Market Recap - Monday February 23, 2026
AI disruption fears, trade uncertainty, and policy headlines trigger a broad risk-off move as investors rotate into defensive sectors.
Stocks fell sharply today, ending near session lows as investors rotated out of growth and financial stocks and into defensive sectors. The Dow dropped 1.66%, the S&P 500 fell 1.04%, the Nasdaq declined 1.13%, and the small-cap Russell 2000 slid 1.61%.
Big Tech weighed heavily on the market, with Microsoft, Amazon, Meta, and Tesla all declining. Software and cybersecurity stocks were particularly weak as renewed fears about AI disruption spread across the tech sector. Financials also struggled, including banks, private equity firms, insurers, and payments companies, while consumer-sensitive industries like airlines, apparel, casinos, and retail joined the selloff. In contrast, defensive areas held up well, including healthcare, food and beverage companies, telecom, insurers, and precious-metals miners.
Investors sought safety in bonds and gold. Treasury yields fell as bond prices rose, gold jumped nearly 3%, silver surged more than 5%, and bitcoin dropped over 5% — all classic signs of a risk-off shift in sentiment.
AI Disruption Fears Drive Selling
A widely circulated research note warning of a potential “global intelligence crisis” triggered renewed concern that rapid AI advances could disrupt industries ranging from software and payments to logistics and delivery services. Cybersecurity stocks weakened further after last week’s AI security developments, while private credit and private equity firms also fell amid worries that AI could slow dealmaking and impact valuations.
Despite the selloff, some analysts noted that tech positioning has become oversold, suggesting potential stabilization if sentiment improves.
Policy Uncertainty & Trade Headlines Add Pressure
Trade policy remained a major source of uncertainty following last week’s Supreme Court ruling limiting emergency tariff powers. The administration is moving ahead with alternative tariff tools, and businesses now face a shifting trade landscape that could complicate supply chains and pricing decisions.
Geopolitical tensions also remain in focus ahead of U.S.–Iran talks later this week. While diplomatic momentum appears to be building, speculation about a potential limited strike continues to linger.
Economic Updates & Fed Outlook
Economic data was mixed. Factory orders contracted unexpectedly, and the Dallas Fed manufacturing index came in below expectations, pointing to slower industrial momentum. Meanwhile, Fed Governor Christopher Waller said a March rate decision could be a “coin flip,” depending on upcoming labor market data.
Investors are now looking ahead to consumer confidence data, the President’s State of the Union address, and further Fed commentary later this week.
Corporate & Industry Headlines
In corporate news, biotech firm Arcellx surged after agreeing to be acquired by Gilead Sciences, while Novo Nordisk fell sharply after disappointing weight-loss drug trial results. IBM declined after a new AI model demonstrated capabilities in COBOL programming, highlighting automation risks for legacy IT systems. Reports of takeover interest boosted PayPal, while Domino’s Pizza rose on strong order volumes.
Meanwhile, OpenAI’s projected spending and revenue forecasts continue to fuel debate about the scale — and financial sustainability — of the global AI infrastructure build-out.
Here’s Our Take
Monday’s selloff highlights how fragile sentiment remains when markets are driven by structural change rather than cyclical forces. AI disruption fears are evolving from a tech-sector story into a broader economic narrative affecting finance, logistics, and services. At the same time, shifting tariff policies and geopolitical uncertainty are adding complexity for businesses and investors alike.
Yet beneath the volatility, the macro backdrop remains relatively stable: inflation is moderating slowly, the labor market is holding up, and earnings growth remains solid. Oversold conditions in large-cap tech may also set the stage for short-term stabilization.
This week’s key catalysts — NVIDIA earnings, AI agent announcements, geopolitical developments, and the State of the Union — could shape market direction in the near term. For long-term investors, the message is clear: markets are adjusting to a new economic paradigm shaped by AI, policy uncertainty, and capital-intensive technological transformation.
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