The S&P 500 rose on Friday after a key consumer inflation report came in slightly weaker than expected, but stocks were still on track for a loss for the week.
The broad market index traded up 0.3%, while the Nasdaq Composite gained 0.1%. The Dow Jones Industrial Average added 68 points, or 0.1%.
The Bureau of Labor Statistics reported that the consumer price index – which measures the cost of goods and services in the US economy – rose 0.2% in January, reflecting a 2.4% year-over-year gain. The inflation gauge was expected to show a 0.3% increase on the month and a 2.5% advance from a year earlier, according to economists polled by Dow Jones.
Excluding volatile food and energy prices, core CPI was in line with expectations at 0.3% month-on-month and 2.5% year-on-year.
“This should be welcome news for the markets and for presumptive new Fed Chair Kevin Warsh,” said Phil Blancato, Osaic’s chief market strategist.
“This is just one month’s worth of data, but if the trend continues, it should pave the way for lower interest rates and reining in inflation.”
Inflation is also “not unrelated” to existing fears among investors that artificial intelligence will disrupt the revenue potential of various industries, according to Keith Buchanan of Globalt Investments. While Friday’s CPI “has nothing to do with what we expect” in terms of industry disruption, the market is still trying to figure out what artificial intelligence and its application across the economy actually mean, he said, noting that it creates “upward pressure on unemployment” as well as “downward pressure on inflation.”
“How did we imagine that everyone would win and there would be no losers?” the senior portfolio manager told CNBC, according to SEEbiz.
Fears of AI disruption roiled the market this week, spreading beyond the recent selloff in software stocks and into significant areas like real estate, trucking and financial services. Financial stocks Charles Schwab and Morgan Stanley fell 10% and 5% respectively this week, while software stock Workday fell 10% over the period. Shares of commercial real estate firm CBRE have lost 15% since the start of the week.
Those fears have spread to the media industry, hitting media stocks like Walt Disney and Netflix.
