February 19, 2026 – U.S. equities retreated Thursday. The S&P 500 fell 0.3%. The Dow Jones shed 0.4%. The Nasdaq dropped 0.2%. Two forces drove the selloff: a hawkish pivot in Federal Reserve meeting minutes and a cautious earnings outlook from Walmart (WMT).
Fed Minutes Signal Rate Cuts Are Far Off
The Federal Reserve released minutes from its January meeting. The document revealed that policymakers are not in a hurry to reduce rates. Several FOMC members even floated the possibility of future hikes. That scenario would only apply if inflation stays above the Fed’s 2% target.
Deutsche Bank strategist Jim Reid flagged the key shift in language. Several participants backed “more two-sided language” on future rate moves. This signals the Fed is watching both upside and downside risks carefully.
Artificial intelligence also featured in the minutes. Fed officials remain split. They disagree on whether AI growth will fuel or dampen inflation over time. This uncertainty adds another layer of complexity to rate forecasts.
Walmart’s Conservative Guidance Rattles Investors
Walmart delivered a quarterly earnings beat. The retailer also announced a $30 billion share buyback. Yet, its profit guidance for Q1 and fiscal year 2027 fell short of Wall Street expectations.
The results mark the first quarterly report under new CEO John Furner. He replaced long-serving chief Doug McMillon. Analysts note Walmart has a history of setting conservative targets early in the year. That context helped shares recover, ending up 1.1% by midday.
Rachel Wolff, senior analyst at Emarketer, remained upbeat. She noted Walmart’s everyday-low-price strategy resonates across all income levels. Its push into e-commerce is also gaining market share among higher-income shoppers.
What Investors Are Watching Next
All eyes turn to Friday’s data. Two major reports land on the same day. The Personal Consumption Expenditures (PCE) index is the Fed’s preferred inflation gauge. A preliminary Q4 GDP estimate is also due. Steve Sosnick of Interactive Brokers warned markets may stay cautious ahead of both releases. A surprise in either direction could shift rate-cut expectations sharply. Oil prices added to the cautious mood. Brent crude climbed 1.7% to $71.56. WTI rose 2% to $66.35. Geopolitical tensions in the Middle East and stalled Russia-Ukraine talks drove the gains.
