U.S. PPI, Iran situation, and private equity crisis drag down U.S. stocks; Dow Jones drops 1%, 10-year U.S. Treasury yield falls below 4%, gold, silver, and oil rise.

U.S. January PPI data exceeded expectations, reigniting inflation concerns. UK private equity lender MFS declared bankruptcy, revealing a $1.3 billion collateral shortfall, sparking investor fears over private credit risks. U.S. stocks opened lower, with the S&P and Nasdaq narrowing losses but still declining. Safe-haven sentiment pushed U.S. Treasuries and precious metals higher, while geopolitical risks involving Iran boosted oil prices.

On Friday, the Dow fell over 1%, the S&P 500 declined 0.4%, and for the month, the indices fell nearly 1%, marking the largest monthly drop since March last year.

(Performance of major U.S. stock indices this month)

According to Wallstreetcn, U.S. core PPI in January grew at the fastest pace in a year, complicating Federal Reserve monetary policy. Data confirms the “reverse Goldilocks” theory: inflation unexpectedly rose while economic growth unexpectedly slowed.

(Inflation surprise index rising, economic growth surprise index falling)

However, short-term investors are more focused on the slowdown in economic growth rather than rising inflation, with expectations for rate cuts increasing significantly this month.

Wallstreetcn reports that UK mortgage lender Market Financial Solutions (MFS) declared bankruptcy, with multiple private credit funds facing liquidity issues, greatly increasing market concerns over default risks in the opaque private lending sector.

Financial stocks in the U.S. plummeted, with the S&P regional bank ETF dropping 5%. Goldman Sachs fell 7.4%, Morgan Stanley 6.2%, Wells Fargo and Citigroup over 5%. Rate-sensitive financial stocks experienced their largest decline since April last year.

Although the VIX index only returned to 21 in February, the skewness surged to its highest level since October 2025, as hedgers flooded the market seeking downside protection.

Analysts interpret this as market not just expecting “more volatility,” but fearing “a market crash.” Investors are rushing to buy downside protection, such as put options.

(Nations SkewDex surging to highest since October 2025)

Matt Maley of Miller Tabak states:

The most urgent issue facing the market is the Middle East situation, but concerns about the tech sector and credit markets are also following closely.

Brian Finneran of Truist told clients:

This morning, the market is selling off any assets with even slight credit exposure. Professional investors are especially concerned about American Express, as white-collar unemployment trends could directly impact its business.

Software stocks declined again on Friday, with North American tech software ETF down 1.25%, marking the second consecutive poor month. Technology, financial, and discretionary sectors performed worst, while utilities, energy, and materials outperformed.

(Performance of U.S. sectors in February)

Amid rising risk aversion, the 10-year Treasury yield fell 5.7 basis points, breaking below the 4.00% psychological level for the first time since October last year. Herman Chan, Bloomberg industry analyst, comments:

Banks are entering a period of higher volatility filled with uncertainties. The pace of AI adoption and disruption remains unpredictable. Falling Treasury yields combined with widening credit spreads indicate a market shifting toward risk aversion.

Amid widespread risk aversion, cryptocurrencies faced sell-offs. Bitcoin dropped 3%, Ethereum fell over 5%, breaking below $2,000. Bitcoin has declined for five consecutive months in February.

Spot gold rose 1.8%, quickly climbing past $5,200 and approaching $5,300 by the close, marking its seventh consecutive month of gains. Silver surged over 6%, its tenth straight month of increases with a 10% monthly gain. WTI crude oil rose 2.88%.

Wallstreetcn reports that Trump expressed dissatisfaction with Iran negotiations but still hopes to resolve issues through talks, stating Iran has not committed to not developing nuclear weapons and no final decision has been made on strikes. Both risks of war and peace remain.

Geopolitical risk premiums surged amid U.S.-Iran tensions, with oil prices rising for the second month in a row and reaching a six-month high. WTI crude oil increased 2.88% intraday.

On Friday, the three major U.S. stock indices declined. Bank stocks fell broadly, with Goldman Sachs down 7.4%, Morgan Stanley 6.2%, Wells Fargo and Citigroup over 5%. However, Dell surged about 22% due to strong earnings outlook driven by a spike in AI server orders.

Major U.S. stock indices:

• S&P 500 closed down 29.98 points, 0.43%, at 6878.88.

• Dow Jones Industrial fell 521.28 points, 1.05%, at 48977.92.

• Nasdaq declined 210.171 points, 0.92%, at 22668.212; Nasdaq 100 down 74.335 points, 0.30%, at 24960.035.

• Russell 2000 down 1.68%, at 2632.36.

• VIX rose 6.6%, to 19.86.

U.S. sector ETFs:

• Banking sector plunged, with the S&P Regional Bank ETF down over 5%, KBW Bank ETF down 4.89%. Solar ETF dropped 4.46%. Oil & gas sector rose 2.60%.

(U.S. sector ETF performance on Feb 27)

The Magnificent 7 tech giants:

• The U.S. tech giants (Magnificent 7) index fell 1.83%, to 193.36 points, down 2.18% this week, and 6.57% in February.

• Google A up 1.42%, Amazon up 1.00%, Meta down 1.34%, Tesla down 1.49%, Microsoft down 2.24%, Apple down 3.21%, Nvidia down 4.16%.

Chip stocks:

• Philadelphia Semiconductor Index down 1.21%, at 8098.371.

• TSMC ADR down 0.56%, AMD down 1.70%.

Chinese concept stocks:

• Nasdaq Golden Dragon China Index down 1.81%, at 7277.39; down 3.61% this week, and 5.88% in February.

• Among popular Chinese stocks, NIO down 4%, Alibaba down 2.6%, and others like New Oriental, Li Auto, JD.com, WeRide, Pinduoduo, Xpeng, Xiaomi down over 1%.

Other stocks:

• U.S. bank stocks sharply lower, with Goldman Sachs down 7.4%, Morgan Stanley 6.2%, Wells Fargo and Citigroup over 5%.

• Circle down 4.32%.

• Dell surged about 22% on strong earnings outlook due to AI server orders.

European markets hit record closing highs, with telecoms up about 15.6%, food & beverages up over 9.8%, oil & gas up over 8.7% in February. UK stocks also reached record closing highs, up over 6.7% in February, while Danish stocks declined over 17.2%.

Pan-European indices:

• STOXX 600 rose 0.11%, to 633.85, surpassing the previous record close of 633.47 on Feb 25. Weekly gain 0.52%, February up 3.74%.

• Euro Stoxx 50 down 0.38%, at 6138.41; weekly up 0.12%, February up 3.20%.

Country indices:

• Germany DAX 30 down 0.02%, at 25284.26; February up 3.04%.

• France CAC 40 down 0.47%, at 8580.75; February up 5.66%.

• UK FTSE 100 up 0.59%, at 10910.55; February up 6.72%.

(Major European and U.S. indices on Feb 27)

European sector performance:

• Telecoms up 15.57% in February, food & beverages up 9.83%, oil & gas up 8.72%, basic resources up 8.54%, utilities up 8.41%.

The 10-year U.S. Treasury yield fell below 3.94%, nearly 30 basis points lower in February. The 10-year German Bund yield dropped about 5 basis points on Friday, down over 9 basis points for the week.

U.S. Treasuries:

• At New York close, the 10-year yield fell 6.66 basis points to 3.9375%. Weekly decline 14.52 basis points, February down 29.80 basis points, trading range 4.2975%-3.9375%.

• The 2-year yield dropped 5.51 basis points to 3.3729%. Weekly down 10.31 basis points, February down 14.75 basis points, trading range 3.5901%-3.3729%.

(Major U.S. Treasury yields)

European bonds:

• At European close, German 10-year bund yield down 4.7 basis points to 2.643%. Weekly down 9.4 basis points, trading range 2.740%-2.643%.

• 2-year German bond yield down 4.3 basis points to 1.998%. Weekly down 5.6 basis points, trading range 2.058%-1.998%.

• UK 10-year gilt yield down 4.4 basis points, weekly down 12.1 basis points. 2-year UK gilt down 2.5 basis points to 3.525%, weekly down 5.5 basis points.

The dollar index declined 0.2%, up 0.6% in February. Offshore RMB appreciated about 1.4% in February, approaching 6.82 yuan.

Dollar:

• At New York close, ICE dollar index down 0.21% at 97.582. Weekly decline 0.21%, February up 0.61%.

• Bloomberg dollar index down 0.09% at 1186.93. February down 0.11%, trading range 1197.11–1178.09.

(Bloomberg dollar index)

Offshore RMB:

• At New York close, USD/CNH at 6.8625, up 181 pips from Thursday’s close, trading between 6.8391 and 6.8699.

• Weekly gain about 350 pips (0.50%), February up about 950 pips (1.37%), overall rising trend with trading range 6.9630–6.8267.

Cryptocurrencies:

• Bitcoin down 3% at New York close. Ethereum fell over 5%, breaking below $2,000. Bitcoin has declined for five consecutive months in February.

CFTC: For the week ending Feb 24, speculative net long positions in NYMEX WTI crude oil increased by 16,968 contracts to 98,187 contracts, a seven-month high.

Crude Oil:

• WTI April futures up $1.81, 2.78%, at $67.02/barrel. Weekly increase over 0.81%, February up 3.52%.

(WTI crude futures)

• Brent April futures up $1.73, 2.45%, at $72.48/barrel, February up 5.64%.

Natural Gas:

• NYMEX April natural gas at $2.8590/MMBtu, down 29% in February.

Spot gold rose 1.7% on Friday, New York silver futures up about 7.7%, February gold up about 11.3%, silver up about 19.3%.

Gold:

• At New York close, spot gold up 1.75%, hitting a daily high of $5,275.82/oz, up 7.84% in February.

• COMEX gold futures up 1.64%, at $5,279.60/oz, up 11.27% in February.

Silver:

• Spot silver up 6.33%, at $93.8333/oz, up 10.11% in February.

• COMEX silver futures up 7.67%, at $94.30/oz, up 19.28% in February.

Other metals:

• COMEX copper up 0.61%, at $6.0630/lb, up 1.35% in February, with a three-wave V-shaped pattern.

• February gains: platinum +7.19% at $2,369/oz; palladium +4.56% at $1,790.59/oz.

• LME copper up $39, at $13,344/ton. LME tin up $3,294, at $57,728/ton. LME nickel up $150, at $17,844/ton.

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