On the last trading day of February (February 27), the US stock market closed lower. The Dow Jones Industrial Average fell 1.05% to 48,977.92 points; the S&P 500 dropped 0.43% to 6,878.88 points; and the Nasdaq declined 0.92% to 22,668.21 points. On a monthly basis, the S&P 500 fell 0.87% in February, and the Nasdaq fell 3.38%, marking their largest monthly declines since March 2025, while the Dow Jones slightly increased by 0.17%, continuing its monthly growth streak. Market analysts said that at the end of the month, funds chose to reduce risk exposure due to a combination of inflation data disruptions, uncertainty in the artificial intelligence industry chain's profit realization cycle, and rising geopolitical risk premiums.
Structurally, the financial and technology sectors led the decline, with the semiconductor and software sectors experiencing more significant pullbacks. Some large tech stocks were among the top decliners, as market expectations regarding the intensity and return path of AI-related capital expenditures resurfaced. The 'liquidity premium' of growth sectors shrank, prompting a shift of funds to defensive sectors. Several institutional figures described this switch as a 'marginal improvement' trade amid weakening risk appetite: using more certain cash flows to hedge against macroeconomic uncertainties.
Inflation Readings Overheat: Rate Cut Expectations Remain Despite Tapered Pricing
In terms of economic data, January's PPI and core PPI numbers were higher than expected, with rising service prices garnering more attention. Analysts close to trading desks noted that inflation resilience has not disappeared, but the market's reaction to single data points has become 'muted,' focusing more on the potential downturn in growth and the intertwining effects of tightening financial conditions. Within this framework, pricing for easing within the year remains in interest rate futures, but the pace depends more on the continuous validation of subsequent employment and inflation data.
Corporate earnings shown in financial reports still provide medium-term support. Market participants mentioned that US corporate earnings grew by over 14% in the fourth quarter, indicating that fundamentals still have some underpinning effect on 'valuation repair,' but in the short term, risk appetite is more easily driven by macro and event factors, leading to an 'underlying support, top pressure' pattern at the index level.
Bond Market Outpaces: 10-Year Yield Drops Below 4%, Reflecting 'Growth Concerns'
Contrasting with the overheated inflation data, buying pressure in the bond market remained dominant. The 10-year US Treasury yield fell to 3.962% on the day, marking the first time since late November last year that it dropped below 4%; it fell about 28 basis points cumulatively in February, one of the largest monthly declines in a year.
Market strategists remarked that this combination of 'inflation overheating and yield drop' seems more like growth concerns being priced in: On one hand, the impact of AI diffusion on employment and corporate cost structures is still hard to quantify; on the other, overseas credit events and geopolitical uncertainties are heightening demand for safe havens. Some institutions summed it up as a term spread trade dominated by 'growth scare.'
From a cross-asset performance perspective, the simultaneous retreat in the US stock market and strengthening of US Treasury bonds also indicates that the stock market did not immediately buy into the valuation support brought by low interest rates. Analysts noted that this reflects that the positive effects brought by declining discount rates are offset by the declining earnings visibility and rising risk premium: when investors are concerned about growth paths, low yields do not necessarily translate into higher stock valuations.
Safe-Haven Assets Favored: Gold Prices Rise Alongside Geopolitical Risk Premiums
In the commodities market, safe-haven sentiments boosted precious metals. Spot gold rose to around $5,230 per ounce at the end of February, up about 7.6% in a single month, and recorded its seventh consecutive monthly increase; silver rose about 9.7% within the month.
At the same time, crude oil prices rose amid geopolitical risk and supply expectation disturbances. Those close to commodities trading indicated that the rise in oil prices reflects more of a risk premium driven by events rather than a trend improvement on the demand side; among inflation-sensitive assets, gold's performance seems to be a comprehensive pricing of 'policy uncertainty + geopolitical risk + real interest rate fluctuations.'
Regarding Chinese stocks, the Nasdaq Golden Dragon China Index fell 1.81% on the day, consistent with the cooling of global risk appetite. Market participants believe that overseas rates and dollar fluctuations remain short-term pricing anchors; if US Treasury yields continue to decline while stock market volatility does not decrease, cross-market capital risk budgets may further contract.
