Wall Street steadied on Friday after an inflation update helped calm the mood following a prior AI-driven selloff that had rattled investors about how artificial intelligence could reshape industries. The move came as U.S. stocks traded more evenly after the S&P 500’s sharp drop the session before, with traders also watching Treasury yields for signs that bond markets were easing their rate expectations.
A key support for risk assets was the inflation report, which showed prices slowed last month by more than economists expected. U.S. consumers paid prices that were 2.4% higher overall than a year earlier for groceries, clothes and other costs of living, still above the Federal Reserve’s 2% target but cooler than December’s 2.7% pace. Economists also highlighted an underlying measure of inflation that slowed to the least-painful level in nearly five years.
“It’s still too high, but only for now, not forever,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. Jacobsen’s comment reflected a broader market logic that a softer inflation trend could eventually give the Federal Reserve more flexibility to cut interest rates later this year, even though the Fed had kept cuts on hold at the time of the report.
On the day, the S&P 500 barely moved, after it had tumbled to one of its worst losses since Thanksgiving. The Dow Jones Industrial Average rose 48 points, or 0.1%, and the Nasdaq composite slipped 0.2%, as the inflation-driven easing in Treasury yields helped offset the market’s earlier concern-driven swings.
In the bond market, the yield on the 10-year Treasury fell to 4.05% from 4.09% late Thursday, and the 2-year yield—tied more closely to expected Fed action—dropped to 3.40% from 3.47%. The yield moves aligned with the idea that lower inflation can reduce pressure for restrictive policy, a shift that tends to buoy stocks if it comes with credible expectations for future rate cuts.
Corporate results and guidance still drove sharp stock moves tied to investor bets about AI disruption. AppLovin, which investors had targeted after Thursday’s decline tied to worries about AI-powered competitors, rose 6.4% Friday even as it had lost nearly a fifth of its value the prior day despite reporting a stronger profit than analysts expected.
C.H. Robinson Worldwide also bounced after a steep Thursday drop linked to an AI platform claim from Algorhythm Holdings. After sinking 14.5% Thursday, C.H. Robinson rose 4.9% Friday following Algorhythm’s statement that its AI platform helps customers scale freight volumes by up to 400% “without a corresponding increase in operational headcount,” a pitch that had spooked some investors in the trucking and freight sector.
Applied Materials strengthened the strongest upward pressure on the S&P 500, rising 8.1% Friday after the chip-and-display maker reported a stronger profit than analysts expected. CEO Gary Dickerson attributed the quarter’s results to “acceleration of industry investments in AI computing,” underscoring how some parts of the supply chain may benefit even as other business models face competitive pressure.
On the losing end, DraftKings dropped 13.5% despite topping analysts’ expectations for profit in the latest quarter, after it gave a revenue forecast for this year that fell short of expectations. Norwegian Cruise Line Holdings fell 7.6% after naming a leadership change ahead of its next quarterly results, saying John Chidsey, a director at the company who previously led Subway Restaurants as chief executive, would replace Harry Sommer effective immediately.
The heaviest weight on the market, Nvidia, slid 2.2%, a reminder that some AI-linked trades continued to struggle even amid broader stabilization. By the close, the S&P 500 added 3.41 points to finish at 6,836.17, its worst week since November, while the Dow rose 48.95 to 49,500.93 and the Nasdaq composite fell 50.48 to 22,546.67.
Outside the United States, indexes were mixed, with Asia ending lower and Europe more mixed. Hong Kong’s Hang Seng fell 1.7%, and Japan’s Nikkei 225 declined 1.2% for two of the bigger moves.