U.S. equity markets closed Friday, February 13, 2026, with a mixed but stabilizing tone following Thursday’s sharp sell-off. While headline indices posted only modest gains, small-cap stocks rebounded and Canadian equities surged, suggesting selective buying interest. At the same time, volatility remained elevated, reinforcing a cautious undercurrent across markets.

Small Caps Lead Recovery as Risk Appetite Returns Selectively

The strongest move of the session came from small-cap stocks. The Russell 2000 advanced more than 1 percent, recovering a portion of the prior session’s losses. Small caps often serve as a barometer for domestic economic confidence, and today’s rebound suggests investors were willing to re-enter higher-risk segments selectively.

Despite the rebound, small caps remain sensitive to volatility and financing conditions. Sustained upside momentum will likely depend on whether market stress indicators, particularly volatility, begin to ease meaningfully.

Dow and S&P 500 Hold Near Flat as Investors Remain Cautious

Large-cap U.S. indices showed limited movement. The S&P 500 closed marginally higher, reflecting balanced buying and selling pressure. Gains were modest and lacked broad sector conviction, signaling consolidation rather than a decisive shift in sentiment.

The Dow 30 also posted a slight gain, supported by industrial and defensive stocks. Blue-chip names provided relative stability, though investor conviction remained muted. The restrained movement in both indices highlights a market still digesting recent volatility rather than aggressively pursuing new highs.
Technology stocks continued to lag. The Nasdaq closed modestly lower, reflecting ongoing caution toward growth-oriented shares. Elevated volatility and lingering valuation concerns have kept investors selective within the tech sector.

Volatility Remains Elevated Despite Market Stabilization

Market volatility continued to rise slightly, with the VIX climbing further. Although the increase was modest, volatility remains significantly above levels seen earlier this year. Elevated volatility signals that investors are still hedging downside risks and remain sensitive to macroeconomic and policy developments. Sustained declines in the VIX would likely be necessary to restore broader confidence in growth-heavy sectors and support a more durable market rebound.

Canada Outperforms While Brazil Extends Decline

Canadian equities delivered one of the strongest performances across the Americas. The S&P/TSX Composite Index surged nearly 2 percent, supported by strength in financials, materials, and energy stocks. Canada’s diversified exposure and resource-linked sectors benefited from improved sentiment and stabilization in global markets.
In contrast, Brazil’s IBOVESPA declined nearly 1 percent, extending recent weakness. Emerging markets remain sensitive to global volatility and capital flow shifts. While Brazil had shown resilience earlier in the week, Friday’s decline underscores the uneven recovery across regions.

Dollar Remains Stable as Markets Consolidate

The U.S. dollar remained essentially flat, offering neither significant support nor additional pressure to risk assets. Stable currency conditions may help prevent further stress in emerging markets, though volatility remains the dominant driver of sentiment.

Looking ahead, markets appear to be stabilizing after recent turbulence, but elevated volatility suggests caution remains warranted. Investors will monitor whether small-cap strength broadens into other sectors and whether volatility begins to trend lower. Key risks include renewed spikes in the VIX and continued weakness in technology stocks. Opportunities may emerge selectively in value and cyclical segments if stabilization continues.