Stocks Retreat on AI Disruption Concerns and Geopolitical Risks

The S&P 500 Index ($SPX) (SPY) today is down -0.61%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -1.17%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.41%.  March E-mini S&P futures (ESH26) are down -0.59%, and March E-mini Nasdaq futures (NQH26) are down -0.39%.

Stock indexes today added to Thursday’s losses, with the Dow Jones Industrial Average falling to a 3.5-week low as the disruptive potential of AI weighed on markets.  The weakness in software companies and cybersecurity stocks is weighing on the broader market. Stocks extended their losses today after US Jan producer prices rose more than expected, dampening any speculation that the Fed would cut interest rates in the near term.

Stock indexes recovered from their worst levels after the Feb MNI Chicago PMI and Dec construction spending reports rose more than expected, which are signs of economic strength.  Also, Dell Technologies is up more than +19% following a strong sales forecast for its AI servers.  In addition, lower bond yields are supportive of stocks as the 10-year T-note yield fell to a 2.75-month low today at 3.97%.

US Jan PPI final demand rose +0.5% m/m and +2.9% y/y, stronger than expectations of +0.3% m/m and +2.6% y/y.  Jan PPI ex-food and energy rose +3.6% y/y, stronger than expectations of +3.0% y/y and the largest increase in 10 months.

The US Feb MNI Chicago PMI unexpectedly rose by 3.7 points to 57.7, stronger than expectations of a decline to 52.1 and the fastest pace of expansion in 3.75 years.

US Dec construction spending rose +0.3% m/m, stronger than expectations of +0.2% m/m.

Geopolitical risks remain a negative for stocks.  WTI crude oil (CLJ26) is up more than +2% at a 6.5-month high after Axios reported that US negotiators, Kushner and Witkoff, left Geneva disappointed by what they heard from Iranian officials in the US-Iranian nuclear talks.  Iran's state media reported that Iran won't allow enriched uranium to leave the country.  The enrichment of uranium remains a sticking point in the nuclear negotiations, with the US saying Iran would have to send such stocks of uranium to another country or dilute them.  The nuclear talks are scheduled to resume next week in Vienna.  President Trump said that he’s considering a limited military strike on Iran to ramp up pressure on the country to strike a deal over its nuclear program and gave them a March 1-6 deadline for an agreement over the country’s nuclear activities, and has threatened military strikes if it fails to comply.

In Tuesday night’s State of the Union address, President Trump doubled down on his commitment to tariffs.  President Trump’s new 10% global tariffs went into effect on Tuesday after the Supreme Court struck down his global “reciprocal” tariffs last Friday. Mr. Trump subsequently threatened to raise the global tariff rate to 15%, and an administration official said the White House is working on a formal order to implement that higher rate, but the timeline for its implementation has not been finalized.  Mr. Trump is applying the 10% baseline levy under Section 122 of the 1974 Trade Act, which allows the president to impose the charge for 150 days without congressional approval. 

Q4 earnings season is nearing its end, with more than 90% of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 472 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 5% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is down -0.52%.  China’s Shanghai Composite closed up +0.39%.  Japan’s Nikkei Stock 225 closed up +0.16%.

Interest Rates

March 10-year T-notes (ZNH6) today are up by +9 ticks.  The 10-year T-note yield is down -2.7 bp to 3.977%.  Mar T-notes climbed to a 3-month high today, and the 10-year T-note yield fell to a 2.75-month low of 3.968%.  Today’s stock slump has boosted safe-haven demand for T-notes.  Also, bond dealer short covering is supporting T-notes as dealers lift short hedges they placed in T-note futures to hedge against this week’s $211 billion of Treasury T-note auctions.  T-notes fell back from their best levels on the stronger-than-expected US reports on Jan produce prices, the Feb MNI Chicago PMI, and Dec construction spending, hawkish factors for Fed policy. 

European government bond yields are moving lower today.  The 10-year German bund yield dropped to a 3-month low of 2.667% and is down -2.3 bp to 2.668%.  The 10-year UK gilt yield fell to a 14.5-month low of 4.241% and is down -2.6 bp to 4.248%.

Eurozone Jan ECB 1-year CPI expectations fell to 2.6%, weaker than expectations of 2.7%.  Jan 2-year CPI expectations were unchanged from Dec at 2.6%, stronger than expectations of 2.5%.

German Feb CPI (EU harmonized) rose +0.4% m/m and +2.0% y/y, weaker than expectations of +0.5% m/m and +2.1% y/y.

Swaps are discounting a 3% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

Chipmakers are sliding today, weighing on the overall market.  NXP Semiconductors NV (NXPI) and Qualcomm (QCOM) are down more than -2%.  Also, Nvidia (NVDA), Microchip Technology (MCHP), ASML Holding NV (ASML), Broadcom (AVGO), Advanced Micro Devices (AMD), Analog Devices (ADI), KLA Corp (KLAC), and Texas Instruments (TXN) are down more than -1%.    

Zscaler (ZS) is down more than -15% to lead cybersecurity stocks lower and losers in the Nasdaq 100 despite reporting Q2 adjusted EPS of $1.01, better than the consensus of 90 cents.  Also, Cloudflare (NET), Okta (OKTA), and CrowdStrike Holdings (CRWD) are down more than -4%.  Also, Palo Alto Networks (PANW) and Fortinet (FTNT) are down more than -2%.

Software stocks are retreating today, a negative factor for the broader market.  Atlassian (TEAM) is down more than -6%, and Datadog (DDOG), Oracle (ORCL), Thomson Reuters (TRI), ServiceNow (NOW), and Salesforce (CRM)are down more than -3%.  Also, Microsoft (MSFT) and Cadence Design Systems (CDNS) are down more than -1%.   

Airline stocks are sliding today after WTI crude oil jumped to a 7-month high, which will boost jet fuel prices and potentially cut into airlines’ profits.  United Airlines Holdings (UAL) is down more than -8% to lead losers in the S&P 500.  Also, American Airlines Group (AAL) and Delta Air Lines (DAL) are down more than -6%.  In addition, Alaska Air Group (ALK) is down more than -4%, and Southwest Airlines (LUV) is down more than -2%.

CoreWeave (CRWV) is down more than -17% after reporting a Q4 loss per share of -89 cents, wider than the consensus of -72 cents per share. 

Flutter Entertainment Plc (FLUT) is down more than -16% after reporting Q4 revenue of $4.74 billion, below the consensus of $4.94 billion, and forecasting full-year US revenue of $7.4 billion to $8.2 billion, weaker than the consensus of $8.73 billion.

Duolingo (DUOL) is down more than -15% after forecasting full-year revenue of $1.20 billion to $1.22 billion, well below the consensus of $1.26 billion. 

Rocket Lab (RKLB) is down more than -8% after pushing back the launch of its Neutron rocket to the fourth quarter of this year. 

Apollo Global Management (APO) is down more than -6% after cutting its quarterly dividend to 31 cents a share from 38 cents, citing a markdown in its portfolio from soured loans. 

Workday (WDAY) is down more than -5% on falling earnings estimates as analysts cut their price targets on the stock by an average of 21% since the company reported earnings on Tuesday.

Dell Technologies (DELL) is up more than +19% to lead gainers in the S&P 500 after reporting Q4 adjusted operating income of $3.54 billion, better than the consensus of $3.27 billion, raised its annual dividend by 20%, and boosted its stock buyback program by $10 billion. 

Block (XYZ) is up more than +15% after raising its full-year gross profit estimate to $12.20 billion from a previous estimate of $11.98 billion, above the consensus of $11.91 billion, and said it was reducing its workforce by nearly half. 

Paramount Skydance (PSKY) is up more than +11% after agreeing to pay $111 billion for Warner Bros Discovery, outbidding Netflix for the company.

Netflix (NFLX) is up more than +9% to lead gainers in the Nasdaq 100 after dropping out of the competition to acquire Warner Bros Discovery. 

Caris Life Sciences (CAI) is up more than +9% after forecasting full-year revenue of $1.00 billion to $1.02 billion, stronger than the consensus of $993 million. 

NCR Atleos Corp (NATL) is up more than +9% after being acquired by The Brink’s Company for $6.6 billion.   

Autodesk (ADSK) is up more than +4% after reporting Q4 adjusted EPS of $2.85, stronger than the consensus of $2.65, and forecasting 2027 adjusted EPS of $12.29 to $12.56, well above the consensus of $11.59. 

Earnings Reports(2/27/2026)

CubeSmart (CUBE) and NIQ Global Intelligence Plc (NIQ).