Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 25, 2026.
Brendan McDermid | Reuters
Stocks dropped on Friday after the latest producer price index data came in much hotter than expected, adding sticky inflation to a list of concerns that has caused market turbulence this month.
The Dow Jones Industrial Average dropped 620 points, or 1.3%. The S&P 500 fell 0.7% while the Nasdaq Composite lost 0.9%.
All three benchmarks are in the red for February amid mounting concerns about the impact of artificial intelligence on specific industries and the overall economy. Those fears were exacerbated after Jack Dorsey’s fintech company Block said it’s laying off more than 4,000 employees, or nearly half of its workforce. Stocks in the financial sector and other areas of the market tied to the economic cycle pulled back Friday.
Notable software names also suffered losses Friday as they close out a terrible month on the threat of AI disruption to the industry. Salesforce tumbled more than 3%, and Microsoft lost more than 1%, weighing on the Dow. Cybersecurity company Zscaler shed 15% after deferred revenue and billings in the fiscal second quarter missed expectations. CoreWeave fell 18% on disappointing guidance.
Nvidia extended its post-earnings slide with a 2% fall Friday. In the prior trading day, the stock shed more than 5%, which came to a surprise to many investors, who remain bullish on the chipmaker given its blowout fourth-quarter results and upcoming product cycle. Market participants attributed the decline in shares to doubts around Nvidia’s deal with OpenAI, weak sentiment over the AI trade and concerns about whether hyperscalers’ lofty AI capital expenditures are sustainable.
Fueling the downbeat sentiment, January’s producer price index — a measure of wholesale inflation — showed a 0.5% increase for the month. Economists polled by Dow Jones saw the headline reading coming in at 0.3%. Perhaps more concerning is that the core PPI reading, which excludes food and energy prices, recorded a 0.8% gain, much more than the 0.3% rise economists anticipated.
“Regardless of whether we see better-than-expected earnings, more tame inflation or a resilient labor market, people have been selling first and asking questions later,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “This morning’s higher inflation data is one more thing to worry about within the ‘traditional’ economic analysis of price stability and full employment, even before investors factor in the disruptive potential of AI’s impact on the economy.”
The Nasdaq is on pace for a decline of more than 3% in February and its worst monthly performance since last March. The iShares Expanded Tech-Software ETF (IGV) is down 10% for the month, bringing its year-to-date losses to 23%.
The S&P 500 is on track for a more than 1% loss in February, while the Dow is on pace for a 0.3% decline.
— Jeff Cox contributed reporting.