Wall Street Ends Volatile Week Mixed as Inflation Eases and Bond Yields Fall

U.S. stocks closed mixed on Friday, with easing January inflation and falling Treasury yields lifting rate-cut hopes while AI concerns and global market weakness capped gains.

The tech-heavy Nasdaq dipped 50.48 points (0.2%) to 22,546.67, adding to the steep loss posted on Thursday, the S&P 500 inched crept up 3.41 points (0.1%) to 6,836.17 and the Dow inched up 48.95 points (0.1%) to 49,500.93.

U.S. stocks ended lower for the week, with the Nasdaq tumbling 2.1%, the S&P 500 slipping 1.4% and the Dow losing 1.2% amid choppy trading following the release of Januarys consumer price inflation report. The Labor Department said consumer prices rose 0.2% in January versus expectations for a 0.3% increase while the annual inflation rate eased to 2.4% from 2.7%, coming in below forecasts. Core prices rose 0.3% month-over-month, matching estimates, with the annual core rate edging down to 2.5%.

The milder inflation reading spurred optimism that the Federal Reserve could maintain a gradual easing bias, leading to a further drop in Treasury yields. Daniela Hathorn of Capital.com noted that the data reduces the risk of a hawkish Fed shift despite a resilient labour market. However, persistent concerns about excessive spending and potential disruptions from the on-going artificial intelligence build out weighed on investor sentiment, limiting buying interest across markets.

Gold stocks moved sharply higher along with the price of the previous metal, resulting in a 5.6% spike by the NYSE Arca Gold Bugs Index. Computer hardware stocks were considerably strong as reflected by the 2.7% surge by the NYSE Arca Computer Hardware Index. Networking, utilities, natural gas and transportation stocks also turned in strong performances while steel stocks moved to the downside amid a report President Donald Trump plans to roll back tariffs on steel and aluminum.

Asia-Pacific stocks moved sharply lower. Japan's Nikkei 225 index slumped by 1.2%, while Hong Kong's Hang Seng Index tumbled by 1.7%. The major European markets turned in a mixed performance. The French CAC 40 Index fell by 0.4%, the German DAX Index rose by 0.3% and the U.K.'s FTSE 100 Index climbed by 0.4%.

In the bond market, treasuries extended the strong upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note which moves opposite of its price, slid 4.8 bps to a two-month closing low of 4.05%.

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