Stocks Rise on Softer Inflation Data, but AI Jitters Trigger Worst Week Since November — WSJ
-
By Vicky Ge Huang
Even a cooler-than-exected inflation reading couldn't keep stocks from posting their worst week since November.
Stocks initially rose after the Bureau of Labor Statistics reported that consumer-price growth slowed to an annual pace of 2.4% in January. Easing price pressures, coupled with this week's robust labor data, reassured some investors that there is a path for the Federal Reserve to cut interest rates without an economic downturn.
But the initial gains faded by midafternoon, with investors struggling to shake off fears over the long-term disruptive potential of AI, which have hit sectors including software, insurance, wealth management, legal data and even trucking in recent sessions.
"The market is certainly reacting in a way that suggests that entire industries are going to be worth much less money than they are today," said Scott Ladner, chief investment officer at Horizon Investments." I think that might be a little bit overblown, but investors are certainly selling first and asking questions later."
Major indexes finished the day mixed, and in the red for the week, after a choppy session marked by frequent reversals. The Nasdaq composite fell 0.2% on Friday, extending its five-session loss to 2.1%. That marked the tech-heavy index's fifth-consecutive weekly decline, its longest such streak since a seven-week slide that ended in May 2022.
The S&P 500 edged up by less than 0.1% to end the week down 1.4%, its biggest weekly loss since Nov. 21, when investors' anxieties over lofty tech valuations and aggressive AI spending plans fueled a similar retreat. The Dow Jones Industrial Average added 0.1%, or 49 points.
Amid the market turmoil, investors sought out traditional havens. The S&P 500's utilities sector rose 7.1% this week to close at a record, the best performance among the index's 11 groups. And a rush into government debt pushed the yield on the 10-year Treasury note, which falls when prices rise, down to 4.055%, its lowest level since Nov. 28.
For some investors, the seemingly indiscriminate nature of this week's selling has created compelling entry points in stocks that were crushed by the broader retreat. Shares of Amazon, for example, notched their ninth consecutive daily decline on Friday. The retail giant has lost $474 billion in market cap over the course of this losing streak, the longest since July 2006.
"You got rate cuts coming, and you got prices coming off highs, while everybody's freaking out over tech and software," said Robert Edwards, chief investment officer at Edwards Asset Management. "That's the wall of worry, and that's where opportunity comes in."
Already, a bright spot has emerged in the AI sector. Shares of Applied Materials gained 8% after the semiconductor-equipment maker posted better-than-expected quarterly results, boosted by soaring demand for AI computing.
Other risky assets rose, too. Bitcoin climbed about 5% and was trading at $68,735 as of 4 p.m. New York time on Friday. Coinbase Global jumped 16% after the largest U.S. crypto exchange swung to a loss in the fourth quarter but expanded its revenue-generating business lines.
Shares in U.S. steel and aluminum producers, including Nucor, Steel Dynamics and Cleveland-Cliffs, retreated after reports that the Trump administration is considering whether to narrow the scope of tariffs on the metals.
Write to Vicky Ge Huang at vicky.huang@wsj.com
source: https://www.tradingview.com/news/DJN_DN20260213011209:0/