The S&P 500 and Nasdaq closed sharply lower on Thursday, February 26, weighed down by a disappointing outlook from chipmaker Nvidia and concerns about a slowing U.S. economy.
The S&P 500 fell 1.59% to 5,861.57 points, while the Nasdaq tumbled 2.78% to 18,544.42 points. The Dow Jones Industrial Average declined 0.45% to 43,239.50 points.
Nvidia (NVDA.O) shares plummeted 8.5% after the company’s quarterly report, which featured a weaker-than-expected gross margin forecast despite an upbeat revenue outlook. This drop erased $274 billion in market value, dampening the recent AI rally on Wall Street.
Other chipmakers also felt the impact. Broadcom (AVGO.O) dropped more than 7%, and Advanced Micro Devices (AMD.O) lost 5%, pulling the Philadelphia chip index (.SOX) down 6.1%. The market’s reaction was partly attributed to the launch of low-cost artificial intelligence models from China’s DeepSeek in January and concerns about overcapacity in the AI sector.
Scott Welch, chief investment officer at Certuity, commented on the situation, stating, “Nvidia’s earnings were good, but not like the blockbuster earnings that they’ve been delivering for a while.”
The Nasdaq’s percentage drop was its steepest one-day decline in a month.
Volume on U.S. exchanges was heavy, with 15.8 billion shares traded, surpassing the average of 15.3 billion shares over the previous 20 sessions. The Cboe Volatility Index (.VIX), often referred to as Wall Street’s “fear gauge,” closed at its highest level since December 19.
While technology stocks faltered, some sectors saw gains. The S&P energy index (.SPNY) rose 0.5%, aligning with a rise in crude prices following the cancellation of Chevron’s license to operate in Venezuela.
Adding to investor unease, data showed jobless claims rose more than anticipated, and another report confirmed a slowdown in economic growth during the fourth quarter.
“We’re now seeing inflation fears give way to growth fears, and that, in turn, is causing stocks to go, at best, sideways, and potentially even down,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia.
On the trade front, there were further developments. President Trump proposed a 25% reciprocal tariff on European cars and other goods, and confirmed that tariffs on Mexico and Canada would take effect the following Tuesday.
Investors are now focusing on the monthly Personal Consumption Expenditure (PCE) data, the Federal Reserve’s preferred inflation gauge, which is due on Friday. Market participants anticipate the Fed will cut borrowing costs by at least 50 basis points by December, according to data from LSEG.
In company-specific news, Salesforce (CRM.N) shares fell 4% due to a lower-than-expected revenue forecast for fiscal year 2026. Conversely, Snowflake (SNOW.N) surged 4.5% after its fiscal 2026 product revenue forecast exceeded estimates. Viatris (VTRS.O) plummeted 15% following downbeat annual results, while Warner Bros Discovery (WBD.O) jumped 4.8% after announcing expectations to double streaming profits this year.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.7-to-one ratio. The S&P 500 posted 20 new highs and 13 new lows; the Nasdaq recorded 42 new highs and 269 new lows.
Reporting by Sukriti Gupta, Medha Singh and Johann M Cherian in Bengaluru, and by Noel Randewich in San Francisco; Editing by Devika Syamnath and Rod Nickel
