• Wall Street posts largest monthly declines in year
• Dow falls 1.05%, S&P 500 drops 0.43%
• Financial, tech stocks pressured by AI, tariff concerns
• Markets price high odds of no March rate cut
U.S. stocks ended lower on Friday, sealing their steepest monthly percentage declines in a year as investors grappled with persistent uncertainty surrounding artificial intelligence costs, renewed tariff concerns and escalating geopolitical tensions.
The Dow Jones Industrial Average fell 521.28 points, or 1.05%, to close at 48,977.92. The S&P 500 dropped 29.98 points, or 0.43%, to 6,878.88, while the Nasdaq Composite declined 210.17 points, or 0.92%, to 22,668.21.
According to Reuters, the S&P 500 and Nasdaq recorded their sharpest monthly declines since March 2025, while the Dow logged its largest weekly drop since mid-November. The slide capped a volatile February marked by concerns over AI-related capital spending, tariff rhetoric and intensifying global conflict.
"To wrap up the month of February, we were reminded there are still some cracks out there," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "Adding to the day's weakness was the hotter inflation data, potentially pushing back on the idea of a dovish Fed later this year."
Financials And Tech Lead The Declines
Financial stocks were under heavy pressure following reports that major lenders including Barclays, Jefferies and Wells Fargo could face potential losses tied to the collapse of a U.K. mortgage provider. Reuters data showed Wells Fargo, Jefferies and U.S.-listed shares of Barclays fell between 4.0% and 9.3% during the session.
The S&P financial sector index slid sharply, while the technology sector also dragged on the broader market. Semiconductor shares and software stocks fell 1.2% and 1.5%, respectively, according to Reuters.
Shares of Nvidia dropped 4.2%, extending the previous session's 5.5% decline despite posting solid earnings. The move reflected lingering unease about AI-related spending and valuation sustainability.
Cloud security firm Zscaler plunged 12.2% after reporting a wider quarterly net loss. By contrast, Netflix jumped 13.8% after announcing it would end its pursuit of Warner Bros Discovery, whose shares fell 2.2%.
Payments company Block surged 16.8% after unveiling plans to cut nearly 4,000 jobs as part of an effort to integrate AI more deeply into its operations. Meanwhile, Dell Technologies rallied 21.9% after forecasting strong revenue growth from its AI-optimized servers business in fiscal 2027 and pledging increased shareholder returns.
Defensive sectors such as healthcare, consumer staples and utilities outperformed. Healthcare and energy led sectoral gains, the latter supported by higher crude prices amid geopolitical tensions.
"This is a classic risk-off environment where the pure defensive areas are finding some strength while the market is turning its head on some of the more cyclical growth areas that are clearly lagging," Detrick said.
Inflation Data And Fed Outlook
Investor caution intensified following a hotter-than-expected Producer Price Index reading, reinforcing expectations that the Federal Reserve may keep interest rates steady in the near term.
Financial markets are pricing in a 94.1% probability that the central bank will leave its benchmark federal funds rate unchanged at 3.50% to 3.75% at its March meeting, according to CME's FedWatch tool cited by Reuters.
Bond markets reflected similar caution. The U.S. 10-year Treasury yield edged up from the previous session, signaling concerns that persistent inflation could delay rate cuts later in the year.
Market breadth was negative. On the New York Stock Exchange, declining issues outnumbered advancers by a 1.31-to-1 ratio, with 564 new highs and 121 new lows recorded. On the Nasdaq, decliners outpaced advancers by nearly two-to-one.
The S&P 500 posted 49 new 52-week highs and two new lows, while the Nasdaq recorded 78 new highs and 127 new lows. Total trading volume across U.S. exchanges reached 20.85 billion shares, compared with the 20-session average of 20.19 billion, Reuters data showed.
Despite February's pullback, Detrick pointed to underlying corporate strength. "It's been a rough go in February, but corporate America is looking at over a 14% gain in earnings in the fourth quarter," he said. "The reality is that earnings drive long-term stock gains and this was a very impressive earnings season."
The combination of AI-related uncertainty, tariff rhetoric and geopolitical risk has introduced fresh volatility into equity markets. While earnings growth has remained solid, investor sentiment has turned more cautious as inflation data complicates expectations for monetary easing.
(With inputs from agencies)
