The Dow slumped 521.28 points (1.1%) to 48,977.92, the Nasdaq slid 210.17 points (0.9%) to 22,688.21 and the S&P 500 fell 29.98 points (0.4%) to 6,878.88.
U.S. stocks ended the week lower, with the Dow falling 1.3%, the Nasdaq sliding 1% and the S&P 500 down 0.4%, as weaker sentiment followed a hotter-than-expected inflation reading. The Labor Department reported producer prices rose 0.5% in January after a revised 0.4% gain in December, exceeding expectations for a 0.3% increase. On an annual basis, producer price growth eased slightly to 2.9%, compared with 3% the previous month.
Market analysts noted that concerns about inflation resurfaced after weeks dominated by discussions over AI-related disruptions in the labor market. Chris Zaccarelli of Northlight Asset Management said the stronger inflation data could prompt the Federal Reserve to delay rate cuts until the second half of the year. Growing fears of stagflation were compounded by AI-driven job cuts, as Block (XYZ) announced plans to halve its workforce, with CFO Amrita Ahuja citing a push toward smaller, AI-enabled teams to boost efficiency.
Airline stocks substantially moved downwards, resulting in a 5.0% nosedive by the NSYE Arca Airline Index. The index ended the session at its lowest closing level in almost a month. Financial stocks were significantly weak , with the KBW Bank Index and the NYSE Arca Broker/Dealer Index plunging by 4.9% and 3%. Software and semiconductor stocks also saw notable weakness while pharmaceutical, retail and telecom stocks showed strong moves to the upside.
Asia-Pacific stocks moved mostly higher. Japan's Nikkei 225 Index edged up by 0.2%, while China's Shanghai Composite Index rose by 0.4% and Hong Kong's Hang Seng Index jumped by 1%. The major European markets turned in a mixed performance on the day while the U.K.'s FTSE 100 Index climbed by 0.6%, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.5%.
In the bond market, treasuries moved sharply higher, extending the upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 5.5 bps to a four-month closing low of 3.96%.