These Stocks Lead Dow Jones In February. Hint: It's Not AI Companies.

Move aside, Microsoft (MSFT) and other tech heavyweights. February was a month for defensive stocks in the Dow Jones Industrial Average. Verizon Communications (VZ) and drug companies Merck (MRK), Amgen (AMGN) and Johnson & Johnson (JNJ) climbed 9% or more.

As technology, financial and consumer discretionary sectors struggle this year, investors have shifted to an odd mix of economically sensitive sectors such as materials and energy along with consumer staples and utilities.

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“There’s a lot of hiding in the defensive names,” Nancy Tengler, chief investment officer of Laffer Tengler Investments, said via comments emailed to IBD.

Amgen climbed more than 13% in February, the best performance by a Dow stock. The biotech broke out of a cup-with-handle base Feb. 4, MarketSurge research shows. That day, Amgen gave surprisingly upbeat 2026 guidance for bone health drugs Prolia and Xgeva, even though both now face competition from biosimilars.

Amgen stock, which has a 90 Composite Rating, is extended 13% from its 343.05 buy point.

Verizon began rallying with a 12% surge that followed the wireless carrier’s fourth-quarter results on Jan. 30. Shares have gone up 25% since then, which included a 12% jump in February. At the conclusion of February, the stock traded at its highest point since July 2022.

The bullish quarterly report included revenue, subscriber additions and profit guidance that were all above expectations. Verizon also announced a stock repurchase of up to $25 billion over three years, including at least $3 billion this year. Verizon has a 61 Composite Rating and rose 12% for the month.

Merck reignited its 2026 gains on Feb. 3, when the company reported fourth-quarter sales of $16.4 billion, up 5% year over year, and earnings of $2.04 per share, excluding some items. The report beat expectations thanks largely to sales of its Keytruda cancer drug, but management gave soft guidance.

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Dow Jones Stock Rises Friday

Merck stock on Friday rose more than 3% as it found support at the 21-day line. A study showed Keytruda in combination with chemotherapy improved survival rates in certain ovarian cancer patients.

Shares also are clearing the 123.33 buy point of a three-weeks-tight pattern, making it actionable. Merck has a 94 Composite Rating and its shares rose 12% in February.

Johnson & Johnson (JNJ) just concluded an eight-month winning streak after adding more than 9% in February. MarketSurge shows a 1.51% 21-day average true range. That means it’s been a productive stock even while it normally makes modest price movements.

J&J issued strong 2026 guidance in January, which helped offset a mixed fourth-quarter report. The strongest growth came from J&J’s innovative medicines division, where organic sales rose 7.9%. Organic medtech sales rose 7.1%. But an analyst cautioned that sales of cancer drug Carvykti, developed with Legend Biotech (LEGN), lagged expectations.

The stock has a 92 Composite Rating. Like Merck, J&J was clearing a three-weeks-tight on Friday.

Far from a defensive stock, Caterpillar (CAT) was a top Dow Jones stock in February. The excavation and industrial equipment maker rose nearly 13% for the month, and is leading the Dow Jones average year to date with a gain of about 29%.

Caterpillar is a bellwether for the U.S. economy, but more recently, it’s become part of the artificial intelligence trade. The company’s generators for data centers have become a big growth driver, even while AI-related Dow components such as Microsoft and Nvidia sputter.

Caterpillar stock made new highs after Q4 results topped Wall Street expectations. Shares are now testing support at the 21-day exponential moving average. The company has a 94 Composite Rating.

Tech Stocks Struggle

It was a lousy month for software stocks and AI-related companies. Amazon.com (AMZN), which owns Amazon Web Services, tumbled nearly 13%, while IBM (IBM) slid 22%, its worst month since October 2018.

Salesforce (CRM) lost about 9% and is down 27% year to date as investors worry that AI applications threaten the business software firm.

The stock had plummeted to a nearly three-year low, but rebounded a bit this past week following earnings. AI model builder Anthropic eased some worries when it showed AI models can be leveraged to deploy “agents” in enterprises. Anthropic emphasized its Claude tool needs data from software firms to be useful. The latest earnings report also extended the rebound.

Meanwhile, artificial intelligence chipmaker Nvidia (NVDA) fell nearly 7% in February, as losses following Wednesday’s earnings report wiped out modest gains for the month.

Microsoft lost more than 8% and is down nearly 19% year to date, trading at 10-month lows. It has lost about 18% since its earnings report on Jan. 28.

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