WASHINGTON (dpa-AFX) - Stocks moved notably lower during trading on Friday, extending the pullback seen during the previous session. The major averages all moved to the downside, with the tech-heavy Nasdaq adding to the steep loss posted on Thursday.
The major averages ended the day well off their lows of the session but still in negative territory. The Dow slumped 521.28 points or 1.1 percent to 48,977.92, the Nasdaq slid 210.17 points or 0.9 percent to 22,688.21 and the S&P 500 fell 29.98 points or 0.4 percent to 6,878.88.
For the week, the Dow tumbled by 1.3 percent, the Nasdaq slumped by 1.0 percent and the S&P 500 decreased by 0.4 percent.
The continued weakness on Wall Street came following the release of a Labor Department report showing producer prices in the U.S. increased by more than expected in the month of January.
The report said the Labor Department's producer price index for final demand climbed by 0.5 percent in January after rising by a downwardly revised 0.4 percent in December.
Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.
The Labor Department also said the annual rate of producer price growth edged down to 2.9 percent in January from 3.0 percent in December. Economists had expected yearly growth to slow to 2.8 percent.
'For the past month the market has been worried about AI disruption and its impact on the labor market, so inflation hasn't been top of mind,' said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
He continued, 'But this morning's inflation readings could give the Fed another reason to be more patient with rate cuts and wait until the second half of the year before making any changes.'
The bigger than expected monthly increase in producer prices along with concerns about AI-related layoffs may have led to worries about a period of stagflation.
Adding to recent concerns about potential AI disruptions, Block (XYZ) said it is cutting its workforce by nearly half.
Block CFO Amrita Ahuja said the payments company sees an 'opportunity to move faster with smaller, highly talented teams using AI to automate more work.'
Sector News
Airline stocks showed a substantial move to the downside on the day, resulting in a 5.0 percent nosedive by the NSYE Arca Airline Index. The index ended the session at its lowest closing level in almost a month.
Significant weakness was also visible among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index plunging by 4.9 percent and 3.0 percent, respectively.
Software and semiconductor stocks also saw notable weakness, while pharmaceutical, retail and telecom stocks showed strong moves to the upside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index rose by 0.4 percent and Hong Kong's Hang Seng Index jumped by 1 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index climbed by 0.6 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.5 percent.
In the bond market, treasuries moved sharply higher, extending the upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 5.5 basis points to a four-month closing low of 3.962 percent.
Looking Ahead
The Labor Department's monthly jobs report is likely to be in the spotlight next week, although reports on retail sales and manufacturing and service sector activity may also attract attention.
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