Markets Slip as Walmart's Cautious Outlook Overshadows Deere's Blowout Quarter

Deere & Company delivered a stunning first-quarter fiscal 2026 earnings beat on February 19, with shares surging more than 13% on the day. The agricultural and construction equipment manufacturer reported Q1 earnings per share of $2.42, far exceeding analyst expectations of approximately $2.02 to $2.05. Revenue came in at $9.61 billion, well above the consensus estimate of around $7.59 to $8 billion, representing a meaningful acceleration in the company’s top-line performance.

Management attributed the outperformance in part to improving demand in construction and smaller-agricultural equipment segments, which helped offset ongoing softness in the large-agriculture market. The company also upgraded its full-year fiscal 2026 net income guidance to a range of $4.5 billion to $5 billion, signaling confidence in a sustained demand recovery across key business lines.

The Deere result stood out as one of the brightest spots in an otherwise cautious session for U.S. equities. Shares were trading near $670 during Thursday’s session, a gain of more than $77 per share from the prior close. The strong beat and raised guidance helped reinforce optimism that industrial demand may be more resilient than feared, even as macroeconomic uncertainty from Fed policy and geopolitical risks continue to cloud the broader market outlook.

Minutes from the Federal Reserve’s January 27–28, 2026 meeting, released on February 18, showed a central bank divided over the path of interest rates and unwilling to commit to near-term cuts. The Federal Open Market Committee voted 10-2 to hold the federal funds rate steady at 3.5% to 3.75%, its first meeting since delivering three consecutive rate reductions in late 2025. The minutes characterized the stance as a “hawkish pause,” with most participants cautioning that progress toward the Committee’s 2% inflation objective could be “slower and more uneven than generally expected.”

Perhaps most notably, several FOMC members indicated they would have supported language acknowledging that upward adjustments to the policy rate could be appropriate if inflation remains persistently above target. This marked a significant shift in tone compared with late 2025 communications, when the committee was firmly in easing mode. Participants broadly agreed that further rate cuts would require “clear indication” that disinflation was firmly back on track, raising the bar for future easing.

Treasury yields rose in response to the hawkish minutes, with the policy-sensitive 2-year yield climbing and the 10-year following suit. The minutes added to investor anxiety on Thursday, compounding pressure from Walmart’s disappointing guidance and contributing to broad equity market declines. The Fed’s next scheduled policy decision is in March 2026.