U.S. stocks slid Friday after a hotter-than-expected inflation reading reignited worries that price pressures may stay sticky, keeping rate-cut hopes on a tighter leash. The Dow Jones Industrial Average fell 620 points, or 1.3%, while the S&P 500 dropped 0.7% and the Nasdaq Composite lost 0.9%.
Hot PPI jolts markets
The trigger was January’s Producer Price Index, a measure of wholesale inflation. Headline PPI rose 0.5% month over month versus expectations of 0.3%. The bigger surprise was core PPI, which excludes food and energy, jumping 0.8% compared with forecasts near 0.3%. The data added fresh pressure to risk assets as investors weighed what firmer inflation could mean for the path of monetary policy.
February pain deepens as AI worries linger
All three major benchmarks stayed in the red for February amid a growing list of concerns — including the impact of artificial intelligence on certain industries and the broader economy. Those fears intensified after Block said it plans to lay off more than 4,000 employees, roughly half of its workforce, a move that rattled cyclical and financially sensitive corners of the market.
Big tech and software drag on the Dow
Several heavyweight technology names extended losses into the session. Salesforce fell more than 3% and Microsoft slipped over 1%, adding to downside pressure on the Dow. Cybersecurity firm Zscaler sank 15% after deferred revenue and billings in its fiscal second quarter missed expectations, while CoreWeave dropped 18% following disappointing guidance.
Nvidia extends post-earnings slide
Nvidia fell another 2%, extending its post-earnings retreat after the stock shed more than 5% the prior trading day. Even with investors broadly positive on the company’s results and product cycle, sentiment around the AI trade has been wobbling, with renewed questions about whether hyperscalers’ AI capital spending can remain at today’s lofty levels.
Tech’s rough month shows up in the numbers
The Nasdaq was on pace for a decline of more than 3% in February, marking its weakest monthly performance since last March. The iShares Expanded Tech-Software ETF (IGV) was down about 10% for the month, with losses sitting around 23% year to date, underscoring how sharply software has been repriced during this pullback.
Volatility rises as investors turn cautious
Risk-off positioning was also visible in volatility markets, with the CBOE Volatility Index (VIX) moving back above 20 and trading around 21. In rates, the 10-year Treasury yield dipped below 4%, hovering near 3.98%, as investors balanced inflation concerns with pockets of defensive demand.
Where the month stands
By late morning trading, the S&P 500 was tracking a February decline of more than 1%, while the Dow was on pace for a drop of roughly 0.3%. The session’s tone reflected a market that has been quick to sell on uncertainty, with inflation surprises adding fuel to an already jittery environment.
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