(Updates to midafternoon trading, adds analyst comments)
Indexes down: Dow 1.32%, S&P 500 0.77%, Nasdaq 1.21%
Financials fall on worries over lending standards
Block surges on plan to cut 4,000 jobs on AI bet
Netflix climbs after ending Warner Bros Discovery pursuit
By Stephen Culp and Ragini Mathur
NEW YORK, Feb 27 (Reuters) – Wall Street extended its selloff on Friday, as weakness in tech and financial shares helped put the S&P 500 and the Nasdaq on track for their largest monthly percentage losses since March 2025, capping a February marked by worries over costs and disruption related to artificial intelligence, revived tariff uncertainties and simmering geopolitical tensions.
All three major indexes were decisively lower, and poised to show steep weekly declines, with the blue-chip Dow on the verge of logging its biggest weekly drop since November.
“February was a terrible month for the Nasdaq, and we saw a rotation into old-economy stocks,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “That rotation helped the broader market a little bit.” Financial stocks slid after worries of contagion in the sector after reports that Barclays, Jefferies, Wells Fargo and other banks face potential losses related to the collapse of UK mortgage provider Market Financial Solutions Ltd, amid broader concerns about lending standards. Wells Fargo, Jefferies and US-listed shares of Barclays dropped between 4.2% and 10.8%.
Tech shares also continued to weigh on the indexes as lingering fears related to AI dragged chips and software down 2.0% and 1.9%, respectively.
Defensive sectors such as consumer staples, healthcare and utilities were the session’s clear outperformers.
“Credit fears are weighing on the banking sector today,” Cardillo added. “And of course this continuing AI selloff and the PPI report, which was very ugly. So today we’re seeing a flight to safety.” On the economics front, a hotter-than-expected Producer Price Index reading fortified expectations that the US Federal Reserve is unlikely to cut its key interest rate in the near term.
Financial markets are currently pricing in a 96.1% probability that the central bank will leave the Fed funds target rate in the 3.50% to 3.75% range at its upcoming monetary policy meeting in March, according to CME’s FedWatch tool.
The Dow Jones Industrial Average fell 654.72 points, or 1.32%, to 48,844.48, the S&P 500 lost 53.45 points, or 0.77%, to 6,855.41 and the Nasdaq Composite lost 277.68 points, or 1.21%, to 22,600.70. Of the 11 major sectors in the S&P 500, energy led the gainers with a boost from rising crude prices, while financial and technology stocks suffered the steepest percentage losses. Nvidia slid 3.4%, extending the previous session’s 5.5% drop despite solid earnings, a sign that risk sentiment for all things AI remained shaky. Zscaler plunged 12.6% after the cloud security firm reported a wider net loss in the second quarter. Netflix jumped 13.0% as investors cheered its decision to exit the fight for Warner Bros Discovery, which dropped 2.0%. Paramount Skydance, WBD’s likely buyer, soared by 23.2%. Block surged 14.5% after the payments firm said it would ax nearly half its workforce, as part of its effort to embed AI across operations. Dell shot up 21.8% after the PC maker said it expects revenue from its key AI-optimized servers business to double in fiscal year 2027 and promised to return more cash to shareholders.
Declining issues outnumbered advancers by a 1.56-to-1 ratio on the NYSE. There were 450 new highs and 92 new lows on the NYSE.
On the Nasdaq, 1,434 stocks rose and 3,226 fell as declining issues outnumbered advancers by a 2.25-to-1 ratio.
The S&P 500 posted 45 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 65 new highs and 104 new lows.
(Reporting by Stephen Culp in New York; Additional reporting by Shashwat Chauhan and Ragini Mathur in Bengaluru; Editing by Matthew Lewis)