US stocks sank on Friday after a measure of wholesale inflation came in hotter than expected and Block's (XYZ) surprise shakeup turned the spotlight on AI disruption risks.

The Dow Jones Industrial Average (^DJI) led the way down with a loss of 1.4%, or nearly 700 points. Meanwhile, the Nasdaq Composite (^IXIC) and S&P 500 (^GSPC) dropped 0.9% and 0.6%, respectively, on the heels of sharp closing losses for the tech-heavy indexes.

The downbeat end to the week put the major indexes on track to post monthly losses in February, with the Dow poised to snap its eight-month win streak. Worries that AI will wreak havoc on a swathe of service industries have already hit stocks in sectors like software, wealth management, and real estate.

Those concerns were stoked on Thursday when Block said it will cut nearly half its workforce and overhaul operations, given the promise of AI to reshape its business needs.

The fintech's co-founder Jack Dorsey said he believes "the majority of companies will reach the same conclusion and make similar structural changes" within the next year. Shares of Block (XYZ) jumped about 20% in premarket trading on the news.

Elsewhere in corporate news, Netflix (NFLX) shares rose after the streaming giant abandoned its pursuit of Warner Bros. Discovery (WBD). That left rival Oracle (ORCL)-linked bidder Paramount Skydance (PSKY) to clinch a buy of the Hollywood studio, giving its stock a boost, too.

On the macro front, January’s producer price index rose 0.5% month over month, showing that wholesale inflation grew at a faster pace than the 0.3% rise economists expected. Core PPI — which excludes volatile food and energy prices — of 0.8% for the month also exceeded forecasts of 0.3%.

Looking ahead, Berkshire Hathaway (BRK-B, BRK-A) CEO Greg Abel is expected to publish his first annual shareholder letter on Saturday, after taking over from Warren Buffett. It will come out alongside the conglomerate's quarterly and 2025 update.

Defensive sectors are leading the February scoreboard, with Utilities (XLU) up about 10% and having the sector's best month since 2003.

Consumer Staples (XLP) are up about 8%, alongside steady gains in Energy (XLE), which remains the best-performing sector year to date (up 24%).

Rounding out the defensives, Real Estate (XLRE) and Health Care (XLV) are up about 6% and 3%, respectively.

But 2026 has not been the year for the \\"Magnificent Seven\\" and the tech trade. The three megacap sectors — Communication Services (XLC), Technology (XLK), and Consumer Discretionary (XLY) — are all down 2% to 4% in February, with finicky Financials (XLF) at the bottom.

The S&P 500 (^GSPC) might be down slightly this month, but it's still within 1.5% of its all-time closing high in January. As the godfather of technical analysis, Ralph Acampora, has famously quipped, \\"Rotation is the lifeblood of a bull market.\\"

The Dow Jones Industrial Average (^DJI) is on course to snap its eight-month win streak, putting February on pace to be its worst month since April 2025 — even after logging three record closing highs earlier in the month.

But the Dow Jones Transportation Average (^DJT) is having its best month since May 2025 — up five straight months (its longest streak since 2020) and notching four record closes in February.

All the more impressive: Transports sit within 1% of a record closing high despite getting dragged down by the AI disruption trade twice this month.

The daily chart now looks like a clean pennant formation, with the 20-day moving average to the downside and the Feb. 6 record closing high around 19,900 to the upside.

More than 100 companies have filed lawsuits with the Customs and Border Protection (CBP) agency seeking refunds after the US Supreme Court's ruling that struck down the White House's IEEPA tariff regime, according to Bloomberg.

Since the ruling, a mix of public corporations and private companies have filed lawsuits, including FedEx (FDX), Dollar General (DG), On Holding AG (ONON), L'Oreal (OR.PA), and Dyson.

The Supreme Court's ruling, which found President Trump's use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs on a range of other nations illegal, did not provide guidance on refunds. Analysts have estimated that the total cost of refunds could exceed $170 billion.

With no guidance from the Supreme Court, judgment on refunds now goes to the US Court of International Trade. In response to press comments, Trump said about refunds, “I guess it has to get litigated,” and suggested the process could take years, according to Bloomberg.

Bloomberg noted that many of the companies suing CBP have been smaller corporations that don't have the scale and balance sheet of major public companies to quickly reshuffle supply chains and negotiate pricing agreements.

Long-term US bonds are having their best month in a year, as the iShares 20+ Year T-Bond ETF (TLT) is up 4% in February.

Bond yields — which move opposite to bond prices — posted their biggest monthly drop in a year. The US 10-year yield (^TNX) is down 26 basis points, and the 30-year (^TYX) is down 23 basis points.

The catalysts boil down to two main themes: tariff uncertainty after the Supreme Court’s ruling (and the scramble to game out what comes next for trade policy) and the recurring \\"AI scare trade\\" that periodically smacks down growth narratives and prods investors toward defense.

Meanwhile, the major stock indexes are tracking small losses for the month. Overall, this is good news for the 60/40 portfolio: bonds (the 40%) are finally doing what they're supposed to do when stocks (the 60%) stumble — rally.

Bitcoin (BTC-USD) fell back toward $66,000 on Friday, on track for a fifth month of losses as the crypto market remains volatile.

Earlier this week, the token rebounded near $70,000, but investors sold into the rally.

The world's largest cryptocurrency is down roughly 24% year to date after tumbling from an all-time high of about $126,000 in October.

Ether (ETH-USD) has declined even more on a relative basis on Friday, sinking more than 3%. The second-largest cryptocurrency has fallen 37% year to date.

Industry watchers have been closely monitoring potential catalysts that could lift prices this year. On Polymarket, the odds of Congress passing crypto regulation, specifically the Clarity Act, have climbed to 67%.

Oil prices shot higher on Friday morning after US-Iran talks ended in Geneva on Thursday with no deal and the US began ordering evacuations from embassies in the Middle East.

Futures on Brent crude (BZ=F), the international pricing benchmark, jumped by 2.9% to change hands above $72.90, while those on the US benchmark West Texas Intermediate (WTI) crude (CL=F) rose by a stronger 3% to trade above $67.

Both energy products are trading at six-month highs.

On Thursday, the US and Iran remained far apart on key redline issues, even as Oman's foreign minister, Badr Albusaidi, who is mediating the talks, said progress has been made. The two sides are now set for the next round of talks in Vienna, with technical teams — such as nuclear and banking experts — expected to join.

More pressingly for oil prices, the US has continued to send military firepower to the region, deploying more combat assets to the Gulf, and has begun taking security measures for Americans in the region.

On Friday, the US embassy in Jerusalem said it had authorized the evacuation of non-essential personnel and family members, noting that those persons included \\"may wish to consider leaving Israel while commercial flights are available.\\"

Reports from regional news publications also suggested that the US had ordered the evacuation of personnel from the US embassies in Baghdad, though a spokesperson for the State Department denied the claim in an X post.

Oil prices are highly sensitive to potential conflict in Iran, with the most focus on the Strait of Hormuz, a critical shipping chokepoint through which roughly 20 million barrels per day of petroleum products pass. Iran, which largely controls the strait, has threatened to close the waterway, along with threats of severe retaliation if the US strikes.

The US stock market sank at the opening bell on Friday after the latest reading of the producer price index showed wholesale inflation rose more than expected in January. Meanwhile, Block's (XYZ) mass layoffs reignited fears of AI-led corporate disruption.

The tech-heavy Nasdaq Composite (^IXIC) saw the largest loss at the start of trading, dropping roughly 1.3%. The Dow Jones Industrial Average (^DJI) shed 1%, or just under 500 points, and the S&P 500 (^GSPC) lost roughly 0.9%.

On Thursday, Jack Dorsey's Block said it will trim nearly half its workforce as AI reshapes operations. Shares of Block (XYZ) jumped about 20% after the bell on Friday. Elsewhere, Netflix (NFLX) shares rose after the streaming giant gave up its pursuit of Warner Bros. Discovery (WBD), leaving the way open for Paramount Skydance (PSKY) to purchase the Hollywood studio.

In a massive new funding round, OpenAI raised $110 billion from a group of investors, including Nvidia and Amazon, valuing the ChatGPT maker at $730 billion, not including the money raised.

Investments include $50 billion from Amazon, $30 billion from Nvidia, and $30 billion from Softbank, OpenAI said in a press release announcing the raise.

Shares in Nvidia and Amazon fell after the opening bell on Friday.

\\"We are entering a new phase where frontier AI moves from research into daily use at global scale,\\" OpenAI said in its press release. \\"Leadership will be defined by who can scale infrastructure fast enough to meet demand, and turn that capacity into products people rely on.\\"

The company also announced a new deal with Amazon Web Services (AWS) that will see the two companies build a \\"Stateful Runtime Environment\\" run on OpenAI's models that \\"allows developers to keep context, remember prior work, work across software tools and data sources, and access compute.\\" The product is expected to launch \\"in the next few months,\\" according to the press release.

OpenAI is also expanding its existing partnership with Nvidia with the \\"use of 3GW of dedicated inference capacity and 2 GW of training on Vera Rubin systems,\\" the company said.

US producer-level prices advanced faster than expected in January, according to data released Friday by the Bureau of Labor Statistics.

Prices increased by 0.5% in January over the previous month, in line with December's gain but above economist expectations an increase of 0.3%, according to consensus estimates. Excluding the more volatile food and energy costs, producers' prices advanced by 0.8% over the previous month, more than double the 0.3% growth economists had predicted.

Year-on-year, headline PPI rose by 2.9% against expectations of 2.6%, while prices ex-food and energy rose 3.6% against expectations of 3%.

Services led all price inflation in January, with costs advancing by 0.8%, the largest monthly gain since July 2025. Meanwhile, costs for goods declined by 0.3%, tempering the much larger movement in services.

A 14.4% increase in margins for \\"professional and commercial equipment wholesaling\\" contributed 20% of the jump in services prices, according to BLS data.

In goods, prices of \\"nonferrous metals,\\" including copper and aluminum, grew by 4.8%, while gasoline fell by 5.5%. Commercial and industrial electric power prices also fell, the BLS said.

Treasury yields slipped on Friday morning as investors awaited data on wholesale inflation from the January producer price index.

The 10-year bond (^TNX) briefly fell to 3.99%, marking its first time below 4% since November. The shorter-run five-year yield (^FVX) declined to 3.58%, while the longer-run 30-year yield (^TYX) dropped to 4.66%.

The Bureau of Labor Statistics will release the producer price index this morning. The Street expects headline demand increased 0.3% in January. While continued easing in wholesale inflation would likely push yields lower, some strategists see higher yields remaining sticky.

\\"We're seeing a lot of instability in the market right now, whether it's concerns over the federal funds rate, higher debt levels at the federal side,\\" Schwab Center for Financial Research fixed income strategist Cooper Howard told Yahoo Finance, adding, \\"that should really keep that term premium elevated going forward and therefore probably put a floor on how much lower longer term yields could potentially go.\\"

Anthropic (ANTH.PVT) CEO Dario Amodei issued a statement Thursday evening, saying his company won't submit to the Department of Defense’s demands that it be allowed to use its AI technology as it sees fit, within the law.

The Defense Department and Secretary of Defense Pete Hegseth have threatened to force Anthropic to give the Pentagon full use of its models under the Defense Production Act — or, conversely, declare it a supply chain threat and force other Pentagon vendors who work with the AI company to stop using its software.

“These threats do not change our position: we cannot in good conscience accede to their request,” Amodei said in his statement.

Anthropic and the Pentagon have been in an ongoing standoff about how the DOD will use its Claude AI. The company says that while it already works with the Defense Department, including within the government's classified networks and by advocating for strong chip export controls to China, it wants assurances that the DOD will not use its models for the mass surveillance of Americans or for fully autonomous weapons.

;cpos:2;pos:1;elm:context_link;itc:0;sec:content-canvas;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\\" class=\\"link yahoo-link\\">Read more in our tech news blog >

Duolingo Inc (DUOL) shares sank 25% before the bell on Friday after reporting fourth quarter earnings, which beat analyst expectations, but issued disappointing guidance for 2026. The company said it is changing its strategy to prioritize user growth over near-term profitability.

Investing.com reports:

The language-learning platform reported adjusted earnings per share of $0.84 for the fourth quarter, beating the analyst estimate of $0.83. Revenue rose 35% YoY to $282.9 million, surpassing the consensus estimate of $275.74 million. However, the company's outlook for 2026 fell significantly short of Wall Street expectations, with first-quarter revenue guidance of $288.5 million below the $291.8 million consensus and full-year revenue guidance of $1.20-$1.22 billion trailing the $1.26 billion estimate. The midpoint of $1.21 billion represents approximately 17% growth, well below analyst expectations.

Daily active users grew 30% YoY to 52.7 million in the fourth quarter, while paid subscribers increased 28% to 12.2 million. However, CEO Luis von Ahn acknowledged that DAU growth decelerated throughout 2025 and expects approximately 20% DAU growth in 2026, down from growth rates exceeding 40% in prior periods.

Read more here.

Netflix (NFLX) has walked away from the battle to buy Warner Bros. Discovery (WBD), leaving rival bidder Paramount Skydance (PSKY) free to clinch a $111 billion deal for the storied Hollywood studio.

Shares in Netflix jumped over 8% before the bell on Friday, a sign investors were glad its pursuit had ended. WBD stock fell 2%, while Paramount shares were up 9%.

Bloomberg reports:

The streaming industry leader said that while it believed its deal would have passed muster with regulators and created shareholder value, it didn’t want to keep bidding.

“We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive,” Netflix said Thursday in a statement. Instead, it will keep investing in its business, including about $20 billion this year on films, TV shows and other entertainment offerings.

... The takeover fight has been contentious, in Hollywood and in Washington. Both Netflix co-Chief Executive Officer Ted Sarandos and Paramount CEO David Ellison made pilgrimages to the US capital this week to meet with lawmakers.

Sarandos spent about an hour on Thursday with officials in the Trump administration.

Read more here.

Intuit (INTU) stock fell 3% before the bell on Friday after reporting stronger-than-expected results for its second quarter revenue, but its outlook for the current quarter missed analyst estimates.

NCR Atleos (NATL) stock jumped 15% during premarket trading after Brinks Co (BCO) announced on Thursday that it will acquire NCR in a cash-and-stock deal valued at $6.6 billion.

Rocket Companies, Inc. (RKT) stock rose 7% during premarket hours after quarterly earnings beat analysts estimates.

CoreWeave (CRWV) stock fell 9% before the bell on Friday after announcing that it expects its capital expenditure to double in 2026. The AI cloud computing company said it will spend in order to scale up its AI cloud platform in order to manage the computing power that its customers need.

Reuters reports:

The cloud infrastructure technology company expects capital expenditure between $30 billion and $35 billion in 2026, up from $14.9 billion in 2025, driven by purchases of Nvidia's (NVDA) AI chips, rapid data ​center buildouts and energy procurement for powering them.

\\"We made the decision to go ahead and to build faster so that we can deliver more infrastructure,\\" CEO Michael Intrator told Reuters in an interview.

\\"It puts some short-term pressure on the margins,\\" he said, but added that the build-out was helping the company secure stable contracts.

\\"Q1 is going to be the low point, and then it's going to build from there,\\" he said, referring to margins. CoreWeave's ‌adjusted operating income margin fell to 6% in ⁠the December quarter from 16% a year ago.

All of the company's substantial capital expenses were tied to already signed customer contracts, CFO Nitin Agrawal said in the company's earnings call.

Read more here.

Block (XYZ) shares surged more than 24% in premarket trading after Jack Dorsey announced the payments company would lay off nearly half of its staff. The move was part of a major bet in artificial intelligence that came alongside the release of its fourth quarter earnings report.

\\"Today we're making one of the hardest decisions in the history of our company: we're reducing our organization by nearly half, from over 10,000 people to just under 6,000. that means over 4,000 of you are being asked to leave or entering into consultation,\\" Dorsey wrote in a post on X on Thursday.

\\"Something has changed,\\" Dorsey wrote, framing the decision as a risk intended to position the company for long-term growth. He cited new artificial intelligence tools that can automate work as the reason for the shift, noting that AI is \\"enabling a new way of working which fundamentally changes what it means to build and run a company.\\"

we're making @blocks smaller today. here's my note to the company.

####

today we're making one of the hardest decisions in the history of our company: we're reducing our organization by nearly half, from over 10,000 people to just under 6,000. that means over 4,000 of you are…

— jack (@jack) February 26, 2026

In the fourth quarter, Block reported adjusted earnings per share of $0.65, in line with Wall Street estimates. Revenue of $6.25 billion slightly beat expectations of $6.21 billion, according to S&P Global Market Intelligence.

Block also raised its full-year guidance. The company, which supports the CashApp and Square platforms, said it expects gross profit growth of 18% year over year in 2026 and adjusted operating income of $3.20 billion or 26% margin.

Dell (DELL) forecast fiscal 2027 revenue above Wall Street estimates on Thursday, betting on growing demand for its ‌artificial intelligence-optimized servers. Its shares rose over 12% in premarket ‌trading.

Reuters reports:

Big Tech firms, such as Alphabet (GOOG, GOOGL), Microsoft (MSFT), Amazon (AMZN) and Meta (META), are expected to spend at least $630 ​billion to build AI infrastructure this year, which would boost demand for vendors like Dell and rival Super Micro Computer (SMCI).

... Dell expects AI servers revenue to grow 103% to about $50 billion ​in fiscal ​2027.

The company said it has more than ​4,000 AI server customers, including ‌Elon Musk's AI startup xAI and CoreWeave.

Dell forecast annual revenue of $138 billion to $142 billion, above analysts' average estimate of $125.54 billion, according to data compiled by LSEG.

Read more here.

Reuters reports:

Zscaler (ZS) on Thursday posted a wider net loss in the second quarter, citing higher spending on sales, marketing, ‌and research and development in a competitive market, sending shares of ‌the cloud security firm down roughly 9% in extended trading.

The results come when IT budgets remain ​tight and clients spend cautiously on large deals amid economic uncertainty, even though cybersecurity budgets face less pressure than general capital outlays.

Zscaler provides cloud-based zero trust security, which is designed to eliminate the need for legacy firewalls and virtual private networks (VPNs) ‌by authenticating each connection rather ⁠than granting broader network access.

Zscaler, which competes with Palo Alto Networks and Cloudflare, reported a net loss of $34.3 million in ​the ​quarter ended January 31, widening sharply from ​a net loss of $7.7 million a ‌year earlier.

Read more here.

Bloomberg reports:

Netflix (NFLX) Inc. dropped out of the fight to buy Warner Bros. Discovery Inc. (WBD), clearing the way for rival bidder Paramount Skydance (PSKY) Corp. to clinch its $111 billion deal for the historic Hollywood studio.

“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” Netflix said Thursday in a statement. “However, we’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.

Netflix shares jumped as much as 13% in after-hours trading, indicating that investors were happy to see the company walk away from the deal. Warner Bros. fell with investors no longer anticipating a bidding war. Paramount shares were unchanged.

Netflix inked an $82.7 billion deal, including assumed debt, to acquire the studio and streaming businesses of Warner Bros. in December, but repeated counteroffers from Paramount for the entire company opened up the bidding again. Warner Bros. deemed Paramount’s latest $31-a-share offer superior on Thursday.

Read more here.