Global Markets Drop Amid Rising Credit Risks, Geopolitical Tensions, and AI-Driven Uncertainty

Global stock markets posted significant losses on February 27, 2026, with the S&P 500 closing down 2.1% at 5,387.41, marking its worst single-day performance since September 2024. The Nasdaq Composite dropped 3.4% to 17,218.63, driven by steep declines in technology and growth stocks. The Dow Jones Industrial Average declined 1.7% to 39,450.85, reflecting broad-based selloffs across industrial and financial sectors. The downturn was fueled by multiple interconnected risks. Credit spreads widened, with the ICE BofA U.S. High Yield Index rising 18 basis points to 4.85%, signaling increased concerns over corporate default risk. A surge in 10-year Treasury yields to 4.62% further pressured valuation metrics, particularly for high-growth equities. Meanwhile, renewed military escalation in Eastern Europe and heightened instability in the Middle East triggered safe-haven demand for government bonds and gold, with the yield on 10-year U.S. Treasuries rising 12 basis points in a single session. Investors also reacted nervously to reports of large-scale AI infrastructure investments by major tech firms, including a $12 billion commitment by a leading semiconductor manufacturer to expand data center capacity. While long-term growth prospects remain intact, the short-term capital outflow and rising energy demands from AI operations raised concerns about inflationary pressures and supply chain strain. The broader impact was felt across asset classes. European indices followed suit, with the FTSE 100 down 1.9% and the DAX slipping 2.3%. Emerging markets were hit harder, as the MSCI Emerging Markets Index dropped 3.1%. Currency markets reflected risk aversion, with the U.S. dollar strengthening 1.4% against a basket of major peers.