Key points:
- Financials
fall on worries over lending standards
- Fintech
company Block surges on plan to cut 4,000 jobs on AI bet
- Netflix
climbs after ending Warner Bros Discovery pursuit
By Stephen Culp and Ragini Mathur
Financial and tech stocks were hit hard by a handful of
persistent investor worries on Friday, putting U.S. stocks on track for their
largest monthly percentage decline in a year.
All three major indexes ended decisively lower and posted
steep weekly declines, with the blue-chip Dow logging its biggest weekly drop
since November. The selloff was driven by uncertainty over costs and disruption
related to artificial intelligence, revived tariff uncertainties and simmering
geopolitical tensions.
"To wrap up the month of February, we were reminded
there are still some cracks out there," said Ryan Detrick, chief market
strategist at Carson Group in Omaha, Nebraska. "Adding to the day's
weakness was the hotter inflation data, potentially pushing back on the idea of
a dovish Fed later this year."
"It's been a rough go in February, but corporate
America is looking at over a 14% gain in earnings in the fourth quarter,"
Detrick added. "The reality is that earnings drive long-term stock gains
and this was a very impressive earnings season."
Financial stocks 
SPF slid
after worries of contagion in the sector after reports that Barclays,
Jefferies JEF,
Wells Fargo WFC and
other banks face potential losses related to the collapse of UK mortgage
provider Market Financial Solutions Ltd, amid broader concerns about lending
standards. Wells Fargo, Jefferies and U.S.-listed shares of Barclays BARC ended
sharply lower.
Tech shares S5INFT also
continued to weigh on the indexes as lingering fears related to AI dragged
chips SOX and
software lower on the day.
Defensive sectors such as consumer staples S5CONS,
healthcare S5HLTH and
utilities S5UTIL were
the session's clear outperformers.
"This is a classic risk-off environment where the pure
defensive areas are finding some strength while the market is turning its head
on some of the more cyclical growth areas that are clearly lagging,"
Detrick said.
On the economics front, a hotter-than-expected Producer
Price Index reading fortified expectations that the U.S. Federal Reserve is
unlikely to cut its key interest rate in the near term.
According to preliminary data, the S&P 500 SPX lost
30.49 points, or 0.44%, to end at 6,878.91 points, while the Nasdaq
Composite IXIC lost
204.74 points, or 0.92%, to 22,673.65. The Dow Jones Industrial Average DJI fell
521.69 points, or 1.05%, to 48,977.51.
Nvidia NVDA extended
the previous session's drop despite solid earnings, a sign of persistent unease
over emergent AI technology.
Zscaler ZS plunged
after the cloud security firm reported a wider net loss in the second quarter.
Netflix NFLX jumped
as investors cheered its decision to exit the fight for Warner Bros
Discovery WBD,
which dropped on the news. Paramount Skydance PSKY,
WBD's likely buyer, closed sharply higher.
Block XYZ surged
after the payments firm said it would axe nearly half its workforce, as part of
its effort to embed AI across operations.
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