Wall Street Falls on AI Disruption Fears, Hot PPI Data

NEW YORK — U.S. stocks declined Thursday as concerns over artificial intelligence's disruptive impact on corporate lending, higher-than-expected inflation data, and rising tensions with Iran weighed on investor sentiment.

The Dow Jones Industrial Average fell 521.28 points, or 1.05%, to close at 48,977.92. The S&P 500 dropped 29.98 points, or 0.43%, to 6,878.88, while the Nasdaq Composite declined 210.17 points, or 0.92%, to 22,668.21.

Nvidia, which plunged Wednesday following its earnings report released after Tuesday's close, tumbled another 4.16%. Apple fell 3.21%, Microsoft declined 2.24%, Meta dropped 1.34%, Tesla lost 1.49%, and Broadcom slipped 0.67%. Amazon rose 1.00% and Alphabet gained 1.42%.

Markets came under pressure early after the January producer price index surged past expectations. The Labor Department reported PPI rose 0.5% from December on a seasonally adjusted basis, exceeding the 0.3% forecast. It marked the largest monthly increase since September's 0.6% gain.

Core PPI, which excludes volatile food and energy prices, jumped 0.8% month-over-month, far above the expected 0.3%. Services PPI surged 0.8%, the biggest increase since July's 0.9% rise. Wall Street views PPI as a leading indicator for consumer prices since producer costs eventually pass through to final goods.

Market participants attributed the spike to companies beginning to pass on tariffs imposed by President Donald Trump to consumers. If this trend continues, the Federal Reserve's rate cuts this year could be more limited than anticipated.

Concerns that AI's disruption could trigger loan defaults at banks and investment firms added to market pressure. Regional lender Zions Bancorp plunged 7.09%, while Wells Fargo dropped 5.62%, Capital One Financial fell 6.15%, and Citigroup declined 5.16%. The KBW Regional Banking Index tumbled 5.23%. Major private equity firms also retreated amid credit risk concerns, with Ares Management down 5.14%, KKR falling 6.34%, and Blackstone losing 3.88%.

Geopolitical tensions fueled safe-haven demand after the U.S. and Iran concluded a third round of nuclear talks in Geneva without progress Wednesday. The parties agreed to continue negotiations in Vienna next week. Trump told reporters at the White House, "I'm not satisfied that Iran doesn't want to give us what we must have." He was referring to the dismantling of Iran's nuclear program.

Netflix surged 13.77% after announcing it would withdraw from the bidding for Warner Bros. Discovery.

Oil prices rebounded sharply for the first time in six sessions on escalating Iran tensions. West Texas Intermediate crude for April delivery jumped $1.81, or 2.77%, to settle at $67.02 per barrel on the New York Mercantile Exchange.