U.S. stock futures pointed to a sharply lower start on Friday, suggesting equities may extend the decline recorded in the previous trading session.
Futures moved further into negative territory following the release of new inflation data showing U.S. producer prices rose more than economists had anticipated in January.
According to the Labor Department, the producer price index for final demand increased by 0.5% in January after a downwardly revised 0.4% gain in December.
Economists had forecast a 0.3% rise, compared with the initially reported 0.5% increase for the prior month.
The report also showed annual producer price inflation easing slightly to 2.9% in January from 3.0% in December, while economists had expected a slowdown to 2.8%.
Ongoing concerns about job losses and workplace disruption linked to artificial intelligence may also weigh on sentiment after Block (NYSE:XYZ) announced plans to reduce its workforce by nearly half.
Block CFO Amrita Ahuja said the company sees an “opportunity to move faster with smaller, highly talented teams using AI to automate more work.”
After posting strong gains over the previous two sessions, stocks retreated on Thursday. The technology-heavy Nasdaq recorded notable losses, although the Dow Jones Industrial Average managed to finish slightly higher.
The Nasdaq recovered somewhat from early-session lows but still fell 273.69 points, or 1.2%, to close at 22,878.38. The S&P 500 declined 37.27 points, or 0.5%, to 6,908.86, while the narrower Dow edged up 17.05 points — less than 0.1% — to 49,499.20.
The downturn on Wall Street was partly driven by a negative reaction to earnings from Nvidia (NASDAQ:NVDA), with shares of the artificial intelligence chipmaker dropping 5.5%.
Nvidia stock retreated from its highest closing level in more than three months despite reporting stronger-than-expected fiscal fourth-quarter results and issuing upbeat guidance.
“It says a lot when a stock market darling beating revenue forecasts by billions of dollars can no longer muster a positive share price reaction,” said Dan Coatsworth, head of markets at AJ Bell. “The mood music is changing on Nvidia, and it represents a significant shift in investor sentiment.”
He added, “The focus has now shifted to growing competition, concerns about excessive levels of investment across the AI space either being unsustainable or unnecessary, and whether the party will end in tears.”
Nvidia’s decline helped pull the broader semiconductor sector lower, reflected in a 3.2% drop in the Philadelphia Semiconductor Index, which had closed at a record high in the previous session.
Networking stocks also moved notably lower, contributing further to weakness in the tech-heavy Nasdaq.
Outside the technology sector, gold mining stocks rallied despite a decline in bullion prices, pushing the NYSE Arca Gold Bugs Index up 2.9% to a record closing high.
Airline shares also posted strong gains, lifting the NYSE Arca Airline Index by 2.3%.
The Dow’s modest advance was partly supported by a sharp rise in Salesforce (NYSE:CRM), whose shares jumped 4.0% after the company reported better-than-expected fourth-quarter results.
On the economic front, separate Labor Department data showed a modest increase in first-time unemployment claims in the week ended February 21.
Initial jobless claims rose to 212,000, up 4,000 from the prior week’s revised level of 208,000.
Economists had expected claims to increase to 215,000 from the originally reported 206,000 in the previous week.