U.S. Stocks May Come Under Pressure Amid Inflation, AI Concerns

Stocks are likely to come under pressure in early trading on Friday, extending the pullback seen in the previous session. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1 percent.

The futures saw further downside following the release of a Labor Department report showing producer prices in the U.S. increased by more than expected in the month of January.

The report said the Labor Department’s producer price index for final demand climbed by 0.5 percent in January after rising by a downwardly revised 0.4 percent in December.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

The Labor Department also said the annual rate of producer price growth edged down to 2.9 percent in January from 3.0 percent in December. Economists had expected yearly growth to slow to 2.8 percent.

Lingering concerns regarding AI-related layoffs and disruptions may also weigh on Wall Street after Block (XYZ) said it is cutting its workforce by nearly half.

Block CFO Amrita Ahuja said the payments company sees an “opportunity to move faster with smaller, highly talented teams using AI to automate more work.”

After moving sharply higher over the two previous sessions, stocks gave back some ground during trading on Thursday. The tech-heavy Nasdaq showed a significant move to the downside, although the Dow managed to end the day slightly higher.

The Nasdaq climbed well off its early lows but still slumped 273.69 points or 1.2 percent to 22,878.38. The S&P 500 also fell 37.27 points or 0.5 percent to 6,908.86, but the narrower Dow inched up 17.05 points or less than a tenth of a percent to 49,499.20.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index edged up by 0.2 percent, while China’s Shanghai Composite Index rose by 0.4 percent and Hong Kong’s Hang Seng Index jumped by 1 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.3 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.6 percent.

In commodities trading, crude oil futures are soaring $2.39 to $67.60 a barrel after slipping $0.21 to $65.21 a barrel on Thursday. Meanwhile, after falling $32 to $5,194.20 ounce in the previous session, gold futures are climbing $44.20 to $5,238.40 an ounce.

On the currency front, the U.S. dollar is trading at 156.13 yen versus the 156.11 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1787 compared to yesterday’s $1.1797.