What’s driving today’s markets: Insights from Jurrien Timmer - February 23, 2026

Market broadening continues to take shape

Meaningful rotation has been taking place beneath headline equity indexes since last year’s tariff‑related volatility. While mega‑cap stocks have driven much of the market’s gains since the bull market began in late 2022, the equal‑weighted S&P 500 has recently narrowed the performance gap with the cap‑weighted index. According to Jurrien, this convergence reflects broader participation across stocks rather than returns being concentrated in a small group of companies. He emphasized that this broadening has occurred without a significant decline in large‑cap stocks. Instead, mega‑caps have largely moved sideways, allowing other parts of the market to catch up. Jurrien described this as a constructive outcome compared with a rotation driven by large‑cap weakness.

A rare dynamic with conditions attached

Jurrien pointed out that periods when the equal‑weighted index outperforms mega‑cap stocks have historically occurred more often during market downturns. He noted that seeing this type of broadening while the overall market remains relatively stable or rising is less common. While he characterized the current environment as positive, he also highlighted an important condition. For this type of broadening to continue in a benign way, mega‑cap stocks need to hold their recent support levels. If those levels were to break, Jurrien cautioned that broadening could still occur, but potentially in a declining market rather than a steady one. As a result, he stressed the importance of monitoring how large‑cap leadership evolves.

Earnings play a larger role in supporting markets

Jurrien also discussed a shift in what has been driving market returns. Early in the bull market, valuation expansion accounted for a significant portion of gains, which he described as typical when earnings take time to recover. More recently, earnings growth and dividends have become more meaningful contributors. Strong earnings momentum over the past several quarters was a key highlight, alongside the observation that valuation expansion has largely flattened since before last year’s tariff‑related volatility. At this stage of the cycle, Jurrien views a greater reliance on earnings as a healthier market structure.

Global participation becomes more visible

The current market broadening is not limited to the United States. Improving earnings momentum is also evident across international markets, with emerging markets in particular showing a sharp pickup in forward earnings estimates. Emerging markets are currently exhibiting stronger year‑over‑year earnings growth than both U.S. and international developed markets. Broader global participation may help address concentration risk, particularly if leadership within U.S. equities were to change.

The U.S. dollar and international exposure

Jurrien observed that the U.S. dollar is no longer behaving as a one‑way trade. While it has not experienced a sharp decline, it has moved into a downward channel with limited momentum. He suggested that this shift may influence how investors think about international markets, as currency dynamics have become less of a dominant headwind than in the past.

AI investment faces greater scrutiny

Turning to artificial intelligence, Jurrien reflected on how investor sentiment has evolved over time. He noted that questions around capital spending, returns on investment and cash flows began to surface last year and have become more prominent more recently. These questions have also extended to concerns about disruption and potential commoditization in certain sectors, particularly software. Rather than viewing this scrutiny as negative, Jurrien described it as constructive. He emphasized that increased critical thinking can help reduce the risk of speculative excess and prevent bubble‑like conditions from forming. He also noted that productivity gains from AI‑related investment may ultimately benefit a broader range of companies, beyond those making the largest capital outlays.

Trade policy developments and market impact

Recent developments related to U.S. trade policy were also discussed. The Supreme Court’s decision affecting the use of emergency tariff powers was largely anticipated by markets, which may help explain the muted immediate reaction. Tariffs were described as functioning like a tax, with the majority of the cost historically borne by U.S. importers and consumers rather than foreign exporters. While unwinding existing tariffs may involve a complex legal process, the broader market impact was characterized as more limited than it would have been earlier in the cycle, given that many of the more aggressive proposals have already been scaled back.

Consumer conditions and digital assets

On the consumer, Jurrien described conditions as generally stable. Employment remains high, wages have largely kept pace with inflation and overall debt levels do not appear excessive. He also commented on Bitcoin, noting that it is trading near a level he has previously identified as an important area of support. While prices could move lower, Jurrien observed that periods when gold has significantly outperformed Bitcoin have historically coincided with lows for Bitcoin. He characterized the current level as an area to watch, while acknowledging the risks involved.

Conclusion: A market that is broadening, not standing still