Wall Street Brief (February 21): U.S. major indexes rose, with a rebound in tech stocks driving Nasdaq's gains; tariff decisions + GDP slowdown + PCE rebound, market sentiment improves but remains cautious

Summary: The Supreme Court rejected Trump's tariffs, and mixed economic data led to a slight rise in US stocks on Friday. The S&P 500 Index rose by 0.69%, the Nasdaq Index climbed 0.90%, the Dow Jones Index gained 0.47%, while the Russell 2000 Index edged down 0.05%. Tech heavyweights recovered, with rebounds from leaders like Google and Netflix driving the Nasdaq’s rise. The VIX volatility index closed at 19.09, falling 5.64% in a single day, easing pressure from market fluctuations. In major asset classes, gold surged 2.23%, crude oil fell 0.54%, Bitcoin rebounded 1.52%, and the yield on the 10-year US Treasury rose.

I. Major Events

1. The Supreme Court rejected Trump’s tariffs, temporarily easing trade uncertainty

The Supreme Court ruled against parts of Trump's tariff measures, prompting him to propose a 10% global tariff as an alternative. Trade-related uncertainties have briefly eased, leading to a recovery in risk appetite. However, questions remain over how subsequent policies will be implemented and their potential impact, leaving markets still somewhat cautious. Meanwhile, US Treasury yields also rose, reflecting a mix of recovering sentiment and lingering inflation concerns.

2. Q4 GDP growth slowed to 1.4%, showing a clear cooling in momentum

The US annualized GDP growth for Q4 2025 dropped to 1.4%, significantly slower than the first three quarters, weighed down by government shutdowns affecting investment and public spending. The cooling growth has led the market to reassess economic resilience, weakening the 'soft landing' narrative. This has also caused a divergence in interest rate expectations: concerns about slowing growth on one hand, and inflation readings preventing premature market optimism on the other.

3. Core PCE rebound suppresses rate cut expectations

December's core PCE was approximately 0.4% month-on-month and around 3.0% year-on-year, higher than market expectations, showing renewed inflation stickiness. This reading increased discussions about 'higher rates for longer,' making interest-rate-sensitive sectors more prone to volatility. Small-cap and high-valuation assets saw limited gains that day, consistent with this backdrop.

II. Major Trends

From a two-week perspective, market divergence continues. The Dow ETF (DIA) performed best over two weeks (+1.28%), while the tech-heavy Nasdaq ETF (QQQ) was weakest (-3.21%). Capital favored value and industrial chains. Over a three-month view, small-cap ETF (IWM) rose 11.42%, significantly outperforming the broad-market ETF (SPY) at 1.74%, indicating an underlying risk appetite in the medium term.

In terms of market breadth, the equal-weight S&P ETF (RSP) gained 8.32% over three months, significantly stronger than SPY, suggesting the rally wasn't solely driven by top weights but was more dispersed. In style rotation, the value-focused ETF (SPYV) rose 5.38% over three months, clearly ahead of the growth-focused ETF (SPYG), which fell -1.47%. In the past two weeks, growth stocks corrected deeper (-3.95% vs. 1.41%), with capital preferring stable cash flows.

Concentration in tech remains under pressure, with the tech giants basket ETF (MAGS) retracting -7.56% over two weeks, showing that leading weights haven't escaped adjustments. Momentum signals diverged faster, with DIA, IWM, and SPYV accelerating gains over two weeks, recovering momentum quicker in value and small caps.

III. Market Sentiment

Overall sentiment improved from the previous trading day but remained cautious. The VIX fear index closed at 19.09, falling 5.64% in a single day, easing volatility pressure. The CNN Fear & Greed Index rebounded to 43 (from 37 the previous day), indicating improving risk appetite, though not yet entering the 'greed' zone.

In terms of market breadth, the previous trading day's total market volume was 16.4B, below the 20-day average of 20.5B. The S&P new highs/lows were 27/6, while Nasdaq new highs/lows were 62/146, indicating weak volume and breadth. Regarding option sentiment and institutional positioning, the latest available data shows: CBOE total Put/Call ratio around 0.88 (February 13), NAAIM Exposure Index at 80.61 (February 11). As these are not same-day readings, they primarily depict recent neutral-to-higher positioning states: funds have not significantly reduced positions, but upward momentum also remains relatively restrained.

IV. Market Scan

1. Index ETFs

A recovery in tech weights drove QQQ up by 0.88%, echoing rebounds in tech leaders like Google and Netflix. Small-cap IWM remained flat at 0.00%, as capital remained cautious toward high-beta sectors amid slowing growth and sticky inflation, with small-cap elasticity yet to fully materialize. Structurally, the index rise was mainly contributed by leaders, with the market's preference for 'certainty' still dominant.

2. Industry Sectors

The communication services sector led the gains, with XLC rising 1.44%, primarily driven by strength in Google and Netflix, as the market repositions its bets on AI and streaming cash flow realization. The consumer discretionary sector, represented by XLY, climbed 1.04%, bolstered by strong e-commerce company earnings reports that reinforced expectations of resilient consumer spending, improving sector sentiment. However, rising U.S. Treasury yields continue to weigh on interest-rate-sensitive areas like durable goods. The energy sector, represented by XLE, declined 0.54%. Despite high oil prices, profit-taking and valuation adjustments led to pullbacks, with capital oscillating between elevated oil prices and demand concerns.

3. Seven Major Tech Stocks

Google rose 3.74%, catalyzed by the launch and feature upgrades of Gemini Enterprise, driving capital back into large-cap tech. Netflix gained 2.17%, outperforming the broader market, reflecting the relatively robust logic of content and subscription models. Microsoft experienced a minor pullback, lacking clear catalysts, while divergence within the sector persisted, with investors favoring leaders driven by event-specific factors.

4. Chinese概念股

PDD Holdings climbed 2.93%, supported by institutional buying and improved analyst sentiment, creating a positive bias for the e-commerce sector as platform-based assets with stronger certainty gained favor. Bilibili retreated, lacking clear catalysts, leading to reduced investor attention. Differentiation continued among Chinese stocks, with sentiment concentrated on companies with clearer profitability and cash flow paths.

5. Cryptocurrencies and related stocks

Bitcoin rebounded 1.52%, with market sentiment improving but momentum remaining limited due to ongoing macroeconomic uncertainties constraining aggressive buying. Coinbase surged 3.26%, benefiting from strength in the crypto sector, as exchange-related stocks with better liquidity were preferred. Mining stocks showed significant divergence, with Riot giving back gains as capital favored timing and defensive strategies in the high-volatility space.

$NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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