Wall Street closed sharply lower on Friday, pulled down by tech and financial stocks. Investor sentiment remained fragile as traders grappled with persistent macroeconomic and geopolitical concerns and revived tariff uncertainties. Hotter-than-expected producer-side inflation numbers also kept investors on edge. All three benchmark indexes finished in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 1.1%, or 521.28 points, to close at 48,977.92. Eighteen components of the 30-stock index ended in positive territory, while 12 ended in the negative.
The tech-heavy Nasdaq Composite fell 210.17 points, or 0.9%, to close at 22,668.21.
The S&P 500 slid 0.4%, or 29.98 points, to close at 6,878.9. Nine of the 11 broad sectors of the benchmark index closed in the green. The Health Care Select Sector SPDR (XLV), the Energy Select Sector SPDR (XLE) and the Consumer Staples Select Sector SPDR (XLP) advanced 1.8%, 1.7% and 1.5%, while the Technology Select Sector SPDR (XLK) and the Financials Select Sector SPDR (XLF) declined 2.2% and 2%, respectively.
The fear gauge CBOE Volatility Index (VIX) increased 6.6% to 19.86. A total of 20.9 billion shares were traded on Friday, higher than the last 20-session average of 20.2 billion. Decliners outnumbered advancers by a 1.31-to-1 ratio on the NYSE and by 1.98-to-1 on the Nasdaq.
Tech Stocks Slide as AI Concerns Weigh on Chips and Software
Technology stocks remained under pressure as lingering concerns about artificial intelligence (AI) spending and monetization dampened investor confidence. Semiconductor companies led the retreat, with traders questioning whether the surge in AI-driven demand can justify elevated valuations after a rapid expansion phase. Skepticism about the sustainability of corporate capital expenditures added to the cautious tone. Tech emerged as the biggest losing sector of the day, with financials close on its heels.
Software shares also declined as investors reassessed how quickly businesses can convert AI investments into durable revenue growth. Worries about regulatory oversight, competitive intensity and stretched expectations further weighed on sentiment. The weakness across chips and software spilled into the broader market, underscoring the sector’s outsized influence and signaling a shift from unbridled optimism to a more measured, selective approach.
Consequently, shares of Salesforce, Inc. CRM and Microsoft Corporation MSFT declined 2.4% and 2.2%, respectively. While CRM carries a Zacks Rank #2 (Buy), MSFT has a #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Iran Tensions Add to Market Pressure
Escalating U.S.-Iran geopolitical tension contributed to market anxiety on Friday, alongside inflation and AI worries. Heightened Iran-related headlines helped push crude oil prices higher as investors priced in possible supply disruption near the Strait of Hormuz, adding to risk-off sentiment. Equity markets felt the effect most in energy-sensitive and defensive sectors, while safe-haven assets drew interest amid uncertainty.
Oil prices rose roughly 2% on Friday as traders weighed potential supply disruptions amid stalled nuclear talks between the United States and Iran. Brent crude settled at $72.48 a barrel, gaining $1.73, or 2.45%, while WTI crude finished at $67.02 a barrel, up $1.81, or 2.78%.
Weekly Roundup
For the week ended Feb. 27, the S&P 500 slid about 0.4%, the Nasdaq dropped around 1% and the Dow fell roughly 1.3%, pressured by AI-related selling, hotter inflation data and foreign selling that outweighed brief mid-week rebounds.
Monthly Roundup
For February, the S&P 500 and Nasdaq posted declines of 0.9% and 3.4%, respectively, with the Nasdaq’s drop the steepest since March 2025. The Dow managed a slight gain of 0.2%, supported by resilience in non-tech sectors despite broad risk-offs.
Economic Data
Producer Price Index (PPI) increased 0.5% in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported on Friday. The number for December was revised down to 0.4% from the previously reported 0.5%. Core PPI increased 0.7%, after rising 0.4% in December.
The Chicago Purchasing Managers’ Index jumped to 57.7 in February, well above expectations and signaling robust expansion in manufacturing activity. The index for January remained unrevised at 53.
The U.S. Census Bureau reported that construction spending for November 2025 had receded 0.2%, after falling 0.1% in October. The number for October was revised down from a previously reported gain of 0.5%.
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Microsoft Corporation (MSFT): Free Stock Analysis Report Salesforce, Inc. (CRM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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