Wall Street heading toward losing week; Block cuts 40% of its workforce citing shift to AI
U.S. futures fell overnight Friday after Block CEO Jack Dorsey said his payment company would lay off 40% of its workforce, citing a shift to artificial intelligence.
Futures for the S&P 500 and Nasdaq each fell 0.4% before the opening bell, while futures for the Dow Jones Industrial Average sank 0.6%.
Shares in Block, formerly known as Square, shot up more than 20% after markets closed following Dorsey’s comments about laying off about 4,000 of its 10,000 employees.
“We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company. Everything we do from here is in service of that,” Dorsey wrote in a letter to shareholders.
Dorsey “just did what most CEOs have only whispered about in boardrooms,” Stephen Innes of SPI Asset Management wrote in a commentary.
“For years we’ve debated whether AI would dent jobs at the margin. Now we have a public case study where the CEO explicitly says intelligence tools have changed what it means to build and run a company,” he said.
Shares in streaming giant Netflix jumped 7.3% in premarket trading after it walked away from its bid to buy Warner Bros. Discovery’s studio and streaming business. That put Skydance-owned Paramount in a position to take over its Hollywood rival. Paramount Skydance shares climbed 7.9% before trading opened Friday.
Netflix said the price required to buy Warner after its board announced that Paramount’s offer was superior would make it a deal that is “no longer financially attractive.”
Warner Bros. shares fell 1.4% overnight. On Thursday, the entertainment giant reported a $252 million loss for the fourth quarter.
Coming later Friday morning is the latest data on U.S. inflation at the wholesale level.
Elsewhere, in Europe at midday, Germany’s DAX rose 0.3%, while the CAC 40 dipped 0.2%. Britain’s FTSE 100 gained 0.5%.
In Asian trading, Tokyo’s Nikkei 225 edged 0.2% higher to 58,850.27.
In Hong Kong, the Hang Seng jumped 1% to 26,630.54, while the Shanghai Composite index advanced 0.4% to 4,162.88.
South Korea’s Kospi lost 1% to 6,244.13 as traders sold to lock in profits from recent gains.
Australia’s S&P/ASX 200 closed 0.3% higher at 9,198.60, while India’s Sensex lost 0.8%.
In energy markets, U.S. benchmark crude oil gained $1.66 to $66.87 per barrel. Crude prices have been swinging while the United States and Iran held indirect talks about Iran’s nuclear program.
The two sides walked away from the latest talks without a deal. That left the danger of another Mideast war on the table as the U.S. has gathered a massive fleet of aircraft and warships in the region.
A peaceful solution would lessen the threat of war, which could disrupt the global flow of oil and drive prices higher.
Brent crude, the international standard, gained $1.70 early Friday to $72.54 per barrel.
The dollar fell to 155.93 Japanese yen from 156.13 yen. The euro rose to $1.1803 from $1.1796.