S&P 500 closes little changed after soft inflation report, index notches losing week: Live updates

The S&P 500 closed barely above the flatline on Friday as a key consumer inflation report that came in slightly lighter than expected failed to spark a substantial rally.

The broad market index added 0.05% and ended at 6,836.17, while the Nasdaq Composite fell 0.22% and closed at 22,546.67. The Dow Jones Industrial Average gained 48.95 points, or 0.10%, and settled at 49,500.93.

The Bureau of Labor Statistics reported that the consumer price index — which measures the costs for goods and services in the U.S. economy — rose 0.2% in January, reflecting a gain of 2.4% on an annualized basis. The inflation gauge was expected to show a 0.3% increase on a month-over-month basis and a 2.5% advance from a year earlier, according to economists polled by Dow Jones.

When excluding volatile food and energy prices, core CPI came in line with expectations at 0.3% on the month and 2.5% year over year.

“This should be welcome news for markets, and the presumptive incoming Fed Chair Kevin Warsh,” said Phil Blancato, Osaic chief market strategist. “This is only one month’s worth of data, but if the trend continues it should pave a path for lower interest rates and reined in inflation.”

Inflation is also “not unrelated” to existing fears among investors that artificial intelligence will disrupt revenue potential in various industries, according to Keith Buchanan of Globalt Investments. While Friday’s CPI print “has nothing to do with what we’re anticipating” as far as industry disruption goes, the market is still trying to figure out what AI and its implementation throughout the economy really means, he said, noting that it’s creating “upward pressure on unemployment” as well as “downward pressure on inflation.”

“How do we think that everyone was going to win and there wouldn’t be a loser?” the senior portfolio manager told CNBC.

AI disruption fears rattled the market this week, spreading beyond the sell-off seen in software and into real estate, trucking and financial services. Financial stocks Charles Schwab and Morgan Stanley fell 10.8% and 4.9% this week, respectively, while software stock Workday dropped 11% in the period. Shares of commercial real estate firm CBRE lost 16% week to date.

Those fears widened to the media industry as well, hitting Walt Disney and Netflix. Disney shares added about 3% on the week, while Netflix shares tumbled 6%.

“Investors show no mercy for anything seen as an AI loser. The list is growing by the day, driving divergence between new/old economy sectors and U.S./[Rest Of World] equities,” said Barclays analyst Emmanuel Cau. “Amid erratic price action and fears of AI disruption turning into a broader macro/credit issue, growth, rates & earnings backdrop is okay.”

The major averages all posted declines for the week, with the S&P 500 sliding 1.4% and posting its second consecutive losing week. The Dow dropped 1.2%, and the Nasdaq notched a 2.1% decline.