US stocks experienced significant volatility on Friday, as all three major indexes closed the month in the red, indicating increasing unease in markets. The Dow Jones Industrial Average ended up 601 points, or 1.39%, while the S&P 500 rose 1.59% and the Nasdaq Composite gained 1.63%. However, despite this brief recovery, February saw a dismal performance, with the benchmark index sliding 1% this week.
The reasons behind the market’s decline are multifaceted, including concerns over Artificial Intelligence (AI) spending, economic growth, and inflation risk. According to Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report, uncertainty about AI spending is driving many tech stocks, such as Nvidia, Tesla, and Palantir, to underperform.
The Nasdaq’s decline can be attributed to a range of factors, including decelerating growth, inflation risk, and tough outlooks for its stocks compared to other assets. Experts warn that increased risk aversion may lead investors to shift away from the more volatile Nasdaq index in favor of more stable investment options.
Meanwhile, new economic data released on Friday revealed cracks in the economy, including a slowdown in consumer spending. The Atlanta Federal Reserve Bank’s estimates for economic growth in the first quarter of 2025 were revised down to project a decline of 1.5%, rather than growth of 2.3%.
While some experts remain cautious about the market due to high valuations, others believe the bull market is intact driven by healthy economic and profit growth. UBS strategists advised preparing for volatility ahead, suggesting that short-term hedges may be worth considering.
Source: https://edition.cnn.com/2025/02/28/investing/us-stocks-nasdaq/index.html