Wall Street’s main indexes tumbled on Friday as AI anxiety hammered technology stocks, with the Nasdaq and the S&P 500 on track for their steepest monthly drop since March 2025, while hotter-than-expected inflation data also hit sentiment.
Technology shares faced selling pressure this month as concerns over high valuations and the uncertain payoff from Big Tech’s massive AI spending grew.
In midday trading, the Dow Jones Industrial Average plunged nearly 500 points, or 1%, to 49,011. The S&P 500 lost 0.6%, and the Nasdaq dropped or 0.7%.
If losses hold, the Dow is on track to snap a nine-month winning streak.
Tariff ambiguity also stoked volatility after the Supreme Court last week voided most of the duties President Trump had imposed in 2025.
In response, Trump announced a temporary global tariff of 10% that came into effect on Tuesday.
Nvidia slid 2% after plunging more than 5% in the previous session despite strong earnings, a sign that risk sentiment for all things AI remained shaky.
“There are a lot of questions around AI and the impact of AI disruption in different industries… (and) the future of tech and, specifically US tech,” said Anthi Tsouvali, multi-asset strategist at UBS Global Wealth Management.
“There is definitely a rotation to companies that tend to be a little more traditional… they don’t have a high exposure to IT and of course, in more defensive parts of the market.”
Risk appetite also took a hit after data showed US producer prices increased more than expected in January, suggesting inflation could pick up in the months ahead.
Earlier in the day, brokerage UBS said it had cut its recommended allocation to US equities to neutral, citing the relatively lower sensitivity of US corporate earnings to global growth and high valuations, among other reasons.
Zscaler plunged 14% after the cloud security firm reported a wider net loss in the second quarter.
Software shares and several industries were rocked earlier this year too, on fears of industry wide AI-driven disruptions.
Netflix added 9% as investors cheered its decision to exit the fight for Warner Bros. Discovery, which dropped 2%. Paramount Skydance rose 4.7% after winning the race for some of the world’s most prized TV and film assets.
Jack Dorsey’s Block surged 16% after the payments firm said it would cut over 4,000 jobs, nearly half its workforce, as part of an overhaul to embed AI across operations.
Dell climbed 16.6% after the PC-maker said it expects revenue from its key AI-optimized servers business to double in fiscal year 2027 and promised to return more cash to shareholders.
