The U.S. stock market closed the week on a sour note, with major indexes posting losses despite some encouraging news on the inflation front. The S&P 500 and Nasdaq Composite both finished the week lower, while the Dow Jones Industrial Average managed a modest gain.

The main driver behind the market's jittery performance was the ongoing concerns around the impact of artificial intelligence (AI) technology on the business world. Investors remain unsettled by the potential disruption AI could bring, as evidenced by the market's sharp sell-off earlier in the week.

Inflation Cools, But Concerns Linger

In a silver lining, the latest Consumer Price Index (CPI) report showed that annual inflation cooled to 2.4% in January, marking an eight-month low. According to CNN Business, this was a welcome surprise for economists, who had expected a higher reading.

"This is one of those tough weeks where spreadsheets and data are cheery, but households still aren't," said Tyler Schipper, an associate professor of economics at the University of St. Thomas. "Even a good inflation report from the perspective of economists is higher prices, and that is not going to sit well with a lot of households."

The Associated Press reports that core inflation, which excludes volatile food and energy prices, also slowed to 2.5% over the last 12 months - its lowest level in nearly five years. However, some prices are still rising at a concerning pace, including for groceries, clothing, and medical care.

Investors Remain Cautious

Despite the easing of inflation pressures, investors appear to be taking a cautious stance. The San Bernardino Sun reports that while the stock market steadied on Friday, the lingering concerns around AI and its potential impact on the economy continue to weigh on sentiment.

"This is one of those tough weeks where spreadsheets and data are cheery, but households still aren't," Schipper said. "Even a good inflation report from the perspective of economists is higher prices, and that is not going to sit well with a lot of households."

As the market navigates these uncertain times, investors will be closely watching for further developments on the inflation front and the ongoing AI disruption. The road ahead may continue to be bumpy, but the recent slowdown in price pressures offers a glimmer of hope for consumers and businesses alike.