S&P 500 Index drops over 0.6%, private credit risk heats up along with a strong PPI, putting multiple pressures on the US stock market

February 28 News: The U.S. stock market continued to weaken on Friday, with the S&P 500 falling more than 0.6%, extending the decline from the previous day. The index dropped back to 6,857 points, significantly below the year’s high of 7,010 points. The Nasdaq 100, Dow Jones Industrial Average, and Russell 2000 all declined by over 1%, indicating a notable decrease in market risk appetite.

This round of correction is closely related to rising risks in the private credit industry. The approximately $1.8 trillion private credit market has recently experienced increased volatility. Blue Owl, with over $300 billion in assets under management, drew attention first as it sold part of its private credit portfolio and announced restrictions on investor redemptions, sparking liquidity concerns. Subsequently, funds under Apollo Global Management chose to cut dividends to conserve cash amid rising default rates and potential pressures.

As a result, Blue Owl’s stock price dropped over 4% in a single day, with a three-month decline of 25%. Apollo Global Management fell more than 7%, Ares Management declined over 6%, and Blackstone and KKR stocks also came under pressure. The continued decline in private credit and alternative assets has heightened concerns about credit risk spillovers.

Geopolitical factors also impacted market sentiment. Escalating tensions in Israel and strained relations between the U.S. and Iran increased risk aversion, with the airline sector among the hardest hit. United Airlines, Delta Air Lines, and American Airlines were among the weaker performers within the S&P 500.

On the macroeconomic front, the latest U.S. January Producer Price Index (PPI) showed a year-over-year increase of 2.9%, with core PPI rising 3.6%, both surpassing market expectations. The persistent inflation has reinforced market expectations that the Federal Reserve may delay interest rate cuts. Investors are closely watching Fed Chair Jerome Powell’s policy signals in upcoming meetings.

Against the backdrop of rising private credit risks, geopolitical tensions, and inflation pressures, the S&P 500 is entering a critical phase. Investors are paying close attention to liquidity changes and corporate credit conditions to gauge the future performance of U.S. stocks.