Stock Market Today: S&P 500 Slides, Nasdaq Drops 3.4%, Dow Plunges 521 Points as GS Stock 7.5% and U.S.-Iran Strikes Erupt

Stock Market Today – February 28, 2026: Wall Street Wraps a Brutal Week as Banks Crater, AI Fears Deepen, and Iran Strikes Shake Global Markets

Weekly Market Wrap-Up and March Forecast

February closed exactly the way most feared — in a sell-the-rip fashion that gutted financial stocks, dragged technology deeper into correction territory, and left the broader market exposed to the most dangerous geopolitical escalation in years. The S&P 500 (SPX) dropped 0.4% on Friday and finished the month down 0.9%, its sharpest monthly decline since March 2025. The Nasdaq Composite (NDX) fell 0.9% on the session, ending February with a painful 3.4% loss — also the worst monthly performance in nearly a year. The Dow Jones Industrial Average (DJI) suffered a 521-point, 1.1% plunge on the final day but somehow still eked out a 0.2% gain for the month, marking ten consecutive winning months. That streak, as impressive as it sounds on paper, felt meaningless by the time the closing bell rang.

What happened after hours made everything worse. The United States and Israel launched a coordinated military strike against Iran late Friday. Within hours, Tehran retaliated with missile barrages targeting four American military bases in the region. Explosions were reported across the Middle East. Futures markets face a Monday morning that could be defined entirely by how far this conflict escalates over the weekend. Crude oil, gold, and defense names are obvious beneficiaries. Everything else stands in the blast radius of uncertainty.

Banks in Free Fall — Goldman Sachs (GS), Morgan Stanley (MS), and the Private Credit Contagion

Friday's devastation in financial stocks was not a routine pullback — it was the worst single session for the sector since the tariff-driven panic last April. The KBW Nasdaq Bank Index plummeted 4.9%. Goldman Sachs (GS) led the collapse with a 7.5% wipeout. Morgan Stanley (MS) followed, shedding 6.2%. Wells Fargo (WFC) lost 5.6%. Bank of America (BAC) declined 4.7%. On the consumer lending side, American Express (AXP) cratered 7.9%, while Capital One (COF) and Synchrony Financial (SYF) both suffered steep drops as recession-sensitive credit portfolios came under heavy scrutiny.

Two forces collided to produce this outcome. The immediate trigger: two business development companies announced dividend reductions — a blaring alarm that stress in private credit is moving from theoretical to tangible. The structural worry runs deeper. Approximately 40% of private credit loans are concentrated in software companies, the very segment being gutted by AI adoption. UBS has estimated that default rates on these exposures could climb as high as 15%. The systemic link is direct — major banks serve as lenders to the private credit funds themselves. When those funds bleed, the losses travel upstream through the financial system.

This is not a replay of 2008, at least not in scale. The private credit universe alone lacks the size to detonate a full systemic event. But the wildcard is employment. If the unemployment rate pushes meaningfully higher, the damage spreads: housing prices weaken, commercial real estate stress deepens, consumer loan delinquencies accelerate, and a contained credit pocket suddenly becomes a full-spectrum financial crisis. That reality makes next week's February non-farm payrolls report — due March 6 — perhaps the single most important economic release since the pandemic recovery.

February Jobs Preview — The 60K Print That Holds the Whole Market Together

Wall Street expects a sluggish 60,000 new non-farm payrolls for February, a notable slowdown from January's 130,000. The unemployment rate is projected to remain at 4.3% — technically near full employment, but uncomfortably close to the 4.5% level where private credit stress models begin triggering cascading risk alerts.

The forward-looking signals are mixed but not yet catastrophic. Weekly initial jobless claims ran at 212,000 in the latest print, down 7.1% year-over-year. The four-week moving average sits at 220,250. The Chicago Fed's unemployment model pegs February at 4.28%. ADP weekly tracking data is consistent with 50,000 to 60,000 monthly job gains — weak but not recessionary.

The granular picture is where things get interesting. Over the past three months, the economy added 65,000 construction jobs and 105,000 in business and professional services, including 30,000 in temporary help — a classic leading indicator whose downtrend reversed in October and has been climbing since. ISM manufacturing employment spiked in January, still below 50 but improving. Trump pointed to roughly 70,000 new construction positions in his State of the Union address, and the data largely supports that claim. The narrative here is factory-building first, manufacturing hiring second — a sequencing consistent with reshoring timelines.

The uglier side: Computer System Design employment has shed nearly 50,000 positions over the past twelve months — a direct consequence of AI replacing white-collar knowledge work. Block (XYZ) announced Friday that it will cut 40% of its entire workforce, with Jack Dorsey explicitly citing artificial intelligence as the driver. The stock rallied 17% to $63.70, with analysts cheering the restructuring. That paradox — the market rewarding mass layoffs while the broader economy absorbs displaced workers — captures the duality of this moment with uncomfortable precision.

The AI Reckoning — Nvidia (NVDA) Extends Its Slide, Dell (DELL) Surges 22%, and the ROI Question Gets Louder

Nvidia (NVDA) dropped another 4.2% on Friday, continuing the post-earnings decline that has transformed the AI bellwether from portfolio hero to primary source of index-level pain. The chipmaker committed a staggering $30 billion to OpenAI's latest funding round. SoftBank matched that figure. Amazon (AMZN) pledged $50 billion. These are breathtaking sums, and the market is increasingly demanding an answer to the question it spent two years ignoring: when does the return on this capital expenditure actually materialize?

The Shiller P/E ratio on the S&P 500 sits above 40 — a valuation territory last seen during the 2000 dot-com peak. That alone does not guarantee a crash, but it eliminates any margin for error. One disappointment in AI monetization, one employment shock, one geopolitical rupture — and these multiples compress violently.

Not every technology name suffered. Dell Technologies (DELL) exploded 22% higher after posting a 39% surge in quarterly revenue, driven entirely by its AI server division. This is the defining bifurcation of 2026 tech earnings: companies selling the infrastructure — the shovels — are minting money. Companies whose products AI replaces are getting annihilated.

Duolingo (DUOL) illustrated the other side, plunging 14% after warning that bookings and revenue growth will decelerate through 2026, with margins compressing. The edtech space, once considered AI-resistant, is learning that no vertical is safe when a language model can tutor for free.

Fourth-Quarter Earnings — The Quiet Strength Hiding Beneath the Chaos

Underneath all the fear, the actual numbers from corporate America remain strong. With Q4 reporting season essentially complete, more S&P 500 companies beat estimates than the long-term average, and the magnitude of those beats exceeded historical norms. Per-share earnings for 2025 look set to surpass the $275 estimate, building a favorable comparison base for 2026. The consensus 2026 EPS forecast sits at $320, and critically, it has not been cut during the reporting season — the exact period when companies issue conservative forward guidance and analysts typically ratchet expectations lower.

FactSet I/B/E/S data shows Q4 S&P 500 earnings rose 5.2% quarter-over-quarter to $74.66, with 96% of the index now reporting actual results. The breadth matters: this was not a quarter carried by five mega-cap tech names. Strength spread across industrials, financials (before this week's bloodbath), healthcare, and consumer discretionary.

The dissonance is between backward-looking results and forward-looking fear. AI disruption is increasingly reflected in valuation compression rather than actual earnings downgrades — software stocks are getting repriced on the expectation of disruption, not on missed numbers. That equilibrium is fragile. If AI displacement begins showing up in payroll data at scale, valuation adjustments will be followed by earnings revisions. February's jobs report becomes the litmus test.

UBS Downgrades U.S. Equities — The Dollar, the Buyback Fade, and the End of American Exceptionalism

Andrew Garthwaite, UBS head of global equity strategy, issued one of the most significant calls of 2026 this week: a downgrade of U.S. stocks to "benchmark" weight in a fully invested global portfolio. The argument is layered and difficult to dismiss.

The dollar is the centerpiece. UBS forecasts the euro reaching $1.22 by end of Q1 and sees asymmetric structural downside for the greenback going forward. The broad trade-weighted U.S. dollar index has already fallen 7.2% year-over-year, hitting new twelve-month lows. The major currencies measure is down 9.3%. Historical analysis shows that a 10% dollar decline corresponds to roughly 4% U.S. equity underperformance on an unhedged basis. Foreign markets are already running away: the MSCI World ex-US is up about 8% in 2026. Japan's Nikkei 225 has rallied 17% year-to-date. Europe's Stoxx 600 is up 7%. The S&P 500 has barely moved.

Buybacks — once the invisible engine of American equity dominance — have lost their differential advantage. The U.S. buyback yield now roughly matches global peers. The combined shareholder yield from dividends and buybacks in the United States is approximately half that of Europe. Meanwhile, the sector-adjusted price-to-earnings premium for U.S. stocks stands 35% above international peers, compared to a historical average of just 4% since 2010. Roughly 60% of U.S. sectors trade not only at higher multiples than their overseas counterparts but above their own historical premium bands.

Policy turbulence adds another layer of risk. Tariff shifts, proposals to cap credit card interest rates, potential restrictions on private equity in housing, drug pricing scrutiny, and trial balloons about curbing defense company buybacks — each individually minor, collectively corrosive to capital allocation confidence.

Broad U.S. equity verdict: hold. Earnings support remains intact and AI-driven productivity gains should sustain select sectors, but the risk-reward at these valuations, with a sinking dollar, disappearing buyback edge, and military conflict in the Gulf, no longer justifies overweight positioning. Rotating capital toward Japan and Europe looks increasingly smart.

Treasuries Rally Hard, the 10-Year Drops Below 4% — What the Bond Market Knows

The 10-year Treasury yield fell to 3.961% on Friday — its lowest mark since October — even after the Labor Department reported unexpectedly hot wholesale inflation for January. In a normal environment, stronger PPI data pushes yields higher. The fact that bonds rallied regardless reveals the market's true priority hierarchy: growth anxiety is overwhelming inflation anxiety.

BAA corporate bond yields stand at 5.78%, with credit spreads widening 14 basis points week-over-week to 1.82%, approaching the top of a twelve-month range spanning 1.38% to 2.02%. That widening is not a crisis signal on its own, but the trajectory is moving in the wrong direction. The 10-year minus 2-year spread sits at +0.57%. The 10-year minus 3-month gap narrowed to just +0.30%. The short end — 2-year minus fed funds — remains inverted at -0.25%.

Mortgage rates touched 5.99%, a fresh three-year low. Purchase mortgage applications nonetheless declined 5% week-over-week to 150 on a seasonally adjusted basis, with the four-week average dropping to 147. In a textbook cycle, sub-6% mortgages would unlock a flood of homebuying. The fact that applications are lackluster at these levels points to structural affordability constraints so severe that even meaningfully cheaper financing cannot move the needle. Refinance applications rose 4% week-over-week and are up 150% year-over-year — impressive, but that is opportunistic rate-locking, not economic expansion.

Real estate loans at commercial banks edged up 0.1% week-over-week but are stuck at just 1.3% year-over-year growth — tied for a twelve-month low. After briefly suggesting a bottom four months ago, this metric has reverted to negative. Housing remains among the economy's most exposed flanks if employment conditions crack.

Gold Posts Its Best Month in 13 Years, Oil Spikes on Iran, and the Commodity Surge Nobody Fully Trusts

Gold futures ended February at $5,230.50 per troy ounce — an 11% monthly gain, the largest since January 2012. In raw dollar terms, gold added $516.60 per ounce in a single month, the biggest nominal monthly gain in the metal's history. The all-time high from late January sits just 1.7% above current levels. With active military strikes against Iran underway, that record is almost certainly going to fall in the opening days of March.

Crude oil rallied 2.8% on Friday to $67.02 after U.S.-Iran nuclear talks broke down without agreement — and that was before the bombing campaign started. Oil sits at $67.26 per barrel, down 8.4% year-over-year, within the middle third of its three-year range ($54.98 to $75.14). Gas prices are at $2.94 per gallon, down $0.19 from a year ago. The commodity spent most of winter as a tailwind for consumers, but the Iran situation resets the entire calculus. Any sustained disruption to Persian Gulf shipping routes would drive crude well past $80 and potentially toward triple digits, reviving the inflation threat the Federal Reserve spent two years fighting.

The Bloomberg Commodity Index surged to 121.68, up 18.4% year-over-year. Bloomberg Industrial Metals gained 16.6%. These readings mechanically score as positives — traditionally reflecting strengthening demand. But when you strip out dollar depreciation, the picture changes dramatically. A 20% commodity surge either signals a roaring global economy (which broader data does not confirm) or a weakening of confidence in the dollar as a store of value. With the greenback down 7% to 9% on a trade-weighted basis, the currency explanation is far more persuasive.

Commodity positioning: bullish, particularly gold and crude oil. Dollar weakness, geopolitical hedging, and active Middle East hostilities create a near-ideal backdrop. Industrial metals carry more ambiguity — the demand narrative is unconvincing, but currency-driven support provides a floor.

Streaming Reshuffled — Paramount Skydance Wins Warner Bros. Discovery, Netflix (NFLX) Rallies

Paramount Skydance soared 21% after securing victory in the bidding war for Warner Bros. Discovery (WBD). Netflix (NFLX) rallied 14% on the same day, as the consolidation deal reshapes competitive dynamics in ways that benefit the streaming leader's dominant position. Warner shares fell 2.2% under the weight of merger execution risk. Moody's immediately placed Paramount Global on review for a potential downgrade to junk territory, noting that while the acquisition adds revenue diversity and margin improvement, it materially increases leverage and introduces significant balance sheet complexity.

Netflix (NFLX): buy. Consolidation of weaker rivals strengthens pricing power and content negotiation leverage. Warner Bros. Discovery (WBD): sell. Downgrade risk, integration uncertainty, and balance sheet strain make this one to avoid until the transaction picture clarifies.

Solar Sector Collapse — First Solar (FSLR) Down 18%, Sunrun (RUN) Crushed 35%

The solar industry's promising start to 2026 shattered this week. An Invesco solar ETF shed 8% — the worst weekly performance since June 2025. First Solar (FSLR) guided 2026 revenue to $4.9 billion to $5.2 billion, badly missing the $6.16 billion analyst consensus. The stock dropped 18% over five sessions. Sunrun (RUN) delivered a dismal 2026 cash flow outlook, triggering a Jefferies downgrade. Shares were destroyed — down 35% by Friday's close.

The pressures are structural. Trump's megabill from last July accelerated the phase-out of key solar subsidies. Tariff exposure remains elevated. And yet the Invesco solar ETF is still up 12% year-to-date, boosted earlier by AI-driven data center energy demand and easing regulatory fears.

Solar sector verdict: bearish. The subsidy cliff is real, guidance from sector leaders confirms a reset year, and tariff headwinds are worsening. Selective long positions make sense only in names directly tied to data center power infrastructure — the rest is a falling knife.

Tariff Collections Explode, Tax Withholding Flashes a Warning, and Spending Holds — For Now

Tariff payments flowing into the U.S. Treasury have surged to extraordinary levels. January 2026 collections reached $30.5 billion versus just $9.0 billion a year ago — an increase of $21.5 billion. Through February 25, the government collected $27.9 billion compared to $8.5 billion in the prior-year period. These fees either compress importer margins or get passed to consumers — or some combination of both. Regional Federal Reserve surveys indicate roughly half of the tariff-driven cost increases are reaching end buyers.

Withholding tax receipts — a real-time proxy for aggregate employment income — are sending a quiet but concerning signal. Over the last 20 reporting days, collections totaled $327.1 billion versus $315.9 billion a year prior, representing 3.5% growth. That sounds healthy until you consider that average wage gains are running just under 4% year-over-year. The math implies that the number of paychecks being written is growing slower than individual pay — meaning total employment volume may be flat or even contracting in real terms. This measure was firmly positive through most of 2025 but has weakened meaningfully since October.

Consumer spending as tracked by the Johnson Redbook index remains a standout at +6.7% year-over-year, with the four-week average at +6.8%. The Truflation independent daily inflation reading sits at just 1.41% — near 52-week lows — which puts real consumer spending above 5% year-over-year. That is genuinely strong. However, motor vehicle sales and new orders for consumer durable goods have both softened in recent monthly data, pointing to rising near-term recession probability even as services spending holds firm.

The St. Louis Fed Weekly Economic Index improved to 2.65, comfortably in positive territory. OpenTable restaurant reservations showed a 4% year-over-year gain — a sharp deceleration from 19% the prior week, but still on the right side of zero. Steel production is up 6.6% year-over-year. Rail carloads surged 17.6% in the latest weekly report, though the 2026 average of +5.3% is the more reliable trend figure.

Shipping Rates Climb to 12-Month Highs — Demand Signal or Supply Distortion?

The Harpex container shipping index rose to 2,213 — a fresh twelve-month high — after bottoming at 810 in December. The Baltic Dry Index sits at 2,117, positioned near the top of its six-month range. Traditionally, rising shipping rates indicate that global trade volumes are pressing against available vessel capacity — a bullish reading. Two factors demand caution, however. First, both indices remain heavily influenced by supply-side dynamics from prior years of shipbuilding overcapacity. Second, Iran's missile strikes on U.S. military installations in the Gulf threaten to drive freight rates higher on geopolitical fear rather than genuine demand growth.

Regional Fed Data — Manufacturing Brightens While Services Deteriorate

Manufacturing new orders from the five regional Federal Reserve surveys offer a surprising pocket of optimism. The month-over-month rolling average improved to +5. Kansas City surged 7 points to +7. Dallas posted +11.1. Empire State held at +5.8. Philadelphia remained robust at +11.7. Only Richmond registered negative, at -9.

The services sector paints a starkly different picture. Regional services indexes deteriorated further in February: Philadelphia plunged to -17.3, Empire State collapsed to -25.7, Richmond slid to -10, and Dallas weakened to -3.2. The rolling average fell to -10. This manufacturing-versus-services divergence is among the most defining features of the current economic environment. Factories are expanding — likely reflecting tariff-driven reshoring and inventory frontloading — while service businesses are contracting, possibly under the weight of AI displacement and consumer caution.

Money Supply, Financial Conditions, and the Long-Leading Framework

Real M1 money supply expanded 1.6% year-over-year in January. Real M2 grew 4.3%. Both are comfortably positive. Historical precedent is clear: no U.S. recession has ever occurred without real M1 turning negative or real M2 dropping below 2.5%. Both measures are well above those thresholds. The Chicago Fed Adjusted Financial Conditions Index reads -0.56, solidly in expansionary territory relative to its -0.25 breakeven. Credit conditions are tightening at the margins, but remain broadly supportive of economic growth.

The St. Louis Fed Financial Stress Index stands at -0.598 — a negative reading is favorable — though it briefly pierced above zero last April during the tariff scare. In its relatively short history, this index has crossed above zero less than one year before every subsequent recession.

Blackstone's (BX) $1.2 Billion Payday and What It Reveals About This Cycle

Blackstone (BX) CEO Steve Schwarzman pulled down $1.2 billion in dividends and compensation during 2025, matching his record from 2022. This came even as the firm's stock, including dividends, returned negative 7.9% — compared to 17.9% for the S&P 500. The payout, overwhelmingly derived from dividends on Schwarzman's ownership stake rather than performance-based compensation, speaks directly to the growing gap between alternative asset manager profitability and shareholder returns that has characterized the private equity industry over the past year.

Looking Ahead — Broadcom (AVGO), Target (TGT), and the Jobs Number That Matters Most

Monday opens with the U.S.-Iran conflict dominating every trading desk on Earth. Beyond the geopolitical wildfire, the economic calendar is dense. ISM manufacturing data drops Monday. Target (TGT) reports earnings Tuesday — a crucial gauge of mid-market consumer health. Broadcom (AVGO) reports later in the week and will face intense scrutiny for any softening in AI infrastructure demand. Friday delivers the February non-farm payrolls report.

If the number lands near the 60,000 consensus with unemployment at 4.3%, markets should find some footing — the no-hire, no-fire equilibrium holds, and private credit stress remains a contained problem. A significantly weaker print — sub-30,000 payrolls or unemployment ticking toward 4.5% — would trigger violent repricing across risk assets, particularly financials and high-yield credit. A surprise to the upside could spark a relief rotation back into battered bank stocks.

The Verdict — March Will Test Every Assumption This Market Has Made

The S&P 500 (SPX) at 6,878.88 is perched on a razor's edge. Earnings are solid. Money supply is expansionary. Consumer spending remains resilient. But the risk catalog is longer and more dangerous than at any point since the April 2025 tariff shock: a private credit bubble with potential 15% default rates, AI displacement accelerating through white-collar employment, a dollar in structural decline, U.S. equities priced 35% above global peers, and now an active military confrontation between Washington and Tehran.

The Nasdaq (NDX): hold with a bearish lean. February's 3.4% loss likely marks the opening chapter of a broader repricing as AI return-on-investment questions intensify and software layoffs accelerate. Selective buying in infrastructure names like Dell (DELL) and Broadcom (AVGO) on weakness is warranted. Broad tech exposure is not.

The Dow (DJI): hold. A ten-month winning streak is extraordinary, but Friday's 521-point hemorrhage and the banking sector collapse suggest the old-economy pillars that supported the index are now exposed to credit deterioration.

Gold: strong buy. Dollar weakness, inflation hedging demand, and active military conflict in the Persian Gulf form a near-perfect storm. The all-time high will fall in early March.

Crude Oil (USO): buy. Iranian retaliation against U.S. bases rewrites the supply outlook. Near-term target is $75 or higher; $85 or above if Gulf shipping lanes face disruption.

U.S. Treasuries: buy. The 10-year at 3.96% has further room to decline as flight-to-safety flows intensify on geopolitical risk and recession fears. Sub-4% is a waypoint, not a floor.

This market has been grinding sideways since October in what one strategist describes as a near-unprecedented holding pattern. The Iran escalation may be the force that finally breaks the stalemate — and the initial direction, absent a rapid de-escalation, is lower. The path to new S&P 500 highs still exists on the back of earnings resilience and AI-fueled productivity, but the wall of worry just became a fortress. Defensive positioning is the right call here. Overweight commodities and fixed income. Underweight U.S. equities relative to international markets. And watch the March 6 jobs number like your portfolio depends on it — because it very likely does.

That's TradingNEWS