Market volatility reared its ugly head again on Wednesday, sending major indices into a tailspin early in the session prior to an afternoon recovery, but futures are indicating a lower open on Friday, as one of the usual catalysts, Nvidia, failed to spark buying in the tech sector and elsewhere.
While Nvidia crushed expectations in its quarterly report after the close Wednesday, the stock sank at the open Thursday and remained mired in the red, losing 5.46% on the day as fears of widespread economic disruption from AI continued to overhang markets. The major fear is that AI will replace most white collar jobs in all industries, a trend that has already seen casualties and should continue to propagate as LLMs continue to learn and grow knowledge bases that make human interaction often trivial and less effective.
AI has already begun to replace entry level jobs in accounting, law, computer programming, coding, research, and other data-intensive functions. It's rapid ascendancy into the business climate is fomenting disruption at firms large and small, as adoption and use of the technology obviates its usefulness and cost effectiveness. AI doesn't take a weekly or monthly paycheck, it doesn't need vacations, health care, sick days, or maternity leave. In general, AI can perform most or all of the functions of entry-level computer workers at a fraction of the cost with minimal supervision, and, as the LLMs learn, they become more accurate and less prone to mistakes. AI “assistants” also generate no employee income, a real quandary for taxing authorities (though some may argue that’s a good thing).
The rise of the machines has become a real concern on Wall Street, though the initial effects may actually cause companies to become more attractive, as Jack Dorsey's payment processing company, Block (XYZ), discovered after slashing thousands of computer jobs in favor of AI. Dorsey, the inventor and founder of Twitter, now X, announced immediate layoff late Thursday. Shares of the company are up more than 18% in pre-market trading Friday.
Volatility due to AI adoption and growth is not likely to ebb any time soon. Rather, it should accelerate as more companies find use cases for the fast-growing technology and the models show improved efficiency. AI also ties into robotics, another growth area that threatens blue collar jobs, as it is used as the "brains" of robots, humanized or otherwise, allowing actual learning of tasks traditionally the province of human beings. Already, companies are touting house-cleaning robots that can be trained to do menial tasks such as vacuuming, laundry, washing dishes, general maintenance and other tasks. Within two to three years, household robots will become a robust market as production costs come down and efficiencies gain.
In another very telling development related to market health and volatility, yields on the benchmark 10-year note dipped briefly below four percent on Thursday, indicating that investors are shedding equities in favor of the safety of fixed income securities. There doesn't seem to be many sectors safe from the AI phenomenon. Use cases are being developed in everything from automated manufacturing to gardening and robotic companionship models.
It's not going away.
Investors have to consider the fallout from millions of entry-level and middle management workers thrust into unemployment lines by AI, and what will become of U.S. and global workforces, long term. If AI continues to replace humans in the workplace, where will these displaced workers go after unemployment benefits and severance runs out? There are presently no easy answers, only nagging indications that a radical shift in the capitalist model is underway.
With markets due to open in a matter of minutes, after the BLS released the January Producer Price Index (PPI), stock futures, which were already lower, continued to decline, sending Dow futures down 510 points, NASDAQ futures off 240, and S&P futures down 38.
The report, from an inflation standpoint, and, from the perspective of lower interest rates, was not good:
The Producer Price Index for final demand increased 0.5 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.4 percent in December 2025 and 0.2 percent in November. (See table A.) On an unadjusted basis, the index for final demand rose 2.9 percent for the 12 months ended January 2026.The January increase in prices for final demand can be traced to a 0.8-percent advance in the index for final demand services. In contrast, prices for final demand goods declined 0.3 percent.
The index for final demand less foods, energy, and trade services moved up 0.3 percent in January, the ninth consecutive increase. For the 12 months ended in January, prices for final demand less foods, energy, and trade services rose 3.4 percent.
For the week, through Thursday's close, the Dow is down 126 points, the NASDAQ is down seven, and S&P futures have shed 37 points.
With valuations at nosebleed levels for many stocks, especially in the tech space, how much longer before companies like Google, Apple, Meta Platforms and others start announcing massive layoffs in favor of AI? The other side of the coin is that these same companies are building the data centers that make AI possible, investing billions in CapEX. These big investments will be offset by lower operating costs down the line, so there is something of a silver lining.
At the Close, Thursday, February 26, 2026:
Dow: 49,499.20, +17.05 (+0.03%)
NASDAQ: 22,878.38, -273.70 (-1.18%)
S&P 500: 6,908.86, -37.27 (-0.54%)
NYSE Composite: 23,524.84, +72.10 (+0.31%)
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