Financial Market Jitters Escalate

Look beyond the headlines to better understand what is driving current market trends and how they could impact credit union investment portfolios.

Top-Level Takeaways

  • Financial market jitters increased in February amid heightened AI disruption fears and geopolitical tensions.
  • The U.S. and Israel launched a major military operation against Iran, sending oil prices and Treasury yields sharply higher.
  • Speculation that AI advancements posed a threat to traditional software companies sparked fears in both equities and private credit.

Financial market jitters escalated in February, even as economic data releases remained generally encouraging.

Two issues have primarily driven market anxiety: AI disruption fears and geopolitical tensions. The latter came to fruition this past weekend when American and Israeli forces launched a major joint military campaign against Iran, reportedly killing much of the nation’s senior leadership.

The initial market reaction included sharply higher oil and natural gas prices, a selloff in equities, and higher global bond yields. The latter was attributable to inflation concerns from higher energy prices. The Strait of Hormuz, just off the coast of Iran, was effectively shut down, cutting off the distribution channel for 20% of the world’s daily oil and light natural gas consumption. It will likely take some time for the dust to settle and markets to get a better idea of the ultimate objectives and potential timeline for U.S. military operations.

Before the U.S. military action on Iran, risk markets had been reeling from worries that accelerating AI development, particularly agentic systems, could cause significant disruption to many white-collar industries, most notably the software as a service (SaaS) sector. The S&P 500 posted its first negative monthly return since last April amid tariff volatility, and the tech-heavy Nasdaq composite index dropped 3.3% in February. The software and services sub-index of the S&P 500 produced a -10% return in February, illustrating the heightened SaaS concerns, and the index is down nearly 21% through the first two months of 2026.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley, Chief Investment Officer, ALM First
Jason Haley, Chief Investment Officer, ALM First

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.
March 6, 2026
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