" for Trump administration to find a more permanent legal footing before Section 122 expires on 20 Jul 2026.  

(2) $175 Billion Refund Crisis

The verdict opened a massive fiscal hole.

Economists estimate that over $175 billion in "illegal" tariffs have been collected since early 2025.

• US Customs and Border Protection (CBP) announced it would cease collecting the IEEPA-linked duties effective from 24 Feb 2026.  

• Importers have already filed nearly 2,000 lawsuits to claw back these payments.

• Top 5 companies suing for tax returns include $Costco(COST)$, $Toyota Motor Corp.(TOYOF)$, $BYD Co., Ltd.(BYDDF)$, $Alcoa(AA)$ and $Goodyear(GT)$.

• US Treasury now faces the daunting task of potentially refunding billions, though the Trump administration has signaled it will contest the "automatic" nature of these refunds in lower courts.  

(3) US Market and Global Reaction

US markets rallied on the verdict. (see above)

By the time market called it a day:

• DJIA: +0.47% (+230.81 to 49,625.97).

• S&P 500: +0.69% (+47.62 to 6,909.51).

• Nasdaq: +0.90% (+203.34 to 22,886.07).

Retail and Tech stocks (highly sensitive to import costs) saw gains.

However, these gains were tempered by the uncertainty of the "Plan B" tariffs, just announced over the weekend.

At the same time, countries that recently signed trade pacts with the US (namely India, UK, and Vietnam) are reportedly re-evaluating those agreements, as the "emergency" threats used to extract concessions have been legally neutralized.

US Market This Week: My viewpoints (mine only)

Convergence of a weak GDP growth, stubborn inflation (PCE/CPI), and a "head-spinning" shift in trade policy following US Supreme Court verdict should create a volatile backdrop for week beginning 23 Feb 2026.

Investors should be pleased to know that both - Dow and S&P 500 indexes have closed prior week at their best levels since early January 2026. (see above).

For this week, expect a "sawtooth" trading pattern in the early days, with these US market possibilities

• The new 15% global levy (effective 24 Feb 2026) is likely to trigger market sell-off, reminiscent of Trump’s Liberation Day global tariff announcement on 02 Apr 2025.

• According to analysts’ reports, Consumer Discretionary (AMZN, TSLA, $Home Depot(HD)$) and Retail sectors stocks will experience most volatility as firms scramble to adjust pricing.

• Energy stocks (eg. $Exxon Mobil(XOM)$ and other oil companies) may continue to rise in the near term. This is due to ongoing tensions as the US and Iran head into their next round of talks in Geneva, Switzerland, on Thu, 26 Feb 2026.

• $NVIDIA(NVDA)$ quarterly earnings report will be out on Wed, 25 Feb 2026 after market close.

  If it beats expectations, it could trigger a "relief rally" that has been masking US’s underlying stagflation concerns.

• Will $Berkshire Hathaway(BRK.B)$ be the other catalytic stock (of the week) to help US close higher, when its Q4 2025 earnings is released on Fri, 27 Feb 2026 ?

• Last but not least, a hot Producer Price Index (PPI) report on Fri, 27 Feb 2026 could trigger US market sell-off, signaling that sticky wholesale costs will keep inflation high and force US Fed to delay rate cuts.

With some of the possibilities mapped out, should US market takes a deeper than expected fall, it might be the perfect setup to get some VTI ETFs, as mentioned in my post. Click here ! to read.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

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• Do you think US market this week will be a replay of April 2025’s Liberation Day ’?

• Do you think NVDA and/or BRK.B quarterly earnings, will be able to work their magic and give US market a boost ? I think both will live up to their reputations.

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