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

Stocks gave up early session gains to close mixed on Friday following a cooler-than-expected inflation print.

The Dow Jones Industrial Average (^DJI) rose 0.1% while the tech-heavy Nasdaq Composite (^IXIC) lost 0.2%, The S&P 500 (^GSPC) also wobbled, closing the session just above the flatline.

All three major averages ended the week in negative territory.

Stocks capped a volatile week in which wealth management, transportation, and logistics stocks followed the software sector, battered by fears that AI will disrupt their business models.

“We believe that these initial reactions to the disruption story may turn out to be overblown, since many industries and individual businesses could very well turn out to be AI beneficiaries in the long term,” Daniel Skelly, head of Morgan Stanley’s Wealth Management market research & strategy Team said in a note on Friday.

He added, “Overall, with the S&P 500 flattish for the year, the bull market has certainly paused, and given way to a bull market in ‘disruption hysteria.'”

Next week will be a shortened trading week, as the market will be closed Monday for Presidents’ Day.

Yahoo Finance’s Ben Werschkul reports:

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Bitcoin (BTC-USD) jumped 5% on Friday after a softer-than-expected inflation print and renewed hopes that crypto legislation stuck in Congress will ultimately be passed and sent to the President’s desk to sign.

The token rebounded near $69,000 after falling as low as $65,000 on Thursday during a broader market sell-off.

US Treasury Secretary Scott Bessent said on Friday during an interview that it was important for Congress to pass a bill creating federal rules for digital assets by Spring.

Nvidia (NVDA) shares are off by over 1% today, even as the broader market rebounds after yesterday’s tech-driven sell-off.

Bloomberg notes this is part of a recent trend of stagnation for Nvidia, whose shares have remained fairly range-bound since hitting an all-time high last October. (Shares are down around 1% for the year. That is happening despite Big Tech’s plans to balloon capital expenditures for AI build-outs — with Nvidia poised to be one of the main beneficiaries of that spending.

Nvidia reports earnings on Feb. 25.

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

Our David Hollerith reports:

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Shares in Rivian (RIVN), Moderna (MRNA), and Applied Materials (AMAT) all surged upward with double-digit increases on Friday after strong earnings reports, while shares in Pinterest (PINS) plunged.

EV maker Rivian jumped more than 20% through Friday morning trading after the company reported a strong fourth quarter earnings beat late Thursday. Rivian executives said the EV maker’s R2 midsize model is on track for delivery before the summer.

Meanwhile, Moderna shares gained 10% after the drugmaker topped quarterly revenue estimates thanks to resilient sales of its COVID shot. While the company had been struggling to find profit as demand for shots has fallen, Moderna reaffirmed its expectation of 10% ‌revenue growth in ​2026 and solidly beat analyst estimates for top-line revenue.

Applied Materials stock gained more than 11% as beats on revenue and adjusted EPS complemented strong demand forecasts for the company’s semiconductor equipment. Semiconductors are a key component of AI technology, fueling bets that Applied Materials will see continued strength.

In a showing that the AI trade cuts both ways, Pinterest saw its shares plunge by more than 20% as analysts evaluated the possibility for disruption by AI advancements. The company also missed analyst expectations on the top and bottom lines.

Consumer energy prices largely fell in January, according to data released by the Bureau of Labor Statistics on Friday, moving in line with a broader oil market that had until January been falling.

Headline energy costs, one of the more volatile categories in the Consumer Price Index, fell 1.5% in January from the previous month and ticked down 0.1% from the previous year. (Energy prices are excluded from the “core” CPI reading due to their volatility.)

Energy commodities saw the largest move downward on both a monthly and yearly basis, with gasoline prices dropping by 3.2% month-on-month and fuel oil prices dropping by 5.7%, according to BLS data. On a yearly basis, gasoline prices have fallen by 7.5% since last January.

While the price of gasoline is one component of the price paid by consumers to fill their cars, that cost also factors in in crude oil prices, refining costs, distribution costs, and taxes. Pump prices have ticked up to a national average of $2.94 today versus $2.82 one month ago, but they are down from $3.16 a year ago.

Meanwhile, in the energy services category, electricity prices shed 0.1% from the previous month, while utility gas services prices rose by 1% as cold weather shocks throughout the country saw both residential and commercial demand for natural gas soar.

Both electricity and utility gas saw large jumps upward year-on-year, increasing by 6.3% and 9.8%, respectively, as the explosive power demand from the data center buildout has sent energy costs soaring.

The US stock market opened in the red on Friday after a broad market sell-off as Wall Street digested a cooler-than-expected inflation reading.

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

Inflation cooled more than expected in January, data released Friday by the Bureau of Labor Statistics showed, as consumer prices increased 0.2% in January from a month earlier and 2.4% on an annual basis. So-called “core” CPI ticked up by 0.3% month-on-month and 2.5% year-on-year.

More than half of traders are now pricing in a 25-basis-point cut by June, but most bets still remain on two cuts by the end of 2026.

On the earnings front, Rivian (RIVN) shares jumped more than 23% following its fourth quarter earnings beat late Thursday, while Pinterest (PINS) shares shed more than 20% on a revenue miss and concerns about AI.

Consumer prices rose 0.2% in January over the previous month, according to data released by the Bureau of Labor Statistics on Friday morning, cooling more than economists had expected. The inflation measure rose 2.4% year-on-year.

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

The headline increases in inflation were just below economists’ expectations of gains of 0.3% on a monthly basis and 2.5% on a yearly basis. January’s core CPI readings were directly in line with expectations month-on-month and year-on-year.

The readings on inflation swung traders’ outlook for rate cuts from the Federal Reserve, now pricing in a 51% chance of at least one 25 basis-point cut by the Fed’s June meeting. Though, traders remain broadly convinced the Fed will hold rates steady in its upcoming March meeting, with less than 10% pricing in a rate cut at that meeting.

DraftKings (DKNG) stock fell 17% before the bell on Friday after the US gambling company missed analyst expectations for this year’s guidance as it steps up its investments in prediction markets.

Roku (ROKU) stock rose 15% during premarket hours after the streaming company beat analysts’ estimates for fourth quarter earnings. Roku also issued strong guidance for the year.

Maplebear (CART), also known as Instacart, saw its stock jump by 12% before the bell today after beating analysts estimates for revenue, which rose 12% to $992 million. However, the group’s fourth quarter earnings were dented by a $60 million settlement with the Federal Trade Commission amid claims that it used underhand tactics to raise costs for shoppers.

Rivian (RIVN) stock soared 19% during premarket hours on Friday following the release of better-than-expected fourth quarter results on Thursday.

Yahoo Finance’s Pras Subramanian reports:

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Pinterest stock sank 19% before the bell on Friday after forecasting first quarter revenue below analysts’ estimates on Thursday.

Reuters reports:

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