U.S. stocks are sinking Friday as Wall Street gets back to hunting and punishing companies that could be made losers by the artificial-intelligence revolution. A surprisingly discouraging update on inflation also hurt the market.

The S&P 500 fell 0.74% and is staggering toward the finish of what would be just its second losing month in the last 10. The Dow Jones Industrial Average was down 683 points, or 1.38%, as of 10:27 a.m. Eastern time, and the Nasdaq composite gave up 183 points, 0.80% lower.

A report showing that inflation at the U.S. wholesale level was at 2.9% last month, much higher than the 1.6% that economists expected, upset the market. The number was so much worse than expected that it could help persuade the Federal Reserve to hold off longer on its cuts to interest rates.

Lower rates would give the economy and prices for investments a boost, but they risk worsening inflation at the same time.

The discouraging data layered more worries atop a Wall Street where investors returned to knocking down software companies and others whose businesses may end up getting supplanted by AI-powered competitors.

Block, the company behind Cash App, Square and other businesses, gave a signal of what AI could do after CEO Jack Dorsey said he was cutting its workforce by nearly half.

That’s even though Block’s profit is growing and it’s sending more cash to shareholders through stock buybacks.

“Intelligence tools have changed what it means to build and run a company,” Dorsey said in a letter to shareholders while announcing Block’s latest profit results.

“We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better.”

The co-founder of Twitter also said, “I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.”

Block is cutting more than 4,000 jobs from its workforce of over 10,000. Its stock jumped nearly 20%.

Capable AI tools that can replace humans could also replace entire companies, or at least eat away at their profit margins.

Fears about AI disruption have been causing sudden and swift sell-offs for stocks seen as potentially under threat, rolling through industries as seemingly disparate as trucking logistics and legal services.

Salesforce, whose platform helps customers manage their relationships with clients, fell 4.4%. It gave back its 4% gain from the day before after reporting a better profit than analysts expected.

Even the companies currently seeing their revenue and profits soar because of AI-related demand are also weakening.

Nvidia fell 2.6%, a day after dropping to its worst loss since last spring, even though it reported a better profit than analysts expected and forecast more in revenue for the current quarter.

Rival chip companies fell by similar amounts, and Broadcom dropped 2.6%. Worries are hurting such companies not only about whether their stock prices following huge gains in recent years but also whether the huge spending driving their growth can continue.

Can big spenders like Amazon, Alphabet and others possibly make back all their billions of dollars in AI investments through higher productivity and profits in the future?

On the winning side of Wall Street was Netflix, which jumped 8.6% after walking 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 2.2%, while Warner Bros. Discovery fell 1.9%.

In the bond market, the yield on the 10-year Treasury was at 3.97%. It swiveled higher following the inflation report, but it’s down from its 4.02% level late Thursday.

ln stock markets abroad, indexes were mixed in Europe and Asia. South Korea’s Kospi fell 1% from its latest record, and Hong Kong’s Hang Seng rose 0.9% in two of the world’s larger moves.

In energy markets, the price for a barrel of benchmark U.S. crude oil rose 3.2% to $67.27. Worries about rising tensions between the United States and Iran over Iran’s nuclear program have been causing big swings.

The U.S. military has already gathered a massive fleet of aircraft and warships in the Middle East, and a conflict could disrupt the global flow of oil and drive prices higher.

Brent crude, the international standard, rose 3.1% to $73.04 per barrel.