Dow Withers on Hot Inflation Report

Stocks dropped on Friday after the latest producer price index data came in much hotter than expected, adding sticky inflation to a list of concerns that has caused market turbulence this month.

The Dow Jones Industrial Average cratered 668.81 points, or 1.4%, to 49,830.39.

The much broader index lost 49 points to 6,859.86.

The NASDAQ dumped 237.04 points, or 1%, to 22,640.08.

All three benchmarks are in the red for February amid mounting concerns about the impact of artificial intelligence on specific industries and the overall economy.

Those fears were exacerbated after Jack Dorsey’s fintech company Block said it’s laying off more than 4,000 employees, or nearly half of its workforce. Stocks in the financial sector and other areas of the market tied to the economic cycle pulled back Friday.

Notable software names also suffered losses Friday as they close out a terrible month on the threat of AI disruption to the industry.

Salesforce tumbled more than 4%, and Microsoft lost about 2%, weighing on Dow futures.

Cybersecurity company Zscaler shed 11% after deferred revenue and billings in the fiscal second quarter missed expectations. CoreWeave fell 16% on disappointing guidance.

Nvidia extended its post-earnings slide with a 2% fall Friday. In the prior trading day, the stock shed more than 5%, which came to a surprise to many investors, who remain bullish on the chipmaker given its blowout fourth-quarter results and upcoming product cycle.

Market participants attributed the decline in shares to doubts around Nvidia’s deal with OpenAI, weak sentiment over the artificial intelligence trade and concerns about whether hyperscalers’ lofty AI capital expenditures are sustainable.

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anuary’s producer price index, which is a measure of wholesale inflation, showed a 0.5% increase for the month. Economists polled by Dow Jones saw the headline reading coming in at 0.3%.

Perhaps more concerning is that the core PPI reading, which excludes food and energy prices, recorded a 0.8% gain, much more than the 0.3% rise economists anticipated.

Prices for the 10-year Treasury gained, lowering yields to 3.98% from Thursday’s 4.01%. Treasury prices and yields move in opposite directions.

Oil prices strengthened $1.47 to $66.68 U.S. a barrel.

Gold prices regained $56.80 to $5,244.20 U.S. an ounce.

Dow Withers on Hot Inflation Report