The NASDAQ Composite wrapped up a turbulent final week of February 2026, surrendering hard-fought gains to close at 22,668.21. While the week began with optimism surrounding big-tech earnings, sentiment soured sharply by Friday. A hotter-than-expected Producer Price Index (PPI) report forced investors to recalibrate their Federal Reserve rate cut expectations, reminding the market that the battle against inflation is not yet fully won.

The Mid-Week Reversal

The price action shown in the 5-day chart tells a clear story of a “bull trap.” Early in the week, buyers pushed the index aggressively higher, culminating in a peak of 23,133.25 on February 25 at 12:50 PM. This breakout above the psychological 23,000 barrier initially looked promising, driven by momentum in the semiconductor and AI sectors. However, the index failed to sustain these levels. The inability to hold above this key resistance zone triggered a wave of profit-taking that accelerated into the weekend, leaving the index near its weekly lows.

Macro Headwinds Return

Friday’s sell-off was not merely technical; it was fundamentally driven. The release of fresh economic data revealed that wholesale prices remain sticky, challenging the “soft landing” narrative that has supported equities for much of the year. With the 10-year Treasury yield ticking higher in response, the discount rate for growth stocks has become less attractive. This macro shift explains the sudden liquidity drain from the NASDAQ, as capital rotated out of high-valuation growth names and into safer, yield-bearing assets.

Volume and Volatility

Market breadth weakened significantly during the pullback. The volume on the decline was substantial, with over 8.2 billion shares traded, indicating institutional distribution rather than just retail skittishness. The sharp drop of -210.17 points (-0.92%) on the final trading day underscores the fragility of the current trend. Investors are now scrutinizing the 52-week range of 14,784.03 – 24,019.99; while the index remains historically high, the momentum indicators are flashing warning signs of exhaustion.

As we enter March, traders should monitor the 22,500 support level closely. A breach below this floor could open the door to a deeper correction toward the 50-day moving average. Conversely, bulls will need to see a decisive daily close above 23,150 to regain control. With the earnings season winding down, the market’s focus will likely shift entirely to macro data and the Federal Reserve’s upcoming commentary. Caution is warranted in the near term.