The Dow Jones Industrial Average plunged more than 650 points in afternoon trading Friday, marking a sharp downturn as anxieties surrounding artificial intelligence and persistent inflation rattled Wall Street. The blue-chip index closed at 48,827, a 1.4% decrease, while the S&P 500 lost 0.8% and the Nasdaq Composite dropped 1.3%.
The declines cap a volatile February for the markets, with the Nasdaq and S&P 500 poised to record their steepest monthly drops since March 2025. A hotter-than-expected Producer Price Index (PPI) reading further fueled concerns that the Federal Reserve will likely hold off on near-term interest rate cuts. The January PPI rose 0.5%, exceeding economists’ forecasts of a 0.3% increase, with core PPI jumping 0.8% – significantly above the anticipated 0.3% rise.
Financial stocks also contributed to the downward pressure, following reports of potential losses for Barclays, Jefferies, Wells Fargo, and other banks related to the collapse of UK mortgage provider Market Financial Solutions Ltd. Wells Fargo, Jefferies, and US-listed shares of Barclays experienced declines ranging from 4.2% to 10.8%. “Credit fears are weighing on the banking sector today,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Technology stocks, already under pressure, continued to slide. Nvidia, despite recent positive earnings reports, fell another 2%, building on a more than 5% decline in the previous session. Concerns persist regarding Nvidia’s partnership with OpenAI and questions about the sustainability of AI-related capital spending by hyperscalers. Amazon, which recently invested $50 billion alongside Nvidia in OpenAI, also saw its stock price decline.
Software companies also experienced losses, with Salesforce falling over 4% and Microsoft declining about 2%, further weighing on the Dow. The shift in sentiment surrounding AI investments, once a catalyst for tech stock gains, is now contributing to the sector’s struggles. “February was a terrible month for the Nasdaq, and we saw a rotation into classic-economy stocks,” Cardillo added. “That rotation helped the broader market a little bit.”
The Nasdaq and S&P 500 are currently tracking for their largest monthly percentage losses since March 2025, reflecting a broader market correction driven by a confluence of factors including AI anxieties, revived tariff uncertainties, and geopolitical tensions. The Dow is on the verge of logging its biggest weekly drop since November.
