Growth Miss and Renewed Tariff Risk

Dave Harrison Smith, CFA
Chief Investment Officer
February 23, 2026

GDP growth came in very light for Q4, inflation also above target.

Raymond James described this as an “anti-goldilocks” report. GDP disappointed, rising 1.4% for the quarter versus 2.8% consensus expectations. Headwinds included the government shutdown and a disappointing quarter for retail spending, while business investment provided some upside offset.

Alongside the GDP release, inflation data showed price pressures remain slightly elevated. The Personal Consumption Expenditures Index , or PCE, which is the Fed’s preferred measured of inflation, rose 2.9% year-over-year versus consensus at 2.8%. Core PCE, which excludes food and energy and is viewed as a better gauge of underlying inflation trends, increased 0.4% month over month. That monthly page suggests inflation remains sticky beneath the surface. Investors are now pricing in two Fed rate cuts by year-end 2026.

The Supreme Court rejection of Trump’s use of IEEPA to implement tariffs was by far the biggest news of the week.

Over the weekend, Trump posted on Truth Social that his tariffs would indeed increasing from the 10% level he indicated last week to the maximum 15% allowed under Section 122. Recall that Section 122 allows for up to 15% global tariffs for a maximum of 150 days. Market reaction was negative Monday morning, as traditional safe havens like precious metals and international stocks held steadier.

Technology stocks were volatile over the week.

Anthropic released Claude Code Security, a coding agent designed to identify and suggest fixes for vulnerabilities. Despite limited overlap with existing products from major cybersecurity vendors, the announcement sent cyber stocks sharply lower.

Blue Owl, a large private credit manager involved in financing several AI data centers, saw shares plummet after halting outflows in one of its retail-focused funds. That pressured Oracle and Coreweave shares and coincided with reports that Blue Owl was struggling to secure financing for certain data center partnerships.

Finally, OpenAI was reported to be near closing a $100 billion financing round valuing the company at $800 billion. The company is reportedly materially lowering its projected spending , telling investors that it plans to spend $600 billion instead of the $1.4 trillion Sam Altman had bragged about last year. Encouragingly, after its “code red” in December, user growth has reportedly re-accelerated and reached new highs in 2026. OpenAI generated $13 billion in revenue in 2025 and is projecting $280 billion by 2030.

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