Market Recap - Friday February 27, 2026
AI jitters, falling yields, and defensive rotation cap a volatile February
Stocks closed lower today, capping off a volatile week and a difficult month for major indexes. The Dow fell 1.05%, the S&P 500 slipped 0.43%, the Nasdaq dropped 0.92%, and the small-cap Russell 2000 lost 1.68%. Both the S&P and Nasdaq logged their biggest monthly declines since March 2025. Despite the headline losses, market breadth was healthier than the indexes suggest, with the equal-weight S&P finishing slightly higher — a sign that the weakness was concentrated in large technology stocks rather than the broader market.
Big Tech led the decline, with Nvidia among the biggest drags following its recent earnings surge and subsequent profit-taking. Semiconductors, software, financials, and travel-related stocks also struggled, while small caps and high-beta retail favorites remained under pressure. Investors rotated toward more defensive areas, with energy, healthcare, telecom, consumer staples, and homebuilders holding up better. Netflix stood out as a winner after stepping away from the Warner Bros. Discovery deal, while grocery and discount retailers benefited from defensive positioning.
Bond markets rallied strongly as investors sought safety. The 10-year Treasury yield fell below 4% for the first time since October, while the 2-year yield dropped to its lowest level since 2022 — signaling expectations for slower growth and potential rate cuts ahead. Gold rose and silver surged, reinforcing the defensive tone, while oil climbed nearly 3% amid lingering geopolitical tensions and uncertainty surrounding U.S.–Iran negotiations.
Economic data added complexity to the outlook. Producer prices came in hotter than expected, suggesting inflation pressures remain sticky, particularly in services. At the same time, Chicago business activity surged to a nearly four-year high, signaling continued economic resilience. Construction spending also improved modestly. Looking ahead, next week’s ISM manufacturing data and the February jobs report will be closely watched for clues about growth momentum and Federal Reserve policy.
Corporate and technology headlines continued to highlight the evolving AI landscape. OpenAI confirmed a massive $110 billion capital raise and expanded its partnership with Amazon, underscoring the enormous capital flowing into AI infrastructure. Block surged after announcing a major workforce reduction driven by AI automation, fueling renewed debate about AI’s impact on white-collar employment. Dell jumped on strong demand for AI servers, while CoreWeave fell as investors reacted to its heavy capital spending plans. Meanwhile, ongoing scrutiny in private credit markets and tariff uncertainty added to investor caution.
Here’s Our Take
Today’s decline reflected a continuation of February’s key themes: rotation, AI disruption anxiety, and shifting leadership rather than outright panic selling. Investors are increasingly grappling with the second-order effects of AI — from job displacement fears to capital spending sustainability — even as demand for AI infrastructure remains extraordinarily strong.
The drop in Treasury yields suggests markets are beginning to price in slower growth ahead, but strong economic readings and persistent inflation complicate the outlook. Meanwhile, the fact that equal-weight indexes held up better signals that market participation is broadening beneath the surface.
For long-term investors, the bigger picture remains intact: AI investment continues to accelerate, corporate earnings growth remains solid, and capital is rotating rather than fleeing equities. In the near term, expect volatility to persist as markets digest inflation data, labor trends, and the durability of the AI spending cycle.
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