U.S. equity futures indicated a sharply negative start to Friday’s trading session, pointing to a continuation of the pullback seen the day before.
Contracts moved deeper into the red after fresh inflation figures showed U.S. producer prices increased more than forecast in January, adding to concerns about persistent price pressures.
Data from the Labor Department showed the producer price index for final demand rose 0.5% in January, following a downwardly revised 0.4% gain in December.
Economists had anticipated a smaller 0.3% increase, compared with the previously reported 0.5% rise for the prior month.
On an annual basis, producer price growth eased slightly to 2.9% from 3.0%, though this was still above expectations for a slowdown to 2.8%.
Investor sentiment was also weighed down by ongoing worries about artificial intelligence-driven job cuts after Block (NYSE:XYZ) revealed plans to reduce its workforce by nearly 50%.
Block CFO Amrita Ahuja said the company sees an “opportunity to move faster with smaller, highly talented teams using AI to automate more work.”
Markets retreated Thursday after two sessions of strong gains. The tech-heavy Nasdaq led declines, while the Dow Jones Industrial Average managed to finish marginally higher.
The Nasdaq pared earlier losses but still dropped 273.69 points, or 1.2%, to 22,878.38. The S&P 500 declined 37.27 points, or 0.5%, to 6,908.86, while the Dow added 17.05 points, less than 0.1%, to 49,499.20.
Weakness was partly triggered by investor reaction to Nvidia (NASDAQ:NVDA), whose shares fell 5.5% despite posting stronger-than-expected quarterly earnings and upbeat guidance.
Nvidia stock retreated from its highest closing level in over three months as investors focused on broader concerns beyond headline results.
“It says a lot when a stock market darling beating revenue forecasts by billions of dollars can no longer muster a positive share price reaction,” said Dan Coatsworth, head of markets at AJ Bell. “The mood music is changing on Nvidia, and it represents a significant shift in investor sentiment.”
He added, “The focus has now shifted to growing competition, concerns about excessive levels of investment across the AI space either being unsustainable or unnecessary, and whether the party will end in tears.”
Nvidia’s decline weighed on the semiconductor sector, with the Philadelphia Semiconductor Index falling 3.2% after closing at a record high in the previous session.
Networking shares also weakened notably, adding pressure on the Nasdaq.
Outside technology, gold mining stocks rallied even as bullion prices slipped, lifting the NYSE Arca Gold Bugs Index 2.9% to a record close.
Airline stocks also advanced strongly, pushing the NYSE Arca Airline Index up 2.3%.
The Dow’s modest gain was supported in part by a 4.0% jump in Salesforce (NYSE:CRM) shares following better-than-expected quarterly earnings.
Meanwhile, separate Labor Department data showed initial jobless claims edged higher in the week ended February 21.
New unemployment claims rose to 212,000, up 4,000 from the prior week’s revised level of 208,000.
Economists had forecast claims would rise to 215,000 from the previously reported 206,000.
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