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Stocks sold off Friday, with the main indexes ending the day and week in the red. Weighing on sentiment today was a hot inflation reading, which arrived just weeks ahead of the next Federal Reserve meeting. Slumping financial stocks also created headwinds, with AI worries ramping up after Block’s (XYZ) massive layoff announcement.
Ahead of the open, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, rose 0.5% month over month in January – faster than what was seen in November and December. Year over year, headline PPI was up 2.9%.
Excluding prices for food and energy, wholesale prices were up 0.8% for the month and 3.6% for the year.
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“January PPI data was hotter than expected and tells us that inflationary pressures remain, including on the services side,” says Sonu Varghese, chief macro strategist at Carson Group. “This is going to give more ammunition to the hawks on the Fed, and even perhaps push Fed members sitting on the fence to wait longer before cutting rates again.”
According to CME Group FedWatch, futures traders are currently pricing in a 94% chance the Fed will keep interest rates unchanged when it concludes its next policy meeting on Wednesday, March 18. Betting odds are for the first rate cut of 2026 to land at the Fed’s June meeting.
Financial stocks sink after Block’s layoff news
Financial stocks have been the worst-performing sector so far in 2026 amid concerns that AI will disrupt business models. This weak price action continued today after payments company Block on Thursday said it is laying off more than 4,000 employees, or roughly half its staff.
“Today we shared a difficult decision with our team,” wrote CEO Jack Dorsey in a letter to shareholders (pdf). “Intelligence tools have changed what it means to build and run a company,” and “a significantly smaller team, using the tools we’re building, can do more and do it better.”
“We are choosing to shift how we operate at a time when our business is accelerating and we see an opportunity to move faster with smaller, highly talented teams using AI to automate more work,” added Chief Financial Officer Amrita Ahuja.
The layoffs were announced in conjunction with Block’s Q4 results, which arrived in line with bottom-line estimates of 65 cents per share on slightly higher revenue of $6.25 billion vs the $6.24 billion analysts expected.
While Block spiked 16.8% on Friday, several other large-cap financial stocks went the other direction, including Goldman Sachs (GS), which plunged 7.5% to make it the second-worst Dow Jones stock of the day. American Express (AXP) gave back 7.9%.
At roughly $860 a share, GS has the greatest influence on the price-weighted Dow Jones Industrial Average, which dropped 1.1% to 48,977. The broader S&P 500, meanwhile, shed 0.4% to 6,878 and the tech-heavy Nasdaq Composite fell 0.9% to 22,668.
While the S&P 500 and Nasdaq closed lower for the month, the Dow rose 0.2%.
Dell soars 22% after earnings, dividend hike
Not all of the day’s price action was lower. Dell Technologies (DELL) soared 21.9% after the PC maker reported higher-than-expected fiscal 2026 Q4 earnings and revenue. Dell gave strong full-year revenue guidance and forecast revenue from its AI servers to more than double in its new fiscal year.
The company also announced a 20% dividend hike and a $10 billion increase to its stock buyback program.
BofA Securities analyst Wamsi Mohan says “the near term is clearly strong,” he is “unsure of the demand elasticity created by” the company’s recent price hikes, which were implemented to counter rising memory costs.
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Mohan has a Buy rating on the tech stock, and he’s in good company. Of the 26 analysts covering Dell who are tracked by S&P Global Market Intelligence, 20 say it’s a Buy or Strong Buy, five have it at Hold and just one calls it a Strong Sell. This works out to a consensus Buy recommendation.
Netflix climbs 14% after ending Warner Bros. buyout bid
Netflix (NFLX) was another big gainer on Friday, climbing 13.8% after the streaming giant ended its bid to buy Warner Bros. Discovery’s (WBD, -2.2%) film and television studios and HBO.
The company first offered to buy the assets for nearly $83 billion in December, prompting Paramount SkyDance (PSKY, +20.8%) to bid $108.4 billion to acquire all of WBD. Earlier this week, PSKY raised its buyout price to $111 billion, and Netflix said on Thursday that it would not increase its offer.
“The transaction we negotiated would have created shareholder value with a clear path to regulatory approval,” wrote Netflix in its press release. “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.”
“We are positive on NFLX walking away from WBD, as our deep dive analysis suggests sustainable 10%+ revenue growth and a 20% EPS compound annual growth rate through fiscal 2030,” says Jefferies analyst Roger Samuel, who adds that both engagement and AI fears are “overdone.”
Samuel has a Buy rating on the mega-cap stock and a $134 price target, representing implied upside of 39% to current levels.