U.S. stock markets closed lower on Friday as investors continued to sell shares of companies they believe could be negatively affected by the rise of artificial intelligence (AI). A higher-than-expected inflation report and rising oil prices due to tensions between the United States and Iran also added pressure on the market.
The S&P 500 fell 0.4%, marking only its second monthly loss in the last 10 months. The Dow Jones Industrial Average dropped 521 points, or 1.1%, while the Nasdaq Composite declined 0.9%.
AI Disruption Fears Weigh on Tech and Software Stocks
Investors targeted software and technology companies amid concerns that AI-powered tools could replace workers, reduce costs, and even disrupt entire business models.
Shares of Block Inc., the company behind Cash App and Square, surged 16.8% after announcing it will cut more than 4,000 jobs—nearly half of its workforce of over 10,000 employees. Despite reporting strong results and increased stock buybacks, Chairman Jack Dorsey said AI tools are allowing smaller teams to work more efficiently.
Dorsey stated that many companies are likely to make similar structural changes within the next year.
Meanwhile, Salesforce fell 2.3%, giving up most of the previous day’s gains, even after reporting better-than-expected profits.
Private-equity firms with exposure to software companies also saw heavy losses. Apollo Global Management dropped 8.6%, while Blue Owl Capital declined 6%.
Nvidia and Chip Stocks Under Pressure
Even companies benefiting from AI demand faced selling pressure. Nvidia fell 4.2%, becoming the biggest drag on the market. A day earlier, it recorded its worst drop since last spring despite reporting strong earnings and forecasting higher revenue.
Investors are questioning whether massive AI spending by companies like Amazon and Alphabet will generate enough long-term profits.
Oil Prices Rise Amid US-Iran Tensions
Oil prices climbed sharply due to rising tensions between the United States and Iran over Iran’s nuclear program. The U.S. military has increased its presence in the Middle East, raising fears of supply disruptions.
Benchmark U.S. crude oil rose 2.8% to settle at $67.02 per barrel. Brent crude gained 2.4% to $72.48 per barrel.
Inflation Adds More Pressure
A new report showed U.S. wholesale inflation rose to 2.9% last month, much higher than the expected 1.6%. This could force the Federal Reserve to delay cutting interest rates.
Lower interest rates usually support economic growth and stock prices but may also increase inflation risks.
In the bond market, the 10-year Treasury yield fell to 3.96%, down from 4.02% on Thursday. Investors often move to safer assets like bonds during market uncertainty.
Global Markets Mixed
Markets in Europe and Asia showed mixed performance. South Korea’s Kospi index fell 1% from its recent record, while Hong Kong’s Hang Seng rose 0.9%.
