A win-win market paradox

Market support from either weaker or stronger growth

It’s estimated that roughly $1.8 billion was gambled on the Super Bowl.¹ About 70% of that came from prop bets on something other than the traditional wagers on the outcome of the game.² It’s hard to know how much of that money was tied to bets on the length of the national anthem, the color of the Gatorade poured on the winning coach, or whether the opening coin flip would land heads or tails. What we do know is that heads or tails is the better bet. With a true 50-50 probability, the coin flip is one of the few wagers that resembles a fair game.

We bring this up following another challenging week in markets.³ It’s not because we think people should gamble their money rather than invest it – quite the opposite. The market, over time, has been a far more reliable proposition than any Super Bowl prop bet in our view. The analogy is useful, however, for thinking about the recent flow of economic data.

It has felt like a “heads I win, tails I win” environment. On one side, weaker growth increases the likelihood of earlier or deeper Federal Reserve (Fed) easing. On the other side, stronger growth reinforces the view that the business cycle remains intact. Either outcome can be supportive of markets, provided inflation stays contained.

Strong and weak data

Last week, the jobs report was relatively strong,⁴ while the housing data were weak.⁵ It’s difficult to have a recession when unemployment remains low, even if certain interest rate-sensitive sectors are under pressure. At the same time, last week’s Consumer Price Index (CPI) report showed that inflation remains generally contained, including on the goods side.⁶ That gives the Fed the cover to lower rates. In theory, lower rates could potentially help with more rate-sensitive areas of the economy, including housing. More broadly, lower rates tend to support stocks if economic growth doesn’t collapse.

Winners and losers

We recognize how that message may land given the carnage we’ve seen in select parts of the market this month, particularly in software stocks.⁷ That pain is real. At the same time, it’s worth noting that cyclical stocks such as industrials and energy have performed well over the past month.⁸

Semiconductor stocks also haven’t experienced anything resembling a broad downturn.⁹ The market has become more discerning within software, separating likely winners from losers. It also remained constructive on the scale of investment coming across technology and the businesses positioned to participate in that growth.

Addressing investors’ fears

We’ll close with three final thoughts about what investors feared last year.

1. Tariffs and inflation. First, one of the biggest questions we’ve received was whether tariffs are inflationary. On the goods side, the answer is yes, but goods represent a relatively small share of the consumer basket, and any price impact tends to be short-lived. The recent benign inflation data supported that view.¹⁰

2. U.S. Treasuries. Second, there were persistent concerns that global investors were abandoning U.S. Treasuries and that the U.S. would struggle to fund its debt. We were skeptical. Last week’s 30-year Treasury auction was significantly oversubscribed, and the 30-year yield fell below 4.7%.¹¹

3. The AI “bubble.” Third, there was the question of the so-called artificial intelligence (AI) bubble. Some excess has clearly been worked off in certain names, but not everything needs to be a bubble. Even after recent volatility, major indexes aren’t far from all-time highs,¹² and valuations in some growth companies now appear to be coming down to more reasonable levels. For long-term investors, that may be an opportunity.

Brian Levitt is Chief Global Market Strategist and Head of Strategy & Insights at Invesco. Benjamin Jones is Global Head of Research, Strategy & Insights at Invesco

Notes

1. Source: American Gaming Association, Feb. 2026.
2. Source: American Gaming Association, Feb. 2026.
3. Source: Bloomberg, L.P., Feb. 12, 2026, based on the four-day return of the S&P 500 Index, which declined 1.41%.
4. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on US employees on nonfarm payrolls.
5. Source: National Association of Realtors, Jan. 31, 2026, based on existing home sales.
6. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on the US Consumer Price Index.
7. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Software Industry GICS Level 3 Index, which declined 17.14%. The index tracks large-cap US companies primarily engaged in software development, including Application Software and Systems Software sub-industries.
8. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Industrial Sector GICS Level 1 Index and the S&P 500 Energy Sector GICS Level 1 Index, which advanced 6.72% and 16.19%, respectively. The S&P 500® Industrials Sector GICS Level 1 Index represents the industrial sector within the S&P 500 index, as defined by the Global Industry Classification Standard (GICS). It includes companies involved in capital goods, commercial and professional services, and transportation. The S&P 500 Energy Sector GICS Level 1 Index is a market-capitalization-weighted index comprising companies within the S&P 500 that are classified under the GICS® Energy Sector. It covers firms involved in oil and gas exploration, production, refining, and equipment.
9. Source: Bloomberg, L.P., Feb. 12, 2026, based on the one-month return of the S&P 500 Semiconductors & Semiconductor Equipment Industry Group GICS 2 Index, which advanced 0.66%. The index measures the performance of large-cap US companies within the semiconductor industry, categorized under the Information Technology sector. It tracks firms involved in producing semiconductor materials, equipment, and manufacturing devices.
10. Source: US Bureau of Labor Statistics, Jan. 31, 2026, based on the US Consumer Price Index.
11. Sources: US Treasury and Bloomberg, L.P., Feb. 13, 2026.
12. Source: Bloomberg, L.P., Feb. 12, 2026, based on the S&P 500 Index and the Dow Jones Industrial Average.

Disclaimer

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The opinions referenced above are those of the author as of February 13, 2026. These comments should not be construed as recommendations, but as an illustration of broader themes. This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations. Diversification does not guarantee a profit or eliminate the risk of loss. All investing involves risk, including the risk of loss.

Diversification does not guarantee a profit or eliminate the risk of loss.

All figures are in U.S. dollars.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

All investing involves risk, including the risk of loss.

Past performance is not a guarantee of future results.

In general, stock values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.

Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the simplified prospectus before investing. Copies are available from your advisor or from Invesco Canada Ltd.

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