Edwin Starr made this song famous back in 1970 and we are about to see how it may impact global markets in the coming weeks. This past week, financial and tech stocks were hit hard by a handful of persistent investor worries on Friday, with U.S. stocks suffering their largest monthly percentage declines in a year.

All three major indexes ended decisively lower and posted steep weekly declines, with the blue-chip Dow logging its biggest weekly drop since mid-November. The selloff was driven by uncertainty over costs and disruption related to artificial intelligence, revived tariff uncertainties and simmering geopolitical tensions.

The S&P 500 and the Nasdaq logged their steepest monthly declines since March 2025, while the Dow eked out its tenth straight month of gains, its longest winning streak since the ten-month run that ended in January 2018.

Adding to the day’s weakness was the hotter inflation data, potentially pushing back on the idea of a dovish Fed later this year. On the bright side though, corporate America is looking at over a 14% gain in earnings in the fourth quarter.

Obviously the attack in Iran over the weekend will have a major impact on the markets tomorrow and throughout the coming weeks, but by how much and quite frankly, in which direction? (More on that below).

For the week, the Dow lost -1.3% to 48,978. The S&P 500 closed lower by -0.4% to 6,879, the Nasdaq gave back -1.0% to 22,668 and the Russell 2000 lost -1.2% to 2,632. The CBOE Volatility Index gained +4% to 19.86.

Front and Center:

Treasuries Rally in February While Stocks Post Losses

Doubts about the return prospects of enormous AI capital expenditures paired with the potential for the modern technology to significantly disrupt industries throughout corporate America dealt losses to stocks in February. As equities suffered their worst monthly performance since March, Treasures had their strongest gains in a year, as safe-haven demand bolstered interest in fixed-income assets.

Not even Friday’s stronger-than-expected PPI was able to stand in the way of plunging yields, with the curve descending in bull-flattening motion, as the longer-yields fall faster than the closer-dated maturities.

The rally in duration is emblematic of rising slowdown concerns stemming from slipping investor sentiment, as wealthier households have been powering cyclical buoyancy on the back of terrific portfolio expansions for three consecutive years. The appreciation has kept them spending heavily while lower- to middle earning individuals dependent on jobs have generally struggled with managing inflation, heavier financing charges and decelerating hiring.

Financial firms ended February where they spent much of the month: enduring another dizzying blow from the threat of artificial intelligence and grappling with signs those cockroaches Jamie Dimon warned about in the world of private credit are starting to scurry.

The combination delivered another bruising selloff in shares of banks and asset managers Friday. The KBW Bank Index slumped 4.9%, dragging the group to levels last seen in early December. All 23 members slid at least 1.9%, with WAL, GS and ZION among the worst performers.

Lenders, payments providers and asset managers have suffered a rolling barrage of blows this month, most prominently from new AI applications and private credit woes. Credit spreads have also started widening, and a Wall Street-backed UK mortgage lender collapsed, adding to fear that banks could face rising defaults in the opaque world of private lending.

Investment-grade bond markets, which had emerged as a safe haven during recent AI-driven swings in equities, are now showing some signs of strain. Globally, premiums on comparable debt have already widened by nearly 4 basis points this week, the largest move since early November, according to a Bloomberg index.

Friday’s rout was a continuation of a trend that’s been unfolding over the past few weeks, as AI worries have consumed nearly every part of the financial sector. Wealth managers, insurance brokers, big banks, boutique advisers, financial data providers and even exchanges have all taken a hit.

The rolling beatdown hit wealth management-linked stocks earlier this month after Altruist Corp. unveiled a tool that helps financial advisers personalize strategies for clients and create pay stubs, account statements and other documents.

That followed a selloff in insurance brokerage stocks after an online marketplace rolled out a new application that uses OpenAI’s ChatGPT to compare auto-insurance rates.

The biggest blow came from a new model released last week by Anthropic that’s aimed at automating financial research and legal services, triggering selloffs in those stocks.

Troubling signs are also mounting in the credit market just months after JPMorgan Chase & Co.’s Dimon warned that a blowup at an auto lender likely wouldn’t be aone-off.

Just this month, MFS creditors warned of a $1.3 billion from shortfall in collateral backing their loans, while BlackRock Inc’s private debt fund sank after slashing its dividend, sending shares of other business development companies lower. In addition, Blue Owl Capital Inc. halted redemptions in one of its funds last week and decided to sell some assets to help pay investors. Its shares posted the worst month ever.

MAG 7 EARNINGS WERE GREAT BUT…

With NVIDIA reporting actual results for Q4 on February 25, all the companies in the “Magnificent 7” have now reported earnings for the fourth quarter. How did the earnings reported by these seven companies perform relative to analyst expectations and year-ago results?

On December 31, the estimated earnings growth rate for the “Magnificent 7” companies for Q4 was 20.1%. Overall, 86% (6 out of 7) of the “Magnificent 7” companies reported a positive EPS surprise, compared to 73% for all S&P 500 companies. In aggregate, earnings reported by the “Magnificent 7” companies exceeded estimates by 5.5%, compared to 6.8% for all S&P 500 companies.

As a result, the “Magnificent 7” companies reported actual earnings growth of 27.2% for the fourth quarter, which is above the earnings growth rate of 18.4% for these seven companies for the third quarter. In fact, this marks the 10th time in the past 11 quarters that the “Magnificent 7” companies have reported earnings growth above 25%. On the other hand, the blended earnings growth rate for the other 493 S&P 500 companies for Q4 is 9.8%, which is below the earnings growth rate of 12.2% for these 493 companies for the third quarter.

Overall, three of the “Magnificent 7” companies are among the top five contributors to earnings growth for the S&P 500 for the fourth quarter: NVIDIA, Alphabet, and Microsoft. Outside of these three companies, Boeing and GE Vernova are the other contributors in the top 5.

Economic Reports of Note (All Times EST):

Monday

9:45 am – US: S&P Global Manufacturing PMI
10:00 am – US: ISM Manufacturing
11:30 am – US: Atlanta Fed GDPNow
11:30 am – US: 3 & 6-month Bill Auctions

Tuesday

5:00 am – EUR: CPI
8:55 am – US: Redbook
9:55 am – US: FOMC Member Williams Speaks
11:45 am – US: FOMC Member Kashkari Speaks

Wednesday

5:00 am – EUR: PPI
7:00 am – US: Mortgage Data
8:15 – US: ADP Nonfarm Employment Change
9:45 am – US: S&P Global Services & Composite PMI
10:00 am – US: ISM Non-Manufacturing PMI
10:30 am – US: Crude Oil Inventories
2:00 pm – US: Beige Book

Thursday

7:30 am – US: Trade Balance
7:30 am – US: Challenger Job Cuts
8:30 am – US: Weekly Jobless Claims
8:30 am – US: Nonfarm Productivity
8:30 am – US: Exports/Imports
10:00 am – US: Factory Orders
11:30 am – US: 4 & 8-Week Bill Auctions

Friday

5:00 am – EUR: GDP
7:30 am – US: Retail Sales
8:30 am – US: February Non-Farm Payrolls
10:00 am – US: Business & Retail Inventories
10:00 am – US: Wholesale Inventories