Dow Jones free fall today: Why did the Dow crash 800 points — inflation shock, Iran war fear and AI disruption slam US stock market on the last February trading day

Dow crash today: The Dow Jones Industrial Average closed at 48,746.58, down 752.62 points (-1.52%), marking one of the sharpest single-day declines of February 2026. The selloff was not random. It was data-driven and fear-driven. Hotter-than-expected US producer inflation, rising US-Iran war tensions, AI sector volatility, and a surge in oil prices combined to pressure equities across the board.

The S&P 500 fell to 6,855.04 (-0.78%), while the Nasdaq Composite slid to 22,654.80 (-0.98%), extending its monthly decline to roughly 2.5%. Investors reacted immediately after the latest Producer Price Index (PPI) data showed inflation running hotter than forecasts. At the same time, oil futures jumped nearly 3% after US-Iran nuclear talks collapsed in Geneva, intensifying geopolitical risk.

This Dow Jones crash is not about one headline. It reflects a collision of inflation pressure, AI sector uncertainty, rising Treasury yields volatility, and growing Middle East conflict risk.

Why did the Dow crash 800 points: US inflation data trigger the Dow Jones selloff

The biggest catalyst behind today’s Dow Jones drop was fresh inflation data from the Bureau of Labor Statistics. January PPI rose 0.5% month over month, above expectations of 0.3%. Core PPI surged 0.8%, more than double forecasts.

Year over year, headline producer inflation came in at 2.9%, versus 2.6% expected. Core PPI climbed 3.6%, compared with the 3% consensus.

Services inflation drove the spike. Service prices jumped 0.8%, the largest gain since July 2025. Margins in professional and commercial equipment wholesaling soared 14.4%, contributing nearly 20% of the services increase.
Hotter inflation increases the risk that the Federal Reserve keeps interest rates higher for longer. Higher rates pressure stock valuations, especially growth and technology shares. That is why the Dow, S&P 500, and Nasdaq all turned sharply lower immediately after the release.

Why are US-Iran war fears adding to stock market volatility?

Markets are also reacting to rising geopolitical risk in the Middle East. The US 5th Fleet presence in Bahrain has reportedly been reduced to mission-critical staff. Satellite imagery indicates US warships have repositioned from Bahraini ports.

The collapse of the third round of nuclear talks in Geneva has escalated tensions. Meanwhile, the U.S. Department of State authorized the departure of non-emergency personnel from Israel.

Oil prices jumped nearly 3% on fears of supply disruption. Rising oil increases inflation risk. That creates a double shock for equities. Higher energy costs hit corporate margins. At the same time, inflation pressure limits the Federal Reserve’s flexibility.

Markets hate uncertainty. The possibility of a US strike on Iranian nuclear facilities like Fordow or Natanz adds a risk premium to global assets.

Is the AI bubble cracking again after Nvidia’s reaction?

Artificial intelligence stocks remain volatile. Shares of NVIDIA Corporation fell despite blockbuster earnings, dragging the Nasdaq lower.

Investors appear concerned about sustainability of AI valuations. Massive capital commitments are also raising eyebrows. Amazon said it will invest $50 billion into OpenAI. Nvidia and SoftBank Group reportedly committed $30 billion each in the funding round.

While AI remains a long-term growth story, near-term valuation pressure is real. High interest rates reduce the present value of future earnings. That makes richly priced AI stocks more vulnerable during inflation shocks.

A new and unexpected fault line opened Friday in the AI sector. Anthropic CEO Dario Amodei issued a public statement refusing to comply with the Department of Defense’s demand for unrestricted use of its Claude AI models. The Pentagon threatened to invoke the Defense Production Act to force compliance — or label Anthropic a supply chain threat and pressure other vendors to cut ties with the company. Amodei held firm. “We cannot in good conscience accede to their request,” he said.

Anthropic’s specific objections center on two uses: mass surveillance of American citizens and fully autonomous weapons. The company says it already works within classified government networks and supports chip export controls targeting China. But it will not cross those two lines. This standoff introduces regulatory and operational risk into the entire AI sector.

If the Pentagon pursues the supply chain threat route, companies across defense technology could face pressure to choose sides. That uncertainty is exactly what stock markets hate.

Why did oil surge while Treasury yields fell?

Oil futures rallied about 3% after nuclear talks ended without a deal. Supply risk is back on traders’ radar.

At the same time, Treasury note prices gained, pushing the 10-year yield below 4%. This move reflects a classic risk-off trade. Investors rotated into government bonds for safety.

However, the inflation data complicates the bond narrative. Normally, hot PPI pushes yields higher. But geopolitical stress created safe-haven demand. This tug-of-war explains the mixed signal between falling yields and falling stocks.

What happened across major indexes today?

The Dow Jones Industrial Average led losses, down nearly 800 points intraday before settling at -752 points.

The S&P 500 dropped 0.78%, pressured by industrials and technology stocks.

The Nasdaq Composite fell 0.98%, extending February’s decline to around 2.5%.

Not every stock fell on Friday. Netflix gained 7.68%, rising $6.50 to $91.09 after walking away from its pursuit of Warner Bros. Discovery. That retreat cleared the path for Paramount Skydance — backed by Oracle — to win the bidding war for the Hollywood studio.

Paramount Skydance shares rallied on the news. Warner Bros. Discovery fell 1.86% to $28.27 despite being acquired, as investors assessed deal terms and integration risk. Netflix’s exit is being read as strategic discipline — the streaming giant choosing content investment and margin expansion over expensive, complex M&A. In a market punishing uncertainty, that decision earned investor approval fast.

The Dow remains up about 1% for the month. But momentum has clearly weakened into month-end.

Why did the Dow crash 800 points: recession risk or temporary pullback?

Right now, this does not look like a structural financial crisis. Instead, it reflects layered risks hitting simultaneously:

Inflation surprise.
AI valuation reset.
Geopolitical escalation.
Energy price shock.

If inflation continues to run hot, the Federal Reserve may delay rate cuts. That could extend volatility into March. If US-Iran tensions escalate further, oil could spike again, adding to inflation concerns.

However, corporate earnings remain broadly stable. Labor markets have not collapsed. And bond markets are not signaling systemic stress.