U.S. stocks steadied on Friday after an encouraging update on inflation helped calm a Wall Street that’s been wracked by worries about how artificial-intelligence technology may upend the business world. The S&P 500 barely budged, a day after it had tumbled to one of its worst losses since Thanksgiving. The Dow Jones Industrial Average rose 0.1%, while the Nasdaq composite slipped 0.2%. Stocks got some help from easing Treasury yields, which fell after a report showed inflation slowed more than expected in January.

Why it matters

The market volatility highlights growing concerns about the potential disruption AI technology could have on various industries. Investors have been quick to react, with a ‘shoot first, ask questions later’ mentality towards companies they perceive as vulnerable to AI-powered competitors. However, the overall economic data, including improved job market and slowing inflation, suggest the economy may be in a better position than at the end of 2025.

The details

Several companies that investors had earlier targeted as potential losers from AI disruption, such as AppLovin and trucking/freight companies, saw their stock prices rebound on Friday after sharp declines the previous day. Meanwhile, Applied Materials, whose products help make chips and displays, reported stronger-than-expected profits and credited ‘acceleration of industry investments in AI computing.’ The market reactions have been aggressive, with analysts likening it to a ‘shoot first, ask questions later’ mindset when it comes to AI disruption.

The S&P 500 tumbled to one of its worst losses since Thanksgiving on Thursday.

U.S. consumers paid prices for groceries, clothes and other costs of living that were 2.4% higher overall than a year earlier in January.

December’s inflation rate was 2.7%.

The players

Brian Jacobsen

Chief economic strategist at Annex Wealth Management.

Gary Dickerson

CEO of Applied Materials, a company whose products help make chips and displays.

John Chidsey

New CEO of Norwegian Cruise Line Holdings, replacing Harry Sommer.

What they’re saying

“It’s still too high, but only for now, not forever.”

— Brian Jacobsen, Chief economic strategist (Newser)

“Acceleration of industry investments in AI computing.”

— Gary Dickerson, CEO (Newser)

What’s next

The Federal Reserve is expected to resume cutting interest rates later this year if the economy continues to show signs of improvement, which could provide a boost to stock prices.

The takeaway

The market volatility underscores the uncertainty and disruption that AI technology is causing across various industries. However, the overall economic data suggests the economy may be in a better position than at the end of 2025, providing some optimism that the market can weather the AI-induced turbulence.