US stocks plunged on Friday, extending this week’s risk-off tone, as hotter-than-expected wholesale inflation data combined with renewed weakness in the technology sector to pressure sentiment heading into month-end trading. The Dow Jones Industrial Average fell roughly 1.4%, shedding nearly 700 points, while the S&P 500 declined about 0.6%. The tech-heavy Nasdaq Composite dropped nearly 1% as investors pulled back from growth stocks amid another round of AI-driven disruption fears and rising concerns that inflation may delay potential Federal Reserve rate cuts.
Friday’s losses also placed the major indexes on track for monthly declines, with the Dow poised to snap an eight-month winning streak. Markets struggled to stabilize as investors weighed persistent inflation pressures alongside structural shifts tied to artificial intelligence reshaping corporate cost structures.
Market Movers:
- Block (XYZ) +17%: Shares surged after the fintech firm announced plans to cut roughly 40% of its workforce, with CEO Jack Dorsey citing AI-driven efficiencies as a long-term competitive advantage. Investors also welcomed stronger-than-expected forward guidance, signaling improving profitability despite broader industry disruption concerns.
- Dell Technologies (DELL) +18%: The stock jumped following a blowout quarterly report fueled by explosive demand for AI infrastructure, particularly servers and networking tied to data center expansion. Strong fiscal-year guidance, dividend increases, and expanded buybacks reinforced confidence that enterprise AI spending remains robust.
- MARA Holdings (MARA) +15%: Shares advanced after the company unveiled a strategic partnership aimed at expanding into AI and high-performance computing data centers. The pivot toward enterprise digital infrastructure helped offset concerns tied to weaker recent earnings performance.
- Netflix (NFLX) +9%: The streaming giant gained after confirming it would not raise its acquisition bid for Warner Bros. Discovery, opting instead to preserve capital and resume share repurchases. A multibillion-dollar breakup fee tied to the terminated deal also helped cushion investor concerns around lost expansion opportunities.
- Duolingo (DUOL) -17%: Shares plunged after issuing softer 2026 guidance as management emphasized user growth over near-term profitability. Investors reacted negatively to expectations for slowing bookings growth and declining margins tied to heavier investment spending.
- CoreWeave (CRWV) -16%: The AI cloud provider fell despite strong backlog growth after outlining aggressive capital expenditure plans for 2026. Massive investment requirements raised concerns about near-term profitability even as long-term demand visibility remained strong.
- Zscaler (ZS) -14%: Shares declined despite earnings and guidance topping expectations, highlighting continued pressure on high-growth cybersecurity names. Investors appeared focused on valuation sensitivity amid rising rates and broader software-sector volatility.
- Kratos Defense & Security Solutions (KTOS) -7%: The defense contractor slipped after announcing a large equity offering expected to raise roughly $1.17 billion. Dilution concerns weighed on the stock despite investor interest in defense and autonomous systems spending trends.
Inflation Data Fuels Rate Concerns
Markets turned lower after January’s producer price index came in hotter than expected, reinforcing fears that inflationary pressures remain sticky across supply chains. Headline wholesale prices rose 0.5% month over month, while core PPI climbed 0.8% — both well above economist forecasts. The data complicated expectations for monetary easing, with traders reassessing the likelihood of near-term Federal Reserve rate cuts. Persistent inflation has become particularly challenging for growth-oriented sectors, where valuations remain sensitive to higher borrowing costs.
Rotation Into Defensive Assets Gains Momentum
Investor positioning throughout February increasingly reflected a shift away from high-growth technology stocks toward defensive sectors. Utilities, consumer staples, energy, and real estate outperformed during the month as volatility tied to AI disruption and trade uncertainty pushed capital toward stability. At the same time, bond markets staged a notable rally, with long-duration Treasurys posting their strongest monthly performance in a year. Falling yields suggest investors are seeking protection against economic slowdown risks even as inflation remains elevated.
Trade Uncertainty and Geopolitics Add Pressure
Trade policy uncertainty also lingered after the Supreme Court’s earlier tariff ruling triggered a wave of corporate lawsuits seeking refunds on previously collected duties. Analysts estimate potential claims could exceed $170 billion, introducing another layer of uncertainty for multinational companies navigating supply chains. Meanwhile, geopolitical tensions lifted oil prices to six-month highs following stalled US-Iran negotiations and increased military positioning in the Middle East. Rising energy prices added to inflation concerns already weighing on markets.
Looking Ahead
Investors now turn toward upcoming economic data and corporate commentary for clues on whether inflation pressures are stabilizing or reaccelerating. Markets will also watch how companies adapt to accelerating AI-driven restructuring trends, which are increasingly shaping hiring, investment, and productivity decisions across industries. With February closing on a volatile note, sentiment heading into March may hinge on whether inflation cools enough to restore confidence in rate cuts — or forces markets into a longer period of adjustment.