US stock indices ended February with significant declines, reacting to unexpectedly high producer inflation readings. Investors, concerned about the prospect of sustained high interest rates, sold off technology stocks, halting the previous rally driven by the artificial intelligence sector. Meanwhile, European markets showed greater resilience, recording their eighth consecutive monthly gain in many cases, despite weakness in the banking sector.
Rising Inflation in the US
PPI data above expectations cooled bullish enthusiasm and increased concerns about interest rates.
Tech and AI Sector Correction
Technology companies, including giants like NVIDIA, are losing ground after months of record gains.
Stability of European Markets
Despite a weak Friday, European indices are recording their longest series of monthly gains in years.
February on global financial markets was marked by a growing dichotomy between the situation in the United States and Europe. In the last week of February, US trading floors came under strong selling pressure following the publication of a report on producer inflation, which turned out higher than market forecasts. This event drastically changed investor expectations regarding future decisions by the Federal Reserve System, pushing back the timeline for potential interest rate cuts. Particularly sharp declines affected the Nasdaq index, linked to profit-taking in the artificial intelligence sector. Leaders of the previous gains, such as NVIDIA, saw a correction in their share prices amid growing doubts about the pace of commercialization of new technologies. The technology sector has been the main growth engine on Wall Street since the 2020s, and its valuations have become exceptionally sensitive to changes in Treasury bond yields, which rise with inflation expectations. In Europe, sentiment was more mixed. Although major indices ended the month near historical highs, the end of the week brought weakness, particularly visible on the Milan stock exchange. The Italian banking sector suffered due to shareholders' negative reception of industrial plans and concerns about the impact of geopolitical tensions in the Middle East. On the Warsaw Stock Exchange, the WIG20 index also deepened its losses, which analysts link to a global 'risk-off' sentiment, meaning a flight of capital from risky assets towards safe havens such as the US dollar or short-term bonds. „AI Gave Investors a Glimpse of the Future This Month. And They Sold Their Stocks.” — The Wall Street Journal
Perspektywy mediów: Liberal media may place greater emphasis on the structural challenges of the economy and risks associated with a tech bubble. Conservative media more frequently highlight the ineffectiveness of inflation-fighting policies and burdens on the banking sector.