The Consumer Price Index (CPI) rose just 0.2% month-over-month and 2.4% year-over-year, according to the Bureau of Labor Statistics. That was lower than the 2.5% annual estimate. Inflation has now eased sharply from its September peak above 3% and from December’s 2.7% reading. Core CPI, which excludes food and energy, was previously at 2.6%.
Despite softer inflation, Wall Street stayed cautious. Investors are worried about AI disruption spreading beyond technology stocks into real estate, logistics, trucking, and software. At the same time, traders revived bets on a June Federal Reserve rate cut. Markets now expect at least two interest rate cuts by the end of 2026, with some traders pricing in even more easing.
This mix of cooling inflation, AI fears, volatile earnings, and rate-cut speculation is driving sharp swings across US stocks today.
Why is the US stock market down today despite lower inflation?
Normally, lower inflation supports stock prices. It increases the chance of Federal Reserve rate cuts. Lower rates help businesses and boost stock valuations.
But today’s market reaction shows fear outweighing relief. Investors are concerned that AI disruption is accelerating faster than expected. Many companies once seen as “safe” from AI — including real estate, transportation, and old-economy industrial names — are now being reassessed.
Heavy selling on Thursday carried into Friday’s open. The market opened in the red as traders digested inflation data and earnings reports simultaneously. The decline is not about inflation alone. It is about uncertainty. Investors are unsure how fast the Fed will cut rates. They are unsure how AI will reshape business models. And they are reacting quickly.
Federal Reserve rate cut expectations rise after CPI data
The January CPI report has shifted interest rate expectations again.
The annual inflation rate of 2.4% is approaching the Federal Reserve’s 2% target. Traders now see stronger odds of a quarter-point rate cut in June. Markets are also pricing in two total cuts by the end of 2026.
However, rate cuts are not guaranteed. Policymakers remain cautious. The Fed must balance inflation progress with labor market strength. Recent jobs data has been resilient, giving officials room to wait.
This tension is keeping markets volatile. Good news on inflation does not automatically translate into a stock market rally.
AI disruption fears hammer tech stocks and old economy sectors
Technology stocks were hit again. All seven of the “Magnificent Seven” megacap stocks closed lower.
NVIDIA fell 1.64% to $186.94. Apple dropped sharply by 5% to $261.73. Amazon slid 2.20% to $199.60. Intel lost 3.75% to $46.48.
The selling reflects a broader fear. Investors are worried that AI winners will expand rapidly, while others may fall behind. The phrase “shoot first, ask questions later” is shaping trading behavior.
Even non-tech sectors felt pressure. Real estate, logistics, and trucking stocks were weak again. AI disruption is no longer viewed as a narrow tech story. It is becoming a market-wide theme.
Biggest Stock Gainers Today
High-volume trading was concentrated in a few breakout stocks that capitalized on massive earnings beats and pivotal AI-driven demand.
Fastly, Inc. (FSLY) emerged as the market’s top performer, with shares skyrocketing over 72% in a single day. This massive move followed a fourth-quarter report where the cloud platform’s revenue jumped 23% to $172.6 million, handily beating analyst estimates. The primary driver for this surge was Fastly’s positioning within the “agentic AI” era, with CEO Kip Compton noting that the company’s edge infrastructure is now vital for optimizing AI agents. The stock’s high volume of over 36 million shares underscores its new status as an “underrated AI play.”
Electric vehicle maker Rivian (RIVN) surged more than 25% after surprising Wall Street with a stronger-than-expected delivery outlook for 2026. The company confirmed that its highly anticipated R2 midsize model is on track for delivery before the summer, resetting the growth narrative for the EV sector. Meanwhile, semiconductor giant Applied Materials (AMAT) jumped 13%, reaching a record high. The toolmaker’s bullish second-quarter guidance, which sits nearly $1 billion above consensus, suggests that the “AI grid supercycle” is driving unprecedented demand for chipmaking equipment.
In the travel and healthcare sectors, Airbnb (ABNB) rose 6% following a rating upgrade from Deutsche Bank and a strong 2026 outlook that predicts low-double-digit revenue growth. Despite the tech sell-off, investors cheered Airbnb’s ability to maintain margins while investing in AI-integrated discovery tools. Moderna (MRNA) also climbed 6%, recovering from a sharp 10% dip earlier in the week. The biotech firm’s resilient morning earnings report helped stabilize investor confidence following a recent FDA rejection of its new flu vaccine.
Gold prices surge as investors seek safety
While stocks fell, safe-haven assets rose.
Gold jumped 1.60% to $5,027.70. Silver surged 3.77% to $78.53. The move signals investors are hedging against uncertainty and volatility.
In commodities, WTI crude oil traded near $62.74, while Brent crude hovered around $66.49. Natural gas slipped to $3.19.
The rise in gold suggests that despite cooling inflation, investors are not fully confident about economic stability or market direction.
ETF and leveraged trading show extreme market positioning
Leveraged ETFs saw heavy activity.
Direxion Daily Semiconductor Bear 3x Shares climbed 7.74%, reflecting bets against chip stocks. ProShares UltraShort Silver surged 24.19%.
Meanwhile, ProShares UltraPro QQQ fell 6.11%, tracking weakness in tech-heavy Nasdaq stocks. SPDR S&P 500 ETF declined 1.54%.
High ETF volume signals aggressive short-term positioning. Traders are reacting quickly to news and price swings.
The key question now is sustainability. If inflation continues trending toward 2%, the Federal Reserve may gain confidence to cut rates. That would typically support equities.
However, earnings clarity is needed. Investors want reassurance that AI disruption will not damage broad corporate profits. They also want stable economic growth.
The Dow remains near 49,000. The S&P 500 is holding above 6,800. The Nasdaq stays above 22,400. These are historically elevated levels. Even modest pullbacks can look dramatic at such highs.
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