(Refiled to correct formatting error)
By Mike Dolan
Feb 18 –
What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Wall Street returned from its three-day weekend on Tuesday to another day of AI-related angst and market churn that briefly saw the VIX volatility gauge stalk some of its highest levels of the year.
Even though the S&P 500 ended little changed on the surface, that masked another big downdraft in the software sector, ongoing jitters about hyperscalers’ spending on AI, and even a big drop in high-flying Walmart stock ahead of its results this week.
I’ll get into that and more below.
But first, check out my latest column on why AI‑linked productivity bets might be moving Treasuries.
And listen to the latest episode of the Morning Bid daily podcast. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.
CHANGING OF LAGARDE
Six weeks in, it’s worth noting that the S&P 500 is still in the red for the year to date, the Nasdaq is down over 2%, and funds tracking the ‘Magnificent Seven’ mega-cap tech stocks are down almost 8% for 2026 so far. U.S. stock index futures were firmer ahead of Wednesday’s bell, however.
In Europe, all the chatter centred on fresh reports that European Central Bank President Christine Lagarde plans to step down before her term ends in October 2027. The ECB said no decision had yet been made, but the original FT report said Lagarde was mulling the move to allow Emmanuel Macron and Friedrich Merz to influence the selection of her successor.
European markets were calm on the news as these reports have been doing the rounds for some time. In any case, steady ECB policy looks baked-in for the foreseeable.
But there will inevitably be focus on the political decision over Lagarde’s successor – whether Germany may break with convention and claim its right to have a Bundesbanker head the ECB for the first time, or whether a compromise candidate like BIS boss and former Bank of Spain chief Pablo Hernández de Cos is more likely.
If a German ECB president emerged, markets may, at the margin, bet on a more hawkish trajectory over the horizon.
Elsewhere, UK inflation fell to 3%, as expected, keeping speculation about another Bank of England rate cut next month on the boil. Sterling was unmoved.
The main focus of the macro world later will be the FOMC’s release of minutes for its January meeting – usually a relatively anodyne readout, but one that could take on more significance amid debates around AI’s impacts on productivity and inflation going forward.
In geopolitics, Iranian Foreign Minister Abbas Araqchi said on Tuesday the U.S. and Iran had reached an understanding on “guiding principles” in nuclear talks. The prospects of a final deal remain uncertain, however. Oil prices trimmed some losses after falling around 2% on Tuesday.
Chart of the day
U.S. public approval of Donald Trump’s immigration policies fell to the lowest level since his return to the White House, amid signs he is losing support among American men on the issue, according to a new Reuters/Ipsos poll.
Trump started his term with his overall approval at 47% but in recent weeks his rating has hovered at the lowest levels of his second presidency, with 38% of respondents in the latest poll approving of his performance – unchanged from a Jan 23-25 poll.
Today’s events to watch
* U.S. December manufacturers’ new orders (8:30 AM EST), December housing starts (8:30 AM EST), January industrial production (9:15 AM EST)
* Federal Open Market Committee issues minutes for its latest meeting (2:00 PM EST)
* Fed’s Michelle Bowman speaks
* U.S. 20-year bond auction
Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan)
Comments