Inflation Surprise Pressures Major Indexes
U.S. equities retreated Friday after fresh wholesale inflation data exceeded expectations, reinforcing concerns that price pressures remain entrenched.
The Dow Jones Industrial Average fell 521.28 points, or 1.05%, closing at 48,977.92. The S&P 500 declined 0.43% to 6,878.88, while the Nasdaq Composite dropped 0.92% to 22,668.21.
February’s Producer Price Index increased 0.5% month over month, exceeding forecasts of 0.3%. Core PPI, excluding food and energy, advanced 0.8%, well above the expected 0.3% gain.
The data added to an already fragile backdrop marked by concerns over artificial intelligence spending, tariff-related cost pressures and stress in segments of private credit.
AI and Tech Weakness Extend Losses
The S&P 500 and Nasdaq both ended February in negative territory as investors reassessed AI-linked valuations and sector concentration risks.
Shares of Block weighed on sentiment after the company announced plans to reduce its workforce by more than 4,000 employees, nearly half its staff. The move intensified debate about AI-driven labor disruption.
Nvidia dropped another 4% following Thursday’s 5% decline, despite strong quarterly results. Investors cited uncertainty around its partnership exposure to OpenAI and broader skepticism about hyperscaler capital spending sustainability.
Software and cybersecurity names struggled. Salesforce and Microsoft declined over 2%, while Zscaler plunged 12% after missing deferred revenue and billings expectations. CoreWeave slid 18% on weak guidance.
The iShares Expanded Tech-Software ETF (IGV) is now down nearly 10% for the month and approximately 23% year to date.
Private Credit and Economic Concerns
Companies tied to private credit faced renewed selling pressure following the collapse of UK lender Market Financial Solutions.
Apollo and Jefferies fell more than 8% and 9%, respectively. Blue Owl declined about 6% amid lingering liquidity concerns.
Stephen Kolano, chief investment officer at Integrated Partners, described the inflation reading as services driven, suggesting that companies may be passing tariff costs through to consumers.
He noted the Federal Reserve faces a difficult policy choice between supporting growth or containing inflation. Investors are also watching the labor market closely. While recent payroll data showed resilience, layoffs reported by Challenger, Gray & Christmas reached their highest January level since the global financial crisis.
For the month, the Nasdaq lost more than 3%, its weakest showing since last March. The S&P 500 fell nearly 1% in February, while the Dow managed a modest gain of about 0.2%.
