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On February 28, 2026, U.S. stock markets found themselves in the midst of a sharp downturn, with all three major indices posting notable losses. Despite the usual optimism that can accompany the close of a trading month, a mixture of economic uncertainty, volatility in tech stocks—especially those tied to artificial intelligence (AI)—and fresh trade policy jitters drove investors into a defensive crouch.
According to Bloomingbit, as of 4:25 AM on February 28, the Nasdaq Composite Index had slipped by 0.97%, landing at 22,656.56 points. The Dow Jones Industrial Average was faring no better, down 1.13% at 48,940 points, and the S&P 500 index had dropped 0.52% to 6,872.93 points. The slide capped a week marked by persistent anxiety about inflation, monetary policy, and the sustainability of the AI boom that has driven tech stocks for much of the past year.
Those losses were foreshadowed in the futures market the previous day. As reported by Gukje News, before the U.S. market opened on February 27, Nasdaq 100 futures were down 0.40% at 24,980.00 points, S&P 500 futures had slipped 0.42% to 6,891.00 points, and Dow futures fell 0.59% to 49,237.00 points. The mood among investors was cautious, with many awaiting the release of the January Producer Price Index (PPI), a key inflation gauge expected to rise by 0.3% month-over-month and more than 3% year-over-year. This figure, many believed, would provide critical clues about the Federal Reserve’s next moves on interest rates.
The anxiety wasn’t limited to macroeconomic data. According to MS Today, worries about the profitability and sustainability of AI investments were weighing heavily on tech stocks. Since the start of February, the Nasdaq index had been in a correction, and some analysts warned of a sharp monthly decline. Even though several major technology companies had recently posted earnings that beat market expectations, investors seemed intent on taking profits—perhaps a sign that the AI-fueled rally was running out of steam, at least for now.
“AI investment demand remains robust, but the overall mood on Wall Street is chilly,” said Jose Torres, chief economist at Interactive Brokers, as quoted by Newspim. “There are growing concerns about the maturity of the so-called ‘Magnificent Seven’ tech stocks.” Torres was referencing the group of leading U.S. technology firms—including Nvidia, Microsoft, Alphabet, Amazon, Apple, Meta, and Tesla—that have dominated market headlines and driven much of the recent gains.
Indeed, Nvidia—a bellwether of the AI sector—saw its shares tumble 5.5% following strong fourth-quarter results, and continued to decline by nearly 1% in pre-market trading on February 27. Investors cited doubts about the profitability of AI infrastructure investments, skepticism over deals with the likes of OpenAI, and worries about excessive capital expenditures by major cloud providers as key factors behind the sell-off. Other tech names weren’t spared: Zscaler plunged more than 9% on widening quarterly losses and disappointing revenue numbers, Intuit dropped over 3% after issuing a weaker-than-expected profit outlook, and CoreWeave fell more than 10% on guidance that failed to impress. Even semiconductor giants AMD and Broadcom faced selling pressure.
Adding to the turbulence, high U.S. Treasury yields have increased the valuation burden for growth stocks. AI companies, in particular, require hefty investments in research and development and infrastructure, making them especially sensitive to rising borrowing costs. The upshot? Investors are now demanding more immediate evidence of profitability and cash flow, and are less willing to pay up for distant promises of future growth.
Some funds have begun rotating out of tech and into more cyclical sectors such as financials and industrials—a trend that was visible even as the broader market struggled. “Investors are putting the brakes on expanding their positions amid growing uncertainty,” said Sameer Samana of the Wells Fargo Investment Institute, as reported by Newspim. “But ultimately, the economy and corporate earnings will push the S&P 500 to higher levels.”
Trade policy also reared its head as a source of uncertainty. Following a Supreme Court ruling that invalidated most of last year’s tariffs, former President Donald Trump announced a new 10% provisional tariff on goods from around the world, which took effect this week. The move, along with ongoing tensions between the U.S. and Iran, further dampened investor sentiment and added to the volatility in global markets.
The anticipation surrounding the January PPI release was palpable. According to consensus estimates compiled by Dow Jones, both the headline and core PPI were expected to rise by 0.3% from the previous month. This inflation data was seen as a crucial indicator for the Federal Reserve’s future interest rate path. Ahead of the release, U.S. Treasury yields dropped across the board: the 10-year yield fell 3.6 basis points to 3.981%, the 1-year yield slipped 2.8 basis points to 3.493%, and the 2-year yield dropped 4.4 basis points to 3.404%.
The shifting tides in the stock market were also reflected in the performance of individual companies. Netflix surged more than 7% after it withdrew from a takeover battle for Warner Bros. Discovery, while Warner Bros. shares fell 1%. Paramount SkyDance, which emerged victorious in the acquisition contest, saw its shares jump over 7%. Payment company Block announced plans to cut more than 4,000 jobs as part of a company-wide AI adoption initiative, sending its shares up nearly 19%. Dell, meanwhile, projected that its AI-optimized server sales would double in fiscal 2027 and announced increased shareholder returns, resulting in a gain of over 15%. Not all the news was positive—Duolingo’s shares plummeted nearly 25% after it issued a disappointing revenue outlook for the first quarter and for 2026.
For the month of February, the Nasdaq was on track to fall by 2.5%, which would mark its worst monthly performance since March of the previous year. The S&P 500 was down 0.4%, while the Dow was expected to finish up 1.2%. According to a survey by the American Association of Individual Investors, bullish sentiment for the next six months slipped for the fourth week in a row, with just 33.2% of respondents expecting gains.
While some industry experts remain confident in the long-term promise of AI and innovation, the near-term picture is clearly dominated by concerns over earnings visibility and the direction of interest rates. As the curtain fell on a tumultuous trading month, investors were left to ponder whether the recent volatility was a temporary blip—or the start of a more pronounced correction in the world’s most closely watched stock market.