Dow Slips, AI and Private Credit Concerns Pressure US Stocks
US stocks closed lower on Friday (February 26) after the latest Producer Price Index (PPI) data came in much hotter than expected, adding to concerns that inflation remains "sticky" and could force the market to lower expectations for interest rate cuts. This inflationary pressure extended the turbulence that has characterized market movements throughout February.
The Dow Jones Industrial Average closed down 522 points, or 1.1%. The S&P 500 fell 0.4%, while the Nasdaq Composite fell 0.9%. All three major indexes were in the red for February, amid growing concerns about the impact of artificial intelligence (AI) on several industries and the broader economy.
Concerns about AI intensified after Jack Dorsey's fintech company, Block, announced plans to lay off more than 4,000 employees—nearly half of its workforce. Concurrently, financial stocks and stocks sensitive to economic cycles also weakened, reflecting investors' shift to a more defensive mode.
Pressure also returned to stocks linked to private credit, as investors anticipated the potential fallout from the collapse of UK mortgage provider Market Financial Solutions. Apollo and Jefferies were among the laggards, falling around 8% and 10%, respectively. Meanwhile, Blue Owl—recently embroiled in issues of liquidity restrictions and asset sales—fell around 6%, reinforcing market caution regarding the non-bank credit segment.
Source: Newsmaker.id
