Friday's session on Wall Street ended with declines in the main indexes. Shares fell after the latest data on the producer price index, a key measure of inflation, came in stronger than expected.
The Dow Jones Industrial dropped 1.05% at the close. and amounted to 48,977.92 points.
The S&P 500 fell by 0.43% at the end of the day. and amounted to 6,878.88 points.
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The Nasdaq Composite fell 0.92%. up to 22,668.21 points
The Russell 2000 mid-cap index is down 1.81%. and amounts to 2,628.9 points.
The VIX index increases by 6.92%. up to 19.92 points
The Nasdaq fell by more than 3% in February. This is the worst month for this index since March last year. The S&P 500 fell by more than 1% in February, and the Dow Jones lost 0.2%. All three are in the red in February due to growing concerns about the impact of artificial intelligence on individual industries and the overall economy.
These concerns intensified after Jack Dorsey's fintech company, Block, announced the layoff of more than 4,000 people. employees – almost half of its workforce.
Shares of companies in the financial sector and other market sectors linked to the economic cycle also fell on Friday.
Shares of companies linked to private credit came under pressure again as investors expected they could be hit by the collapse of British mortgage provider Market Financial Solutions. Apollo and Jefferies lost 8 and 10 percent, respectively.
Well-known software companies also suffered losses on Friday, ending a disastrous month. Salesforce fell 3%, while Microsoft lost 2%.
Cybersecurity company Zscaler lost 13%. after deferred revenues and invoices in the second quarter of the fiscal year fell short of expectations.
CoreWeave fell 21%. as a result of disappointing forecasts.
Nvidia continued its decline after announcing its earnings results on Wednesday, dropping 3% on Friday. Shares fell more than 5% on Thursday, surprising many investors who remain enthusiastic about the chipmaker given its stellar fourth-quarter results and upcoming production run.
Market participants attributed the stock's decline to doubts about Nvidia's deal with OpenAI, weak sentiment in the AI industry and skepticism about whether hyperscale companies' high investment in AI is sustainable.
Fueling the pessimistic sentiment, the January Producer Price Index (PPI) – a measure of wholesale inflation – rose 0.5%. on a monthly basis. Economists polled by Dow Jones predicted the headline reading would be 0.3%. Perhaps more worrying is the fact that the core PPI reading, which excludes food and energy prices, rose 0.8%, well above the 0.3% rise economists had predicted.
Stephen Kolano, chief investment officer at Integrated Partners, sees the PPI report as an additional headwind for investors, on top of already existing concerns about not only AI capital spending and the risk of its disruption across industries, but also other factors such as pressures in the private lending market. Stressing that the inflation reading appears to be more dependent on services, he opined that this is a signal that companies are likely starting to pass on tariff costs to end consumers to maintain their margins.
“The inflation problem is not yet solved,” Kolano said, adding that this creates a dilemma for the Federal Reserve, which must decide whether to lower interest rates to stimulate economic growth or keep them at their current levels to continue fighting inflation.
“It simply creates uncertainty about the direction economic policy will take in the rest of the year,” he added.
In his opinion, another cause for concern is the labor market. While last month's job growth was much better than expected, the chief investment officer said he was unsure whether the job market was stabilizing given the rising number of layoffs.
Challenger, Gray & Christmas reported earlier this month that the number of layoffs in January had reached the highest level since the global financial crisis.
“I don't see a clear signal that the unemployment rate will not increase,” Kolano said.
On the oil market, WTI contracts for March increase by 3.13%. to USD 67.26 per barrel, and April Brent futures increase by 2.50%. up to USD 72.52/b. (PAP Business)
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