Private Credit, AI Fears Hammer Stocks Through February
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- Apollo Global Management reduced a dividend at a private-credit fund and re-evaluated asset values over loan-portfolio challenges, sending shares down more than 8% on Friday, Feb. 27.
- Blue Owl Capital fell nearly 6% in the session after earlier in February limiting investor withdrawals and selling $1.4 billion in private-credit assets, including software loans.
- The KBW Nasdaq Bank Index dropped nearly 5% to cap the month, with investors reviving 'cockroaches' fears after the collapse of U.K.-based mortgage lender Market Financial Solutions.
- A hotter-than-expected January wholesale inflation report showed prices rose 0.5%, well above the 0.3% economists had forecast, reinforcing the risk-off mood before the opening bell.
- The AI 'fear trade' broadened beyond software to drag memory-chip names like Sandisk and Micron, while a viral Citrini Research Substack post envisioning 2028 white-collar job destruction was credited with inspiring the worst stock selloff in three weeks.
- Despite the dour sentiment, the S&P 500 finished Friday only roughly 2 percentage points shy of record territory — a contradiction one portfolio manager dubbed a 'shoot first, ask questions later' market.
Why it matters: February's nearly 5% drop in the KBW Bank Index, $1.4 billion in forced private-credit asset sales at Blue Owl, and 8%+ drop in Apollo shares show the 'cockroaches' fear is no longer theoretical contagion talk. The contradiction is telling: even Nvidia's blockbuster earnings weren't enough to offset deepening investor anxiety over whether massive AI infrastructure spending will ever justify its cost.
