Wall Street ended lower on Friday (Saturday AEDT) after a hotter-than-expected inflation report intensified concerns about persistent price pressures and added to growing unease over artificial intelligence-linked valuations and credit risks.
The Dow Jones Industrial Average fell 521.3 points or 1.1% to close at 48,977.9. The S&P 500 declined 30.0 points or 0.4% to 6,878.9, while the Nasdaq Composite lost 210.2 points or 0.9% to 22,668.2.
Both the S&P 500 and Nasdaq finished February in negative territory. The Nasdaq dropped more than 3% over the month, marking its weakest monthly performance since last March, while the S&P 500 slipped close to 1%.
The Dow, however, managed a modest monthly gain of about 0.2%.
Investor sentiment deteriorated after January’s producer price index (PPI) showed wholesale inflation rising 0.5% for the month, exceeding expectations of a 0.3% increase.
More troubling for markets, core PPI, which excludes food and energy, climbed 0.8%, well above forecasts of 0.3%. The data reinforced fears that inflation remains sticky, potentially complicating the Federal Reserve’s policy path.
According to the CME Group FedWatch Tool, financial markets are pricing in a 93.6% probability that the central bank will leave the federal funds target range unchanged at 3.50% to 3.75% at its March meeting.
Technology and AI-linked names extended recent losses as investors questioned whether the rapid pace of capital expenditure on artificial intelligence infrastructure is sustainable.
Chipmaker Nvidia fell 4.2%, building on a 5.5% slide in the previous session despite reporting strong quarterly earnings.
Market participants cited doubts over Nvidia’s deal with OpenAI, softening sentiment around the broader AI trade, and scepticism about whether hyperscalers can maintain lofty spending levels.
Software stocks also struggled. Salesforce and Microsoft dropped 2.4% and 2.2%, respectively, weighing on the Dow.
Cybersecurity firm Zscaler plunged 12.2% after reporting deferred revenue and billings that missed expectations in its fiscal second quarter, alongside a wider net loss.
AI infrastructure provider CoreWeave tumbled 18.5% on disappointing guidance, further fuelling concerns that the AI-driven rally may be losing momentum.
Financial stocks were also under pressure amid reports that several banks face potential losses linked to the collapse of UK mortgage provider Market Financial Solutions Ltd.
Jefferies fell 9.3%, while Apollo Global Management dropped 8.6%. Shares of Blue Owl Capital slid 6% as the firm continues to grapple with liquidity curbs and asset sales.
Among major lenders, Wells Fargo dipped 5.6%, and U.S.-listed shares of Barclays declined 4%.
In contrast, defensive sectors, including consumer staples, healthcare, and utilities, outperformed as investors rotated into perceived safe havens.
Elsewhere, streaming giant Netflix surged 13.8% after announcing it would exit the bidding process for Warner Bros. Discovery, whose shares fell 2.2%.
Paramount Skydance, viewed as the likely buyer of Warner Bros. Discovery, soared 20.8%.
PC maker Dell Technologies jumped 21.9% after projecting robust revenue growth from its AI-optimised servers business in fiscal 2027 and pledging to return additional capital to shareholders.
Meanwhile, fintech group Block, founded by Jack Dorsey, announced plans to lay off more than 4,000 employees, nearly half of its workforce, intensifying concerns about the broader economic impact of AI-driven restructuring.
On the bond markets, yields eased slightly, with the 10-year Treasury yield down around 1.5% at 3.949% and the two-year yield also 1.5% lower at 3.383%.
