Wall St Heads For Weekly Losses As Tech Jitters Offset Relief Inflation
US stocks rose in volatile trade on Friday as inflation showed signs of cooling, but a rally in stocks amid renewed fears of AI-driven disruption stalled, putting the S&P 500 and Dow on track for their worst weekly losses since November.
Friday’s data showed that US consumer prices rose less than expected in January, prompting traders to slightly increase the likelihood of the Federal Reserve cutting interest rates in June to 69% from 63% previously.
“The key takeaway from both (the) value and equity markets is that the deflationary trend is continuing. It kind of reinforces the idea that we’re past the inflationary crisis,” said Michael Metcalfe, head of market strategy at State Street Markets.
“This paints a picture of continued improvement in inflation, which will allow prices to come down over time.”
Equity markets retreated from record levels as fears of AI-led disruption fueled a sell-off in companies including software and insurance to trucking companies, while stronger-than-expected January jobs data sowed doubts about the pace of monetary policy easing this year.
The Cboe volatility index, Wall Street’s fear gauge, hit a one-week high of 22.40 points before easing slightly.
At 11:55 a.m. the Dow Jones Industrial Average rose 222.36 points, or 0.45%, to 49,674.34, the S&P 500 gained 36.38 points, or 0.53%, to 6,869.14, and the Nasdaq Composite added 2,70,505 points. 22,669.69.
With earnings season more than halfway through, AI capex outlays emerged as the dominant theme of the “Magnificent Seven” companies, whose cumulative investments will reach nearly $650 billion. Investors are now demanding real payback as they continue to punish sectors they fear could be stifled by competitive growth.
“You’re discounting a lot of money that has to be realized. Investors are wondering if that’s really going to happen and we’re not trading at cheap valuations,” said Brent Schutte, chief investment officer, Northwestern Mutual Wealth Management.
“That raises the bar a little higher for investors to continue to push the market.”
The biggest tech stocks weighed in, Nvidia and Alphabet fell 1.5% and 0.7%, respectively.
Health care stocks supported markets on Friday, with Eli Lilly and UnitedHealth adding 0.8% and 1.2%, respectively. Moderna jumped 8.9% after posting better-than-expected fourth-quarter earnings.
Shares of Applied Materials advanced 9.3% after the construction materials firm forecast second-quarter revenue and profit that topped Wall Street expectations.
Network equipment provider Arista Networks gained 9.8% after forecasting better-than-expected annual revenue.
White House trade adviser Peter Navarro said there is no basis for reports that the administration plans to lower steel and aluminum tariffs.
Other steelmakers declined, with Nucor down 2.3% and Steel Dynamics down 3.2%.
Aluminum producers Alcoa and Century Aluminum fell 1.1% and 7.1%, respectively.
Advancing issues outnumbered decliners by a ratio of 3.08-to-1 on the NYSE, and by a ratio of 3.06-to-1 on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and five new lows, while the Nasdaq Composite recorded 40 new highs and 108 new lows.
(Reporting by Twesha Dikshit, Purvi Agarwal and Medha Singh in Bengaluru; Editing by Shilpi Majumdar and Pooja Desai)
