Dow, S&P 500, Nasdaq gains fizzle to cap week of sharp losses as AI fears grow

Stocks gave up early gains to end mixed on Friday as inflation data came in below expectations.

The Dow Jones Industrial Average (^DJI) rose 0.1%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.2% and the S&P 500 (^GSPC) also saw some volatility, ending slightly above flat.

All three major moving averages ended the week in negative territory.

Stocks ended a tumultuous week, with wealth management, transportation and logistics stocks following gains in the software sector, which has been hit hard by concerns that artificial intelligence will disrupt their business models.

“We believe the initial reaction to disruptive stories may be exaggerated, as many industries and individual businesses are likely to be beneficiaries of AI in the long term,” Daniel Skelly, head of Morgan Stanley’s wealth management market research and strategy team, said in a note on Friday.

He added, “Overall, with the S&P 500 underwhelming this year, the bull market has definitely paused and given way to a ‘disruptive hysteria’ bull market.”

Next week’s trading week will be shorter as markets will be closed on Monday for Presidents’ Day.

Yahoo Finance’s Ben Werschkul reports:

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Bitcoin (BTC-USD) rose 5% on Friday after weaker-than-expected inflation data revived hopes that crypto legislation stalled by Congress will finally be passed and sent to the president for his signature.

The coin rebounded to near $69,000 after falling to $65,000 during Thursday’s broader market sell-off.

U.S. Treasury Secretary Scott Bessant said in an interview on Friday that it is important for Congress to pass a bill setting federal rules for digital assets by the spring.

Nvidia (NVDA) shares are down more than 1% today, even as the broader market rebounds after yesterday’s tech-driven selloff.

Bloomberg noted that this is part of a recent trend of stagnation for Nvidia, which has seen its stock price remain fairly range-bound since hitting an all-time high in October last year. (The stock is down about 1% this year.) This is happening even as big tech companies plan to increase capital spending on building artificial intelligence — and Nvidia is expected to be one of the main beneficiaries of that spending.

Nvidia will report earnings on February 25th.

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After Coinbase posted its second-worst quarterly net loss ever of $667 million, CEO Brian Armstrong sought to ease investor and analyst concerns about the company’s fourth-quarter earnings call.

Our David Hollerith reports:

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Shares of Rivian (RIVN), Moderna (MRNA) and Applied Materials (AMAT) all jumped by double digits on Friday after strong earnings reports, while shares of Pinterest (PINS) tumbled.

Shares of electric vehicle maker Rivian rose more than 20% in morning trading Friday after the company reported strong fourth-quarter earnings late Thursday. Rivian executives said the electric carmaker’s R2 midsize model is expected to be delivered by summer.

Meanwhile, Moderna’s shares rose 10% after its quarterly revenue beat estimates on strong sales of its COVID-19 vaccine. Moderna reiterated its forecast for revenue growth of 10% in 2026 and beat analysts’ top revenue expectations by a wide margin, even as the company has struggled to find profits due to falling demand for its shots.

Applied Materials shares rose more than 11% as growth in revenue and adjusted earnings per share complemented strong demand forecasts for the company’s semiconductor equipment. Semiconductors are a key component of artificial intelligence technology, fueling bets that Applied Materials will continue to strengthen.

Developments in the artificial intelligence industry work both ways, and Pinterest shares plummeted more than 20% as analysts assessed the potential for disruption from advances in artificial intelligence. The company’s revenue and profit also missed analysts’ expectations.

Data released by the U.S. Bureau of Labor Statistics on Friday showed that consumer energy prices fell sharply in January, in line with the overall oil market trend that had been declining until January.

Overall energy costs, one of the more volatile categories in the consumer price index, fell 1.5% month-on-month in January and down 0.1% year-over-year. (Energy prices are excluded from “core” CPI readings due to their volatility.)

According to the Bureau of Labor Statistics, energy commodities posted the largest monthly and annual declines, with gasoline prices falling 3.2% month-on-month and fuel oil prices falling 5.7%. Since January last year, gasoline prices have fallen 7.5% year-on-year.

While the price of gasoline is part of the price consumers pay to fill up their cars, that cost also includes the price of crude oil, refining costs, distribution costs and taxes. The national average gas price has now risen to $2.94, compared with $2.82 a month ago, but down from $3.16 a year ago.

Meanwhile, within the energy services category, electricity prices fell 0.1% month-on-month, while utility gas service prices rose 1% as a nationwide cold weather shock caused residential and commercial natural gas demand to surge.

As energy costs soared due to the explosive power demand caused by data center construction, electricity and utility gas increased significantly year-on-year, increasing by 6.3% and 9.8% respectively.

U.S. stocks opened lower on Friday as Wall Street digested lower-than-expected inflation data.

The Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) both fell about 0.4%, while the S&P 500 (^GSPC) fell about 0.2% a day after tech stocks came under heavy selling pressure.

Data released by the U.S. Bureau of Labor Statistics on Friday showed that inflation cooled more than expected in January, with consumer prices rising 0.2% month-on-month and 2.4% annually. The so-called “core” CPI rose 0.3% month-on-month and 2.5% year-on-year.

More than half of traders currently expect a quarter-point rate cut by June, but most are still betting on two cuts by the end of 2026.

On the earnings front, Rivian (RIVN) shares rose more than 23% late Thursday after fourth-quarter earnings beat estimates, while Pinterest (PINS) shares fell more than 20% on lower-than-expected revenue and concerns about artificial intelligence.

Data released by the U.S. Bureau of Labor Statistics on Friday morning showed that consumer prices rose 0.2% month-on-month in January, a decline that exceeded economists’ expectations. The inflation indicator rose by 2.4% year-on-year.

The so-called “core” consumer price index, which excludes the often volatile food and energy categories, rose 0.3% month-on-month and 2.5% year-on-year.

Headline inflation rose slightly below economists’ expectations for a 0.3% monthly increase and a 2.5% annual rate increase. The core CPI data for January were directly in line with expectations both month-on-month and year-on-year.

The inflation data changed traders’ expectations for a rate cut by the Federal Reserve, with the probability of the Fed cutting interest rates by at least 25 basis points at its June meeting now stands at 51%. Still, traders remain broadly confident that the Fed will keep interest rates steady at its upcoming March meeting, where a rate cut of less than 10% is priced in.

draft king (East Ken NG) The U.S. gaming company’s shares fell 17% in pre-market trading on Friday after its guidance for the year fell short of analysts’ expectations as it stepped up investment in prediction markets.

Roku (RokuShares of the streaming company rose 15% in premarket hours after the streaming company’s fourth-quarter earnings beat analysts’ expectations. Roku also issued strong guidance for the year.

Maple Bear (cart)Instacart, also known as Instacart, its stock price rose 12% before the market opened today, and revenue exceeded analysts’ expectations, rising 12% to $992 million. However, the group’s fourth-quarter earnings were hurt by a $60 million settlement with the Federal Trade Commission over claims the group used unfair tactics to raise costs for shoppers.

Shares of Rivian (RIVN) surged 19% in Friday’s pre-market session after reporting better-than-expected fourth-quarter results on Thursday.

Yahoo Finance’s Pras Subramanian reports:

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Pinterest shares fell 19% in pre-market trading on Friday after forecasting first-quarter revenue on Thursday that fell short of analysts’ expectations.

Reuters reports:

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