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U.S. stocks slid Friday as Wall Street weighed three forces at once: renewed anxiety that AI could disrupt business models and jobs, a discouraging inflation update and rising concern about tensions between the United States and Iran. Investors have continued to punish companies seen as potential “losers” in the artificial-intelligence revolution, while oil climbed amid geopolitical risk.
The S&P 500 fell 0.4% and finished the session after it endured only its second losing month in the past 10. The Dow Jones Industrial Average dropped 521.28 points, or 1.1%, and the Nasdaq composite slid 210.17 points, or 0.9%. In trading terms, the day added pressure to a market that has been whipsawed by shifting expectations over inflation and economic growth, alongside faster-moving sentiment about technology.
AI anxiety was among the drivers, with investors returning to “knocking down” software and other businesses they suspect could be displaced by AI-powered competitors. Block, the company behind Cash App and Square, offered a signal that reinforced those concerns after its top leader described plans to cut staff while announcing its latest profit results. Jack Dorsey said in a letter to investors, “Intelligence tools have changed what it means to build and run a company,” adding, “We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better.”
Dorsey also wrote, “I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.” Even so, Block said it is cutting more than 4,000 jobs from a workforce of over 10,000, and its shares rose 16.8% after the announcement and after the company reported its quarterly results.
Pressure also spread beyond software companies to businesses that lend money to or invest in them, reflecting fears about revenue durability in the face of AI competition. Apollo Global Management fell 8.6% and Blue Owl Capital dropped 6%, while Salesforce declined 2.3% after giving back much of a prior-day gain. Nvidia slid 4.2% and was the heaviest weight on the U.S. market, even after it had reported results that topped analysts’ expectations and forecast more revenue for the current quarter.
The broader rate outlook remained another factor. A report showed inflation at the U.S. wholesale level was up 2.9% last month, above the 1.6% economists expected, and that raised the odds that the Federal Reserve could hold off longer on interest-rate cuts. In the bond market, the yield on the 10-year Treasury fell to 3.96% after briefly moving higher following the inflation report, with Treasury yields often dropping when nervousness rises and investors look for safer assets.
Energy prices rose alongside the market’s geopolitical worry. Benchmark U.S. crude climbed 2.8% to settle at $67.02 a barrel, while Brent crude rose 2.4% to $72.48. The move reflected ongoing uncertainty about tensions between the United States and Iran over Iran’s nuclear program, with the report noting that the U.S. military has gathered a “massive fleet” of aircraft and warships in the Middle East and that a conflict could disrupt oil supplies.
Markets abroad were mixed. South Korea’s Kospi fell 1% from its latest record, while Hong Kong’s Hang Seng rose 0.9% for two of the world’s larger moves, as investors weighed the same mix of inflation sensitivity, AI-related stock selection and geopolitical risk.