Wall Street Sees Major Declines Amid AI Concerns
Wall Street’s key indexes dropped on Friday, primarily influenced by worries surrounding AI, leading to the Nasdaq and S&P 500 witnessing their largest monthly declines since March 2025. Additionally, inflation data that was unexpectedly high further dampened investor sentiment.
This month has seen technology stocks facing increased selling pressure as anxieties over inflated valuations and the unpredictable returns of Big Tech’s substantial investments in AI grow.
During midday trading, the Dow Jones Industrial Average fell nearly 500 points, or about 1%, settling at $49,011. The S&P 500 slipped by 0.6%, while the Nasdaq experienced a decline of 0.7%.
Should these losses persist, the Dow is likely to conclude its impressive nine-month winning streak.
Further adding to the market instability was uncertainty regarding tariffs, following a Supreme Court ruling that invalidated many of President Trump’s mandates from 2025.
In response, President Trump declared temporary 10% global tariffs set to take effect on Tuesday.
Despite presenting strong earnings, Nvidia’s stock dropped by 2%, following a more than 5% fall the previous day, which indicates ongoing volatility in market sentiment towards AI.
Antti Tzobari, a multi-asset strategist at UBS Global Wealth Management, noted, “There are a lot of questions about AI and its disruptive impact on various industries and the future of technology, especially in the U.S.” He added that investors are leaning towards more traditional companies with less exposure to IT risk, suggesting a shift towards the defensive parts of the market.
The risk appetite was further impacted by U.S. producer price data that exceeded expectations in January, indicating inflation might pick up speed in the near future.
Prior to this, UBS adjusted its recommended stock allocation for U.S. equities to neutral, citing the low sensitivity of U.S. corporate earnings to global economic trends and high market valuations.
Zscaler’s stock tumbled 14% after the cloud security firm reported an increase in net losses for the second quarter.
Earlier in the year, both software stocks and various industries had been rattled by fears of industry-wide AI disruption.
On a brighter note, Netflix’s shares surged by 9% as investors responded positively to its decision to withdraw from its competitive struggles with Warner Bros. Discovery, which dropped by 2%. Paramount Skydance saw a 4.7% increase after securing lucrative television and film assets.
Jack Dorsey’s Block experienced a 16% spike after announcing plans to cut more than 4,000 jobs—almost half of its staff—aiming to integrate AI into its operations more effectively.
Dell’s stock rose 16.6% after the company forecasted that revenue from its primary AI-optimized server business could double by fiscal 2027, while also promising to return more cash to shareholders.
