White House & Policy - February 27, 2026 (EOD)

 ## Policy Recap The administration's policy focus today centered on escalating geopolitical tensions and regulatory actions impacting technology and financial sectors. Notably, the president issued a directive for federal agencies to immediately cease using AI technology developed by Anthropic, a move that signals heightened scrutiny over AI applications within government operations. This executive action reflects growing concerns about national security and data privacy related to AI, which has reverberated across the tech industry. On the legislative front, Congress remains embroiled in debates over funding allocations for the Department of Homeland Security amid a looming partial government shutdown. Democrats offered a new funding proposal, but uncertainty persists, contributing to market volatility. Additionally, the administration’s ongoing negotiations with Iran stalled, with the president indicating a willingness to use force if necessary, intensifying geopolitical risk perceptions. This rhetoric has influenced energy markets and defense-related sectors, as investors weigh the potential for conflict escalation. Throughout the trading session, markets digested these policy developments with caution. The AI-related executive order triggered sector-specific selloffs in technology stocks, while geopolitical tensions boosted energy prices and safe-haven assets. Congressional gridlock on spending bills added to the risk-off sentiment, particularly impacting financials and small-cap stocks sensitive to economic policy uncertainty. ## Market Reaction The major U.S. indices closed lower, reflecting the market’s cautious stance amid policy uncertainties. The S&P 500 (SPY) declined 0.72% to $684.32, while the Nasdaq 100 (QQQ) fell 0.61% to $605.54. The Dow Jones Industrial Average (DIA) underperformed with a 1.25% drop to $488.68, and the Russell 2000 (IWM) was the weakest, down 2.12% to $260.36, highlighting small-cap vulnerability amid fiscal and geopolitical risks. Bond markets showed a modest flight to safety, with the 20+ Year Treasury ETF (TLT) rising 0.65% to $90.86, indicating increased demand for long-duration government debt. The U.S. dollar index (UUP) was relatively flat, down just 0.07%, as geopolitical tensions and inflation concerns balanced out. Intraday volatility was pronounced around the announcement of the AI technology ban on Anthropic, with technology shares initially selling off sharply before some recovery attempts. Geopolitical developments regarding Iran talks and the president’s comments on potential military action drove crude oil prices higher, with the US Oil Fund (USO) gaining 2.76% to $81.97, reinforcing risk-off dynamics in equities but risk-on in energy commodities. Overall, risk sentiment shifted toward caution, with investors favoring defensive and commodity-related assets while reducing exposure to growth and financial sectors amid policy uncertainties. ## Sector Scorecard - **Financials (XLF):** The sector declined 2.34% to $51.27, pressured by congressional funding uncertainty and broader risk-off sentiment. Bank stocks such as Bank of America (**$BAC** -4.79%) and Citigroup (**$C** -5.16%) were notably weak, reflecting concerns over credit conditions and regulatory risks. - **Energy (XLE):** Energy was a standout performer, rising 1.73% to $56.00. The surge was driven by heightened geopolitical risk related to Iran tensions and the prospect of supply disruptions. Key names like ExxonMobil (**$XOM** +2.73%) and Hess (**$HES** +8.65%) benefited from the risk premium on oil prices. - **Industrials (XLI):** The sector edged up 0.25% to $177.14, supported by defense contractors and infrastructure-related firms amid geopolitical concerns. Companies like Raytheon Technologies (**$RTX** +2.55%) and General Dynamics (**$GD** +1.80%) saw gains as defense spending prospects improved. - **Technology (XLK):** Technology stocks fell 1.83% to $138.43, dragged down by the executive order banning Anthropic AI technology in federal agencies and ongoing AI-related regulatory scrutiny. Major tech companies including Apple (**$AAPL** -3.41%) and Nvidia (**$NVDA** -3.66%) declined, reflecting investor caution on AI policy risks. - **Healthcare (XLV):** Healthcare outperformed, rising 1.76% to $160.19, as investors sought defensive exposure. Pharmaceutical and biotech companies like Merck (**$MRK** +3.79%) and Johnson & Johnson (**$JNJ** +2.04%) benefited from the sector’s safe-haven appeal amid market volatility. ## Winners & Losers ### Today's Policy Winners **$AAOI** +63.21% - Surged on strong Q4 earnings and guidance, benefiting from increased demand in AI data center infrastructure despite broader tech weakness. **$DEC** +4.08% - Gained on positive energy sector sentiment amid geopolitical tensions boosting oil and gas prices. **$HES** +8.65% - Benefited from rising oil prices linked to Iran geopolitical risk and potential supply constraints. **$RTX** +2.55% - Defense contractor rallied on expectations of increased government spending amid heightened geopolitical tensions. **$JNJ** +2.04% - Healthcare sector strength amid market uncertainty drove gains in defensive pharmaceutical stocks. ### Today's Policy Losers **$AAPL** -3.41% - Declined on concerns over AI regulatory risks following the administration’s ban on Anthropic technology in federal agencies. **$BAC** -4.79% - Bank of America fell amid congressional funding uncertainty and broader financial sector pressure. **$C** -5.16% - Citigroup declined on similar financial sector headwinds and risk-off sentiment. **$SOFI** -7.22% - Despite beating earnings, the fintech stock was hit by broader financial sector weakness and AI-related market jitters. **$RUN** -35.41% - Sunrun plunged due to sector-specific headwinds and cautious investor sentiment on clean energy policy outlook. ## Trade & Tariff Update No significant new trade or tariff developments were reported today. However, ongoing uncertainty around tariffs continues to weigh on certain industrial and manufacturing stocks, with some companies like Calumet (**$CLMT** -10.79%) and PACS Group (**$PACS** -12.38%) reflecting residual tariff-related concerns in their earnings outlooks and stock performance. ## Tomorrow's Policy Calendar - Congressional committee votes expected on DHS funding proposals amid partial government shutdown risk. - Treasury and DOJ hearings on cryptocurrency regulation and illicit finance controls, focusing on Binance. - Pending executive order on AI regulation and data privacy expected to be detailed further. - Senate Democrats to press Treasury and DOJ on enforcement actions related to cryptocurrency exchanges. - Key risk factors include potential escalation in U.S.-Iran tensions and progress in government funding negotiations. --- This session underscored the market’s sensitivity to U.S. government policy actions, particularly in AI regulation, geopolitical risk, and fiscal uncertainty. Investors remain cautious, favoring defensive sectors and commodities while technology and financials face headwinds from regulatory and legislative developments.