Dow drops over 780 points as inflation surprise hits tech shares

Shares on Wall Street tumbled on Friday as hotter-than-expected US producer price data intensified inflation concerns, adding to a growing list of headwinds that have rattled markets this month. The Dow Jones Industrial Average (DJIA) slid 789 points, or 1.6%, while the S&P 500 declined 0.9%. The Nasdaq Composite shared losses, falling 1.2%.

January’s producer price index (PPI), a key gauge of wholesale inflation, rose 0.5% for the month, above the 0.3% increase economists polled by Dow Jones had forecast. Even more troubling for investors, core PPI, which strips out food and energy, jumped 0.8%, sharply higher than expectations of a 0.3% rise.

Technology stocks remained under pressure, extending a difficult month for the sector. Nvidia dropped another 2%, building on a more than 5% decline in the previous session despite strong fourth-quarter results and optimism around its upcoming product cycle.

Traders pointed to lingering concerns about Nvidia’s partnership with OpenAI, waning enthusiasm around the artificial intelligence trade and questions over whether hyperscalers can sustain elevated AI-related capital spending.

Nvidia recently invested $30 billion in OpenAI in a funding round that valued the company at $110 billion. Amazon, which contributed $50 billion to the same round, also traded lower alongside Nvidia. Earlier in the rally, such AI-related announcements typically boosted tech shares, but sentiment has since shifted.

Software names also extended losses. Salesforce fell over 4%, while Microsoft declined about 2%, weighing on the Dow. Cybersecurity firm Zscaler plunged 11% after reporting weaker-than-expected deferred revenue and billings for its fiscal second quarter. CoreWeave dropped 16% following disappointing guidance.

The pullback broadened beyond tech, with financials and other sectors retreating amid rising concerns that AI-driven disruption could weigh on the labor market and broader economy. Those fears were heightened after Block announced plans to lay off more than 4,000 employees, nearly half its workforce.

Friday marked the final trading session of February, capping a volatile month. The Nasdaq is on track to fall more than 3%, marking its worst monthly performance since last March. The iShares Expanded Tech-Software ETF (IGV) has declined 10% this month, taking its year-to-date losses to 23%.

The S&P 500 is poised for a decline of more than 1% in February, while the Dow is on pace for a modest 0.2% gain.