MW The economy just flashed a Goldilocks signal - and it's been doing a lot of that lately

By Steve Goldstein

Philadelphia Fed survey latest in series of datapoints suggesting not-too-hot but not-too-slow economy

Data out of Washington - and Philadelphia - seems to be signaling improvement.

There's something different about the feel of the economic data of late.

Inflation is slowing. The jobs market is not exactly on fire, but companies also are not laying off workers, as the decline in the unemployment rate and Thursday's report showing a drop in first-time jobless claims attest.

The ISM manufacturing report rose to its highest level in more than three years, even if the actual comments made by purchasing managers were more negative than positive. Industrial production rose at the fastest rate in 11 months.

And then there's the venerable Philadelphia Fed manufacturing index, the longest-running survey from a regional Fed bank, polling executives on conditions in eastern Pennsylvania, southern New Jersey and Delaware.

The reading for February, released Thursday, not only beat expectations -- coming in at 16.3 on a scale of -100 to +100 -- but the current general activity component saw its first back-to-back increase since late 2024.

"Overall the survey delivered a Goldilocks signal of decent growth and disinflation," says Felix-Antoine Vezina-Poirier, associate strategist at BCA Research. A Goldilocks economy, as the fairy tale goes, is not too fast and not too slow.

And the point is the Philadelphia Fed data fits with the trend showing improving momentum across both soft (survey) and hard indicators after the slowdown last year.

"Historically, such positive momentum has coincided with equity outperformance versus bonds," he says. The firm's stance toward stocks is still neutral, however. He says the firm is waiting to see how volatility in the rates market responds to re-accelerating growth before recommending investors own more equities.

But he does say investors should favor cyclical and value-focused sectors over growth, which is how things have played out this year. Vanguard's value ETF VTV has gained 8% this year, while Vanguard's growth ETF VUG has declined 5%.

The market

U.S. stock-market futures (ES00) (NQ00) drifted ahead of the open. Gold's (GC00) back above $5,000.

   Key asset performance                                                Last       5d      1m      YTD     1y 
   S&P 500                                                              6861.89    0.43%   -0.74%  0.24%   12.17% 
   Nasdaq Composite                                                     22,682.73  0.38%   -3.21%  -2.41%  13.63% 
   10-year Treasury                                                     4.073      2.10    -16.00  -9.90   -35.70 
   Gold                                                                 5046.4     -0.34%  1.27%   16.49%  71.08% 
   Oil                                                                  66.01      5.09%   7.68%   14.98%  -6.02% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

The U.S. is considering a limited strike on Iran to pressure the country into a nuclear deal, according to the Wall Street Journal.

Fourth-quarter GDP data as well as the December reading of personal income and PCE inflation index are set for release at 8:30 a.m., followed by flash PMI readings, new-home sales and consumer sentiment after the open.

The U.S. Supreme Court could issue a ruling on the legality of the Trump administration's tariff policy.

Blue Owl Capital $(OWL)$ late Thursday pushed back at media coverage of its decision to permanently freeze withdrawals from a private-capital fund, arguing that its move to return 30% of capital in the first quarter is faster than a previous process of giving back money to investors.

Ticketmaster parent Live Nation Entertainment $(LUV)$ reported stronger-than-forecast sales and said early ticket sales so far this year were up double digits,

The loss-making online home-buying platform Opendoor Technologies (OPEN) reported much stronger-than-forecast revenue.

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The chart

Robin Brooks, senior fellow at the Brookings Institution and the former chief currency strategist at Goldman Sachs, says he's still a dollar bear even as the U.S. dollar index DXY has bounced 2% from its late January lows. He shows the dollar, on a trade-weighed basis, against both a basket of developed and emerging market countries. "Even though the G10 Dollar has rallied, I see this as noise. The EM Dollar remains near its recent low, which in my mind signals further Dollar weakness ahead," he writes.

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   TSM     Taiwan Semiconductor Manufacturing Co. 
   INFY    Infosys 
   AMZN    Amazon.com 
   PLTR    Palantir Technologies 
   MSFT    Microsoft 
   MU      Micron Technology 
   AMD     Advanced Micro Devices 

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BEYOND THE NEWSROOM

MarketWatch Picks: I'm 49 and single with $500K in my 401(k). I'm 80/20 stocks/bonds and want to retire early. Who can help?

-Steve Goldstein

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February 20, 2026 06:41 ET (11:41 GMT)

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