By Alex Financials

Markets Under Pressure: Inflation, AI Doubts, and Global Risks Shake Stocks

U.S. markets closed the final trading sessions of February under heavy pressure as investors confronted a powerful mix of hotter-than-expected inflation data, weakening confidence in AI-driven growth stocks, and rising geopolitical uncertainty. The result: increased volatility, sharp tech selloffs, and a noticeable shift toward defensive sectors.

Here’s what matters most for investors today.

Hot Inflation Data Reignites Rate Fears

The biggest catalyst moving markets today was a stronger-than-expected wholesale inflation (PPI) report, which reinforced concerns that inflation remains stubbornly elevated.

Major indexes moved lower:

• Dow Jones Industrial Average fell roughly 700 points

• S&P 500 declined about 0.7%

• Nasdaq dropped around 1%

The data suggests the Federal Reserve may need to keep interest rates higher for longer — a scenario equity markets strongly dislike because higher rates reduce corporate valuations and future earnings expectations.

Financial stocks were among the biggest drags, including:

• Goldman Sachs ($GS)

• American Express ($AXP)

• JPMorgan Chase ($JPM)

Investors are now reassessing expectations for rate cuts in 2026, which had previously helped fuel market optimism earlier in the year.

AI Trade Stumbles as Nvidia Leads Tech Selloff

The dominant market theme of the past two years — artificial intelligence — is now becoming a source of uncertainty rather than momentum.

Shares of Nvidia ($NVDA), long considered the backbone of the AI rally, fell again despite strong earnings results. The company lost roughly $259 billion in market value in one session as investors questioned whether expectations had become too high.

Key concerns driving the selloff:

• Massive AI capital spending by tech companies

• Slower near-term monetization of AI investments

• Valuation fatigue after historic gains

• Fear of AI disrupting white-collar employment and corporate margins

The Nasdaq is now on track for its largest monthly decline in nearly a year, highlighting how dependent market performance had become on a small group of mega-cap tech stocks.

Risk-Off Mood Spreads Across Wall Street

Investor sentiment shifted noticeably toward caution this week.

Markets are seeing a classic “risk-off” rotation:

Falling sectors

• Technology

• Financials

• Growth stocks

Outperforming sectors

• Healthcare

• Utilities

• Consumer staples

Defensive positioning signals investors are prioritizing stability over growth as macro uncertainty rises.

Meanwhile, layoffs tied to automation fears and AI disruption narratives have added psychological pressure to markets already worried about valuations.

Geopolitics and Oil Add Another Layer of Uncertainty

Beyond inflation and AI concerns, geopolitical risks are creeping back into market pricing.

Ongoing tensions connected to Middle East developments and U.S.–Iran negotiations have contributed to volatility in commodities and equities.

Oil prices have risen alongside global risk concerns, while investors increasingly look toward safe-haven assets such as precious metals during periods of instability.

Historically, simultaneous inflation pressure and geopolitical risk create a difficult environment for equities — a pattern markets appear to be revisiting.

Corporate Movers: Winners and Losers

While macro forces dominate headlines, individual stocks are still making large moves.

Notable Decliners

• Amphastar Pharmaceuticals ($AMPH) plunged after disappointing developments tied to company updates.

• AI-linked tech names broadly declined alongside Nvidia.

Select Bright Spots

Some companies tied to strategic AI adoption or strong content strategies saw gains earlier in the week, showing markets are becoming more selective rather than abandoning growth entirely.

Global Markets Tell a Mixed Story

Interestingly, global markets are not moving uniformly.

European equities extended a long winning streak supported by solid corporate earnings, even as banking stocks weakened due to credit concerns.

This divergence suggests investors are rotating geographically rather than exiting equities altogether.

What Investors Are Watching Next

Markets are heading into March focused on several key catalysts:

1. Upcoming inflation readings — confirmation or reversal of today’s trend.

2. Federal Reserve messaging — clarity on rate cuts.

3. AI earnings follow-through — whether spending translates into profits.

4. Geopolitical developments — especially energy markets.

February is shaping up as one of the most volatile months since early 2025, with the S&P 500 and Nasdaq on track for notable monthly losses amid AI and inflation anxieties.

Bottom Line

Today’s market action reflects a major transition phase:

• Inflation fears are back.

• The AI trade is being reassessed.

• Investors are rotating into safer assets.

• Macro risks are once again driving price action.

After years where liquidity and AI optimism powered markets higher, Wall Street is entering a period where fundamentals — earnings durability, cash flow, and valuation discipline — matter again.