Welcome back to our monthly recap for February. The days are already feeling longer, and we are looking forward to springing ahead on March 8th for even more evening light. More daylight is ahead!
In this recap, we will discuss how the markets performed in February, then jump into our topic of the month: how the military conflict in the Middle East is impacting markets and what it means for your portfolio.
The Markets in February
February continued the theme ofglobal leadership, with international markets once again outperforming their U.S. counterparts.Emerging Marketsposted the strongest return among major indices at5.5%, supported by steady economic readings across Asia and improving expectations for global manufacturing.Developed international markets (MSCI EAFE)also delivered a solid month, rising4.6%, reflecting broad-based strength across Europe and Japan. Together, these gains reinforced the growing role of international equities in driving global performance early in the year.
U.S. equity results were more mixed, with a clear divergence between small caps, large caps, and growth-oriented benchmarks. TheRussell 2000 gained 0.8%, showing modest resilience as investors weighed shifting interest‑rate expectations heading into spring. TheDow inched up 0.31%, while large‑cap indices struggled: theS&P 500 slipped –0.76%, and theNasdaq fell –3.33%, reflecting weaker performance among technology and higher‑valuation growth names. Overall, February highlighted continued global participation paired with a temporary cooling in U.S. large-cap growth leadership, suggesting a more balanced and diversified market environment as 2026 unfolds.
US Equity Sectors
February saw a noticeable rotation in sector leadership, withUtilitiestopping the month over10%, supported by declining rate expectations and renewed interest in defensive yield-oriented areas.Energyfollowed at9.5%, benefiting from firmer commodity prices, whileMaterialsgained8.40%, extending momentum from improving industrial demand and stronger input pricing.
Several sectors posted steady but more moderate gains.Consumer Staplesadvanced7.78%, reflecting stable earnings visibility, whileIndustrialsrose7%alongside resilient transportation and manufacturing activity.Real Estatealso moved higher at5.82%, helped by slightly improved financing conditions, andHealth Caredelivered a modest3.5%as sentiment remained balanced.
On the weaker end,Communication Servicesslipped–1.69%, and bothConsumer DiscretionaryandTechnologydeclined–3.56%, reflecting pressure on higher‑valuation segments.Financialsposted the lowest return at–3.76%, as uncertainty around net interest margins and the Fed’s policy path weighed on the group. Collectively, February’s performance highlighted investor preference for defensive, income‑generating, and real‑asset‑linked sectors amid evolving macro and rate dynamics.
Bond Performance
February delivered a stronger month for bonds across most major categories, with a clear rebound in longer-duration exposures.U.S. Treasuriesled the group with a1.82%return, supported by a late-month rally as shifting economic data moderated concerns around persistent inflation. TheBloomberg U.S. Aggregate Indexalso posted a solid1.64%gain, reflecting a broad improvement across both government and investment-grade credit components.Global bonds (ex‑USD, hedged)followed with a1.25%return, as foreign yield curves stabilized and global rate‑cut expectations became more aligned.
Short‑term U.S. exposures delivered steadier but more modest gains.1–3‑year government/credit bondsreturned0.52%, benefiting from their lower rate sensitivity, while1–3‑month Treasury billsreturned0.28%, maintaining their role as a low‑volatility anchor. Although shorter maturities did not match the upside seen in longer‑duration Treasuries, they continued to provide consistency and helped smooth intra‑month fluctuations as economic data drove intermittent yield volatility.
Overall, February marked a reversal from the more subdued environment seen in January, with longer‑duration Treasuries regaining momentum and broad fixed income delivering more uniform strength. The combination of stabilizing rate expectations and improving global monetary alignment supported performance across the curve, suggesting a more constructive backdrop for diversified bond allocations heading into spring.
Topic of the Month– Military Conflict in Iran and the Middle East
You’ve likely been following the headlines about the military conflict in the Middle East and more specifically, Iran. We we wanted to reach out directly to share our perspective on what it means for your portfolio.
Here’s what’s happening:
The escalation of military operations in the Middle East has introduced new uncertainty into global markets, with oil prices climbing in response. The primary concern centers on the Strait of Hormuz, a narrow waterway off Iran’s coast through which roughly 20 percent of the world’s daily oil supply flows. Any sustained disruption there could push energy costs higher, which might unsettle the markets and could trickle down to consumer prices.
Here’s what it means for you:
Market volatility during geopolitical events is expected. We’ve seen situations like this before, and markets adjust to the news over time. Your financial strategy was built to weather periods of uncertainty like this one.
There are also some updates worth noting. OPEC+ has announced it’s prepared to increase oil production by 206,000 barrels per day starting in April. Global oil supply was already healthy heading into this event, with the International Energy Agency projecting global oil production growth of 2.4 million barrels per day in 2026. Major oil-producing nations in the Gulf also hold approximately 3.5 million barrels per day in spare capacity that can be brought online relatively quickly.2,3,4
Our insight:
Your portfolio reflects your goals and time horizon, so reacting to short-term headlines can be a mistake. History has shown time and again that during periods of volatility, it’s important to stay disciplined.
Closing Comments
That’s it for our February recap. Thank you for the opportunity to partner with you on your financial journey. We’re here to help keep you moving towards your goals.
See you next month!
Laurence
Disclosures
Investing involves the risk of loss. This content is for informational purposes only and should not be, nor regarded as personalized investment advice or relied upon for investment decisions. Laurence Schiffman and Traverse Planning are affiliates of Clear Creek Financial Management and may maintain positions in the securities discussed in this video. All opinions expressed here are solely those of Traverse Planning and do not reflect the opinions of Clear Creek Financial Management.
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