U.S. Stocks Drop Sharply After Higher-Than-Expected January Producer Prices
U.S. equities fell sharply on Friday following the release of January’s Producer Price Index (PPI), which came in well above expectations. The strong print intensified concerns over persistent inflation and suggested the Federal Reserve may have limited room for near-term rate cuts. The Dow tumbled 715 points (-1.5%), the S&P 500 slipped 1.1%, and the Nasdaq fell 1.4%. Core PPI rose 0.8% month-on-month, signalling inflationary pressure, while headline PPI increased 0.5% versus the 0.3% consensus.
Technology Stocks Under Pressure
Tech and software names once again struggled as investors shifted focus from AI hype to valuations and risk management. NVIDIA slid 2% following a more than 5% drop in the previous session. Amazon also fell, reflecting cautious sentiment around ongoing AI investments and OpenAI-related developments.
Software and Cybersecurity Sectors Hit Hard
Major software and cybersecurity companies faced steep declines. Salesforce dropped 4%, Microsoft fell roughly 2%, Zscaler plunged 11% after missing expectations, and CoreWeave dropped nearly 20% on weak guidance. Investor caution has heightened, with concerns over AI’s effect on labour markets and potential layoffs contributing to the sell-off.
See How Technology Stocks Are Moving Global Markets
February Performance Wrap-Up
The Nasdaq is on track for a monthly decline exceeding 3%, while the S&P 500 is roughly down 1%, and the Dow decreased around 0.3% for February. UBS downgraded U.S. equities to “benchmark,” citing a weaker dollar, elevated valuations, and political instability. Meanwhile, non-U.S. markets are outperforming, with the MSCI World ex-US up nearly 8% year-to-date compared to the S&P 500’s flat performance.
Financial Sector and Bank Weakness
Financials underperformed on Friday, with banks facing pressure due to concerns over private equity exposure and risks from struggling software firms. In contrast, companies such as Netflix and Dell saw positive movement, providing some relief amid broader market declines.
Corporate News: Netflix, Warner Bros., and Paramount
Netflix exited the race to acquire Warner Bros. Discovery, leaving Paramount Skydance to finalize a $111 billion deal. Netflix shares jumped 8% premarket, while WBD fell 2%, and Paramount rose 9%. Investors welcomed the clarity provided by Netflix’s decision.
Live Nation Upgraded
Shares of Live Nation increased 1% after Rothschild & Co. Redburn upgraded the stock to “buy” and raised the price target to $193, highlighting strong demand, regulatory easing, and stabilization following previous downgrades.
Block Announces Major Job Cuts
Block revealed plans to lay off over 4,000 employees, around half its workforce. Shares surged 19% in extended trading as investors interpreted the move as a decisive step to improve efficiency and profitability.
Dollar Tree Downgraded
Citi downgraded Dollar Tree from “buy” to “neutral,” citing that the stock had nearly doubled from its lows and now trades close to its price target. Shares fell 2% as investors weighed the balanced risk-reward profile despite ongoing strategy improvements.
Big Tech and AI Funding Round Impact
Following OpenAI’s announcement of a $110 billion funding round, Big Tech stocks struggled. Amazon, Microsoft, and Meta fell 1–2%, despite Amazon participating in the funding and expanding its multi-year partnership with OpenAI. High valuations and ongoing AI capital expenditures appear to have tempered short-term enthusiasm.
