Inflation Surprise Hits Markets
U.S. stocks moved lower Friday after January’s producer price index (PPI) came in hotter than economists expected, complicating the inflation outlook and pressuring rate-cut expectations.
The Dow Jones Industrial Average dropped roughly 1.3%, shedding more than 600 points. The Nasdaq Composite fell 1.2%, while the S&P 500 slid 0.7%.
With the decline, major indexes are tracking toward monthly losses, and the Dow risks snapping its eight-month winning streak.
January PPI rose 0.5% month over month, above expectations of 0.3%. Core PPI, excluding food and energy, surged 0.8%, also well ahead of forecasts. The print reinforced concerns that inflation remains sticky at the wholesale level.
AI Disruption Back in Focus
Beyond macro pressure, markets also reacted to renewed concerns about artificial intelligence reshaping corporate structures.
Block announced plans to cut nearly half its workforce as it restructures around AI-driven efficiencies. Management suggested similar moves could become widespread across industries.
The development intensified investor anxiety around how AI could disrupt service-heavy sectors such as software, consulting, and wealth management.
Rotation Is Clear
February has marked a noticeable shift in leadership.
Hard assets are outperforming:
- Gold is up roughly 11% on the month, sitting just below recent record highs.
- Silver has surged about 19%.
- Copper remains near record territory.
Meanwhile, crypto continues to struggle:
- Bitcoin is down roughly 15% in February.
- Ether and other major tokens are also in decline.
On the equity side, defensive sectors are leading:
- Utilities are up approximately 10% in February.
- Consumer Staples are higher by about 8%.
- Energy remains one of the strongest performers year to date.
Mega-cap growth names and tech-heavy sectors, by contrast, have lagged, reflecting a broader rotation away from high-beta trades.
WSA Take
The market narrative is shifting.
Sticky inflation is tempering rate optimism. AI is accelerating structural change across industries. And investors are rotating into defensives and hard assets rather than chasing speculative growth.
The S&P 500 remains close to record highs — but beneath the surface, leadership has clearly changed.
In bull markets, rotation keeps the cycle alive.
The question now is whether this shift signals consolidation — or the start of a more meaningful reset.
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