Inflation Surprise Sends Dow Down 521 Points as AI Worries Spark Broad Sell-Off
Inflation at the wholesale level surprised to the upside and renewed fears about artificial intelligence combined to knock U. S. stocks lower on Friday, erasing recent gains and intensifying concerns about the timing of monetary easing. The reaction mattered immediately: investors rapidly re-priced risk across major indexes and sectors after the hotter-than-expected inflation reading.
Producer Price Index and Inflation shock
The market slide followed the release of the Producer Price Index, which measures price changes before they reach consumers. The PPI rose 2. 9% in January on an annualized basis, well above the 1. 6% economists had expected. That hotter-than-expected reading raised the prospect that the Federal Reserve could hold off on planned rate cuts, a dynamic traders said helped drive selling across equities.
Dow Jones Industrial Average plunges 521 points
Major benchmarks moved sharply: the Dow Jones Industrial Average tumbled 521 points, a decline of about 1. 1%; the S& P 500 fell 30 points, or 0. 4%, to close at 6, 879; and the Nasdaq Composite sank 0. 9% on the day. The losses followed the PPI release and a renewed wave of AI-driven anxiety among investors, producing a swift reallocation of capital away from perceived vulnerabilities.
Block and Jack Dorsey cite AI in workforce cuts
Investor unease was amplified by corporate moves that underscored the disruptive potential of AI. Block, the company behind Cash App and Square, announced a reduction in staff from around 10, 000 employees to 6, 000, a cut of nearly half, and its stock jumped 16. 8% on Friday. Chief executive Jack Dorsey framed the move as evidence that "intelligence tools have changed what it means to build and run a company, " saying a significantly smaller team using the company’s tools can accomplish more.
Block is the latest firm to point to AI as part of its rationale for layoffs; Pinterest and Dow made similar declarations earlier this year when they announced job cuts. Logan Purk, a senior research analyst at Edward Jones, summed up a swift change in investor sentiment, noting that a year ago many expected generative AI to boost sales and growth but that narrative has shifted toward the belief that generative AI could replace existing software in many cases.
Oil prices climb amid United States–Iran tensions
Energy markets also reacted to geopolitical developments. Oil prices rose as tensions between the United States and Iran escalated amid discussions over a potential nuclear deal. President Trump threatened military action if Iran did not rein in its nuclear capabilities, a posture that contributed to a 2. 8% rise in the price of a barrel of benchmark U. S. crude to $67. 02 and a 2. 4% increase in Brent crude to $72. 48 per barrel.
Apollo Global Management drop and winners like Netflix
The sell-off extended beyond software stocks. Private-equity firms that have lent to challenged software companies also felt the strain: Apollo Global Management fell 8. 5% as investors assessed credit risk tied to firms facing AI pressure. Sectorwide fears over capable AI tools replacing workers — and potentially entire businesses or profit pools — have produced sudden sell-offs in industries ranging from trucking logistics to legal services.
Not every market reaction was negative. Netflix climbed 13. 8% after the company dropped its bid to buy Warner Bros. Discovery’s studio and streaming business, a development that investors rewarded on the day.
Wedbush Securities analyst Dan Ives pushed back on the view that AI will fully obliterate legacy software, arguing that new AI tools will be limited by the data they can access and will not simply rip-and-replace existing ecosystems. What makes this notable is how quickly sentiment can flip from optimism about AI-driven growth to fears of wholesale disruption, magnifying market moves when macro data like the PPI surprises on the upside.
Updated Feb. 27, 2026, 4: 51 PM ET.
