Stocks End Volatile Week Lower as AI Fears and Inflation Data Rattle Markets

U.S. equities closed out a turbulent week on a weak note, leaving the major averages in negative territory for both the week and much of February. The S&P 500 fell 0.4%, the Nasdaq Composite dropped 0.9%, and the Dow Jones Industrial Average slid 1.1%, as renewed concerns about artificial intelligence disruption and persistent inflation pressures weighed on sentiment.

Selling pressure intensified early after Block announced plans to cut roughly 40% of its workforce as it accelerates automation through AI. The move reignited fears that rapid technological adoption could disrupt traditional business models, particularly in software and financial services. Asset managers with heavy exposure to legacy technology companies came under renewed scrutiny, amplifying declines across the sector.

Financial stocks were further pressured by a hotter-than-expected January Producer Price Index report, which reinforced expectations that Federal Reserve rate cuts may be pushed further into the future. The data undermined optimism for deal activity, leveraged buyouts, and capital markets issuance—key profit drivers for large banks and private equity firms. Goldman Sachs was among the hardest hit, helping pull the financials sector down 2.0%.

Technology shares fared even worse. The information technology sector dropped 2.2% as software stocks extended their recent slide, while semiconductor weakness offered little support. NVIDIA again lagged despite strong fundamentals, with investors reacting cautiously to its announced $30 billion investment in OpenAI. One bright spot came from Dell Technologies, which surged following a strong earnings report but could not offset broader sector losses.

Outside of tech and financials, however, investors rotated into defensive areas. Health care, consumer staples, and utilities all posted solid gains as capital shifted toward perceived stability. Energy stocks also advanced alongside rising oil prices after renewed geopolitical tensions between the U.S. and Iran pushed crude higher. The move weighed heavily on airline shares, including United Airlines and Delta Air Lines, which fell sharply on concerns about fuel costs.

Corporate deal activity added another layer of volatility. Netflix rallied after opting not to increase its bid for Warner Bros. Discovery, effectively clearing the way for Paramount Global’s Skydance transaction to prevail.

Small- and mid-cap stocks underperformed, with the Russell 2000 and S&P MidCap 400 posting steeper declines than the large-cap benchmarks. By the close, the S&P 500 had slipped back below its 50-day moving average, highlighting the market’s fragile technical position.

Despite the weakness, the session also underscored a defining theme of 2026: leadership is gradually broadening beyond mega-cap technology. Persistent rotational buying into defensive and cyclical sectors helped limit losses, suggesting investors are repositioning rather than exiting equities altogether. Whether that rotation can stabilize the market—or whether pressure on tech and financials deepens—will likely determine the market’s direction as March begins.

Our FTinvest 11 model portfolio edged down 0.05% to close at 1,011.70, posting a nearly flat session as the portfolio continues to consolidate following its earlier all-time high of 1,039.51. Daily volatility has narrowed in recent sessions, suggesting a stabilization phase after February’s strong breakout and subsequent pullback.

Despite the recent sideways movement, FTinvest 11 remains firmly above the 1,000 milestone and continues to hold solid year-to-date gains. The portfolio’s disciplined, value-driven framework remains central as it navigates short-term fluctuations while maintaining long-term positioning strength.