Hot Inflation Data and AI Jitters Send Dow Tumbling Over 500 Points

2026-02-28 economy

New York, Friday, 27 February 2026.
Markets sank as January producer prices unexpectedly surged 0.5%, reigniting rate fears. Compounding the turmoil, CoreWeave shares collapsed 20%, signaling deepening investor anxiety regarding the profitability of AI infrastructure.

Market Close: A Sea of Red

On Friday, February 27, 2026, the trading session concluded with significant losses across all major indices, cementing a turbulent end to the month. The Dow Jones Industrial Average closed down 521.28 points, or 1.05%, settling at 48,977.92 [2][8]. Volatility was even more pronounced earlier in the day, with the index suffering an intraday drop of nearly 800 points [5]. The broader market mirrored this downturn; the S&P 500 declined 0.43% to 6,878.88, while the technology-heavy Nasdaq Composite lost 0.92% to close at 22,668.21 [2][8]. These declines reflect a shift in sentiment as investors digest a confluence of negative economic indicators and sector-specific headwinds.

Inflation Resurgence Rattles Investors

The primary catalyst for Friday’s sell-off was the release of the January Producer Price Index (PPI), which indicated that inflationary pressures remain stubbornly high. The headline PPI rose 0.5% month-over-month, exceeding the consensus forecast of 0.3% [5]. Even more concerning to the Federal Reserve was the core inflation metric—excluding volatile food and energy prices—which surged 0.8% against expectations of less than 0.3% [5]. On a year-over-year basis, headline producer inflation climbed to 2.9%, surpassing the expected 2.6% [5]. This “hot” data has reignited fears that the central bank will be forced to keep interest rates elevated for a longer duration to curb rising service prices, which jumped 0.8% in January [5].

AI Sector Faces Profitability Scrutiny

Beyond macroeconomic data, the technology sector faced a distinct reality check regarding the return on investment for massive artificial intelligence spending. CoreWeave, a critical infrastructure partner to Nvidia, saw its stock plummet 20% on Friday after its first-quarter guidance missed expectations [2]. This decline occurred despite some analysts identifying the company as a leading infrastructure play just a day prior [2]. The pessimism proved contagious, dragging down Nvidia shares by 3.1% [4], as the market questioned the durability of AI-driven growth margins. Meanwhile, broader tech giants like Microsoft and Meta also faced pressure earlier in the week following news of a $110 billion cash infusion for OpenAI, which prompted investors to scrutinize the massive capital expenditures required to compete in the sector [1][2].

Geopolitical Tensions Spike Oil Prices

Adding to the wall of worry, geopolitical instability escalated sharply on Friday. Nuclear talks between the United States and Iran collapsed in Geneva, a development that immediately impacted global energy markets [5]. Following the breakdown in diplomacy, oil prices surged, with benchmark U.S. crude rising 2.8% to settle at $67.02 per barrel [4][8]. The heightened tension was further underscored by the U.S. Department of State’s authorization for non-emergency personnel to depart Israel [5]. This geopolitical risk premium, combined with rising crude costs, threatens to add further inflationary pressure to the U.S. economy [5].

Corporate Restructuring and M&A Moves

Amidst the broader market decline, specific corporate actions drove significant individual stock movements. Block shares surged 15.1% on Friday [4] after the company announced on Thursday, February 26, that it would reduce its workforce by nearly half—cutting over 4,000 jobs—to streamline operations [4]. In the media landscape, Netflix shares rose 7.68% to close at $91.09 after the streaming giant withdrew its bid for Warner Bros. Discovery assets [5]. Conversely, Warner Bros. Discovery shares fell 1.86% to $28.27 following the news [5]. While Dell defied the tech slump by surging over 21% on the back of a 300% increase in AI server revenue [2], these individual success stories were insufficient to buoy a market weighed down by the twin threats of inflation and geopolitical conflict.

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Stock Market Volatility