US stock markets ended the week with significant declines following the publication of producer inflation data, which turned out higher than analysts' expectations. The Dow Jones index lost 1.4%, and sentiment on Wall Street was further worsened by concerns about a bubble in the artificial intelligence sector and geopolitical tensions in the Middle East. Although European stock exchanges showed greater resilience, February is ending in an atmosphere of uncertainty regarding the Fed's future decisions on interest rates.
PPI Inflation Above Forecasts
A 0.5% increase in producer prices in January suggests persistently high inflation in the USA, pushing back the prospect of interest rate cuts by the Fed.
Sell-off of Technology Companies
The AI sector, previously the engine of growth, is suffering from profit-taking and concerns about the profitability of huge investment outlays.
European Resilience
Stock exchanges in Madrid and Milan ended February with gains, benefiting from the better condition of traditional sectors compared to Nasdaq.
The recent trading sessions in February 2026 brought a significant deterioration in the capital market climate, with particular focus on the New York Stock Exchange. The direct cause of the sell-off was the report on the Producer Price Index (PPI), which rose by 0.5% in January, exceeding economists' forecasts. Such data serves as a warning signal for the Federal Reserve, suggesting that inflationary pressure in the US economy remains strong. Consequently, investors began revising their expectations regarding the schedule of interest rate cuts, which primarily hit technology companies, which are exceptionally sensitive to increases in the cost of capital. The market situation was complicated by reports from the technology sector, where despite announcements of new products from giants like Nvidia, skepticism is growing regarding short-term profits from investments in artificial intelligence. At the same time, commodity markets are observing a decline in US crude oil production to its lowest level since June 2025, coinciding with expectations for decisions from the OPEC+ group regarding increasing production. An additional risk factor remains tensions in relations with Iran and concerns about the stability of the banking sector, which was particularly visible in the quotations of financial institutions in Milan. The history of financial markets shows that February is often a period of corrections after New Year optimism, which in economic literature is sometimes associated with the cycle of annual report publications.Despite problems across the ocean, European markets demonstrated relative strength. The Ibex 35 index in Madrid gained 2.6% in February, and the Italian index gained 3.7%, reaching multi-year highs. This difference results from the smaller share of technology companies in European indices in favor of so-called old economy sectors, such as telecommunications. Nevertheless, global sentiment remains strongly influenced by US monetary policy, and any signal of accelerating inflation triggers an immediate flight from risk. Stock Index Changes (February 2026): Milan (FTSE MIB): 3.7, Madrid (IBEX 35): 2.6, Wall Street (Dow Jones): -1.40.5% — was the increase in US producer prices, exceeding forecasts