Wall Street closed sharply lower on Thursday, dragged down by steep losses in Nvidia, Tesla, and other artificial-intelligence heavyweights, as investors dialed back expectations for further Federal Reserve interest-rate cuts amid renewed inflation concerns and mixed signals from policymakers.
The market downturn came just as the U.S. government reopened after a record 43-day shutdown, which had rattled investors and delayed key economic reports. Recent remarks from Fed officials have fueled uncertainty, with several signaling hesitation about easing policy further this year.
Traders now see only a 47 % chance of a 25-basis-point rate cut in December, down from about 70 % last week, according to CME Group’s FedWatch Tool.
“The fundamental question is whether tariff-driven inflation is temporary or not,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa. “That’s why some Fed governors are reluctant to cut—it’s a risky bet either way.”
AI Sector Leads Market Sell-Off
Technology stocks bore the brunt of Thursday’s sell-off as investors questioned lofty valuations built on AI optimism.
Nvidia (NVDA.O) sank 4.7 %
Tesla (TSLA.O) dropped 7.6 %
Broadcom (AVGO.O) slid 5.4 %
“There’s a lot of uncertainty about the economy. What we’re seeing is a correction in the AI sector and rotation to other parts of the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The S&P 500 fell 1.62 % to 6,739.60, the Nasdaq tumbled 2.48 % to 22,825.50, and the Dow Jones Industrial Average lost 1.38 %, closing at 47,590.87.
Eight of the 11 S&P 500 sector indexes declined, led by a 2.74 % drop in information technology and a 2.58 % loss in consumer discretionary stocks.
Rotation Out of Tech
The week had earlier seen the Dow notch record highs on Tuesday and Wednesday as investors shifted money from technology into health care and value stocks.
The S&P 500 Value Index rose 1.4 % for the week, while the Growth Index slipped 0.7 %—a sign of investors’ growing caution around high-priced AI names.
Cisco Systems (CSCO.O) bucked the trend, climbing 5 % after raising full-year profit and revenue forecasts on strong demand for networking gear.
In contrast, Walt Disney (DIS.N) plunged 7.7 % after warning of a prolonged dispute with YouTube TV over distribution of its cable channels.
Labor and Commodities
Fresh labor data from ADP showed private employers shedding roughly 11,000 jobs per week through late October. A report from Indeed Hiring Lab pointed to a 16 % year-on-year decline in retail job postings, underscoring ongoing weakness in hiring.
Energy producer APA Corp gained 3.2 % after reports that Spain’s Repsol was considering a reverse merger of its upstream unit with potential partners.
Meanwhile, memory-chip makers Western Digital and SanDisk fell 3.1 % and 10.7 %, respectively, following weak sales and profit figures from Japan’s Kioxia Holdings.
Market Breadth
Declining stocks outnumbered advancers on the S&P 500 by roughly 1.8 to 1. The index posted 15 new highs and 6 new lows, while the Nasdaq recorded 51 new highs and 178 new lows.
With inflation pressures persisting and rate-cut expectations fading, analysts say investors are bracing for more volatility as the year winds down.
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Speaking during a closed-door deposition in New York on Thursday (February), former U.S. Secretary of State Hillary Clinton said she did not “recall” ever meeting the late sex offender Jeffrey Epstein and had “no knowledge of his crimes”.
Pakistan’s declaration of an “open war” with Afghanistan must be understood in the context of months of escalating violence, regional analysts have said, describing the latest developments as a significant shift in the nature of the conflict.
Iran’s Foreign Minister Abbas Araghchi on Friday urged Afghanistan and Pakistan to resolve their differences through dialogue, offering Tehran’s assistance to facilitate understanding between its eastern neighbours.
Tensions between the U.S. and Iran are escalating, with Washington ordering a significant military build-up in the region and multiple countries evacuating diplomatic staff amid fears of further instability.
The death toll from heavy rains and flooding in Brazil’s Minas Gerais state has risen to 46, authorities said, with 21 people still reported missing. The storms triggered landslides and widespread flooding, displacing thousands across Juiz de Fora and Uba.
The situation in Cuba was heating up and called for restraint following a deadly incident involving a Florida-registered speedboat off the coast of the Caribbean island, the Kremlin said on Thursday (26 February).
Syria’s economy is showing clear signs of recovery, with economic activity accelerating in recent months, the International Monetary Fund (IMF) said on Wednesday.
Pakistani air strikes hit a weapons depot on the western outskirts of Kabul overnight, triggering hours of secondary explosions that rattled homes across the Afghan capital and left residents fearing further violence.
Paramount Skydance emerged as the winner in a months-long battle to acquire Warner Bros Discovery after streaming giant Netflix on Thursday refused to raise its bid for the storied Hollywood studio.
Global debt surged to a record $348.3 trillion at the end of 2025, after nearly $29 trillion was added over the year, marking the fastest annual increase since the pandemic, according to the Institute of International Finance (IIF) report released on Wednesday.
Millions of Colombian roses have arrived in the United States just in time for Valentine’s Day, keeping the country on track as the world’s second-largest flower exporter. Between 15 January and 9 February, Colombia shipped roughly 65,000 tons of fresh-cut blooms.
Russia’s car market is continuing to receive tens of thousands of foreign-brand vehicles via China despite sanctions imposed after Moscow’s full-scale invasion of Ukraine in 2022, a journalistic investigation has found.
Türkiye’s national energy company, TPAO, has struck a new cooperation deal with U.S. energy giant Chevron, signing a memorandum of understanding to explore joint oil and gas exploration and production opportunities, the Turkish Energy and Natural Resources Ministry announced on Thursday.
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