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AI Fears Trigger Market Sell-off
28 Feb
Summary
- S&P 500 and Nasdaq faced their worst month since spring last year.
- Bank and tech shares declined significantly due to AI worries.
- Gold futures rose 11% and Treasury yields dropped amid market jitters.
February witnessed significant market volatility, with the S&P 500 and Nasdaq experiencing their steepest monthly declines since the previous spring. Investors expressed growing apprehension regarding artificial intelligence, leading to substantial sell-offs in software, tech, and financial firms. These sectors are either heavily invested in or potentially disrupted by AI's rapid advancement.
Concerns intensified as AI began to be perceived as a threat to existing corporate business models, impacting industries from wealth management to trucking. This shift in perception contributed to a sell-off described as 'sell first, ask questions later.' Despite strong earnings from key players like Nvidia, market jitters persisted.
In response to AI-driven anxieties, investors sought refuge in traditional safe-haven assets. Gold futures saw a notable increase of approximately 11% in February, marking their largest monthly rise since January 2012. Concurrently, benchmark 10-year Treasury yields experienced their most significant one-month decline in a year, falling to 3.961% by Friday.
While U.S. markets grappled with tech fears, foreign markets showed robust performance. Japan's Nikkei 225 climbed 10% and South Korea's Kospi surged approximately 20% during the same month. This contrast highlights the varied impact of economic and technological shifts across different global markets.
