Wall Street closed the trading week lower as investors digested fresh inflation data from the consumer price index report and the ongoing volatility in energy markets remained present with crude oil topping $100 amid US – Iran tensions. Inflation data showed that the consumer price index rose 0.3% month-over-month in February, accelerating from a 0.2% increase in January.
The oil and gas sector remained highly volatile as the ongoing US–Iran conflict kept the Strait of Hormuz at the center of market attention. Crude oil prices settled above $100 per barrel on Thursday, marking its first close at that level in roughly three and a half years as investors grew increasingly concerned about prolonged disruptions to global oil supplies.
The historic sell off in private credit continued to accelerate and has erased over $250 billion in market cap from major firms like Blackstone, KKR, and Blue Owl. Triggered by rising defaults, fears of AI disrupting portfolio companies (particularly software), and high redemption requests, investors are pulling money out of the highly unregulated part of the market.
For the week, the S&P lost 1.6%, while the Nasdaq dipped 1.3%, and the Dow fell 2.0%.
Future Wealth LLC
From early summer 2023, private credit stocks staged what may rank as the single biggest surge in the annals of financial services. As syndicated banks were restricted by tighter lending standards, private credit companies began dolling out funds to the companies shut out by the larger banks. With the prospect of higher return, investors poured in money into Blackstone, KKR, Blue Owl, Ares among others. Those stocks in turn notched phenomenal returns.
In September 2025, the first cracks emerged. There were bankruptcies of two companies fueled by loads of cheap debt – subprime auto lender Tricolor, and car parts maker First Brands. By early 2026, investors were getting nervous and began pulling out funds as markets began to get roiled. The private credit funds began to restrict withdrawals but the requests kept coming. In the meantime, their stocks began a historic sell off and each of these companies’ stocks are down 20 to 30% ytd.
The problem is that private credit and private equity companies get full value only by holding funds for a long period and offer the opportunity for investors to get outsize gains in 5-8 years. But, if swarms of investors who aren’t used to that tradeoff get scared by the AI news and sell en masse, the funds’ redemptions go up and their net asset values keep dropping, even if they don’t deserve to based on actual credit performance. These companies begin to restrict redemptions causing even more angst among investors.
This leaves us with a Prisoner’s dilemma – classic game theory scenario showing why two rational individuals might not cooperate, even when it’s in their best interest to do so. In the end, both investors and private credit companies are hoping that there will be a state of equilibrium also known as Nash equilibrium, named after the famous mathematician John Nash. A Nash equilibrium is a stable state where no individual can improve their outcome by unilaterally changing their strategy, assuming others keep theirs unchanged.
But when it comes to seeing one’s savings getting wiped out and the helplessness of being unable to withdraw those funds from these private credit companies, even John Nash would be upset.