Macro Pilgrim's Ledger Weekly
Stocks slipped as AI tensions, tariffs, and geopolitics weighed. With bonds repricing risk, is this pause…or the start of something bigger?
For U.S. markets this past week, risk assets weakened as structural concerns and shifting sentiment outweighed short-term optimism. By Friday, all three major indexes closed lower, led by declines in tech and financial stocks, as persistent worries about artificial intelligence disruption and cost pressures weighed on investor confidence.
The Dow suffered its largest weekly drop in several months, while the S&P 500 and Nasdaq also finished the week in negative territory as traders reduced exposure to cyclical and high-valuation areas of the market.
Underlying the market moves was a backdrop of ongoing uncertainty. Persistent concerns around AI, revived tariff debates, and broader macro risk factors contributed to a cautious tone. Treasury yields moved modestly lower by week’s end, illustrating that fixed income markets were repricing risk amid weaker equity sentiment.
Taken together, the week reinforced that markets remain sensitive to both earnings dynamics, macro policy signals, and geopolitical unknowns with little sustained upside momentum in the absence of clear catalysts.
“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills.” — Jesse Livermore
The Week That Was
The week began with Federal Reserve officials back in the public eye, including remarks from Governor Waller on the economic outlook and additional speeches that focused on artificial intelligence and productivity, including comments from Governor Cook and a separate address from Waller on operationalizing AI at the Fed. At the same time, the Chicago Fed National Activity Index for January printed at +0.18, up from -0.21 in December, signaling a firmer read on national activity to start the year.
On Tuesday, consumer and housing data arrived with a mixed tone. The Conference Board’s Consumer Confidence Index rose to 91.2 in February from an upwardly revised 89.0 in January, while the expectations component remained the key swing factor within the report. The December Case-Shiller release showed home price appreciation continuing to cool, with the national index up 1.3% year over year. Regional manufacturing remained soft, with the Richmond Fed’s February composite manufacturing index falling to -10 from -6 in January.
Wednesday’s key overseas release was euro area inflation. Eurostat reported euro area annual inflation at 1.7% in January, down from 2.0% in December, continuing the disinflation trend into the start of 2026.
On Thursday, the labor market stayed relatively steady. Initial jobless claims for the week ending February 21 rose to 212,000 on a seasonally adjusted basis. The same day’s energy data was notable, with the EIA reporting U.S. commercial crude oil inventories up 16.0 million barrels week over week to 435.8 million barrels.
Friday delivered the week’s heaviest domestic data cluster. The BLS reported the Producer Price Index for final demand up 0.5% in January and 2.9% over the past year, with services leading the monthly increase while goods declined. The Chicago Business Barometer rose to 57.7 in February from 54.0 in January. Construction spending data that had been rescheduled was released as well, showing total construction spending up 0.3% in December to an annual rate near $2.17 trillion.
In a dramatic and unprecedented standoff that grabbed national attention and reverberated through the technology and defense sectors, the U.S. government moved to blacklist Anthropic after weeks of escalating tensions with the United States Department of Defense. Defense Secretary Pete Hegseth issued an ultimatum to Anthropic’s leadership demanding that the company remove certain safety restrictions on its Claude AI models to allow military use or face being designated a supply chain risk, a label typically reserved for firms tied to adversarial states.
After Anthropic declined to accept those terms, citing ethical constraints around domestic surveillance and autonomous weapons, the administration directed federal agencies to cease using Anthropic’s technology and prohibited the company from future defense contracts. The decision marked one of the most significant clashes yet between a frontier artificial intelligence developer and U.S. national security policy.
