Wall Street ended sharply lower on Tuesday as investors worried about artificial intelligence (AI) creating more competition for software makers, keeping them on edge ahead of quarterly reports from Alphabet and Amazon later this week.
AI heavyweights Nvidia and Microsoft both fell. Alphabet dropped ahead of its report on Wednesday, while Amazon declined ahead of its Thursday report.
Investors in recent months have become pickier about AI-related stocks, looking for companies generating measurable returns from their outsized investments in the new technology.
Wall Street’s attention on Tuesday turned to technology companies that could face steeper competition and lower margins as a result of AI. One catalyst driving those concerns was Anthropic’s launch of a legal tool for its Claude AI chatbot.
“We're looking at a lot of software names that are seen as companies that may well be disrupted when we start to see the advancement of artificial intelligence. We're seeing a lot of software companies across the spectrum get hit,” said Art Hogan, chief market strategist at B. Riley Wealth.
Salesforce, Adobe, Synopsys, Datadog, Atlassian and Intuit fell sharply.
AI data firm Palantir bucked the trend, rallying after strong quarterly results late on Monday.
The S&P 500 software and services index fell for a fifth consecutive day.
"We've got an expensive market and expectations are really high. Many areas, especially around AI, are priced for perfection. That's just got us in a skittish environment," said John Campbell, senior portfolio manager, Allspring Global Investments.
Healthcare stocks came under pressure after Wegovy maker Novo Nordisk warned that it expected a steep decline in annual sales. The company's U.S.-listed shares plummeted.
Rival Eli Lilly fell, as did obesity drugmakers Viking Therapeutics and Structure Therapeutics.
Walmart climbed to become the first brick-and-mortar retailer ever to hit $1 trillion in stock market value.
Advanced Micro Devices fell ahead of its quarterly report after the bell.
Walt Disney dipped after it named theme parks head Josh D'Amaro as CEO, placing a longtime insider at the helm and ending succession uncertainty.
PayPal slumped after it forecast 2026 profit below estimates.
According to preliminary data, the S&P 500 lost 59.04 points, or 0.85%, to end at 6,917.40 points, while the Nasdaq Composite lost 336.20 points, or 1.42%, to 23,255.91.
The Dow Jones Industrial Average fell 170.98 points, or 0.35%, to 49,236.68.
With one quarter of the S&P 500 set to report quarterly results this week, analysts expect companies to have grown their earnings nearly 11% in the December quarter, up from an estimate of about 9% at the start of January, according to LSEG data.
Pfizer fell despite posting fourth-quarter profit above estimates, while Merck rose after quarterly results.
PepsiCo shares gained after the company announced price cuts on core brands such as Lay's and Doritos.
Meanwhile, legislation to end a U.S. government shutdown narrowly cleared a procedural hurdle in the House of Representatives, setting up a vote on final passage later in the day.
The partial shutdown has postponed releases of key jobs data on Friday along with the JOLTS report, originally expected on Tuesday.
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The months-long disarmament process involving the outlawed Kurdistan Workers’ Party (PKK) has made little tangible progress, Turkish intelligence chief İbrahim Kalın has said.
King Charles and Queen Camilla have begun a landmark visit to the U.S., aimed at reinforcing ties between the two allies at a sensitive moment. The trip comes as security concerns rise in Washington and political tensions persist over foreign policy.
China is stepping up efforts to boost domestic spending and U.S. retail giant Walmart is expanding across the country to meet demand.
Afghanistan’s disaster authority says it is working with the International Organization for Migration (IOM) to boost emergency response, shelter support and volunteer networks following talks in Kabul on Sunday.
U.S. President Donald Trump and First Lady Melania Trump were rushed out of the White House Correspondents' Association Dinner by Secret Service agents after a 31 year old suspect attempted to storm event.
President Donald Trump said on Sunday Iran could telephone if it wants to negotiate an end to their two-month war. Tehran said the U.S. should remove obstacles to a deal, including its blockade of Iran's ports. Meanwhile Iranian Foreign Minister Abbas Araghchi arrives in St Petersburg for talks.
Adidas shares rose after Kenya’s Sebastian Sawe delivered a historic performance at the London Marathon on Sunday (26 April), becoming the first athlete to run an official marathon in under two hours.
Disney+ has debuted Disney Animation’s Songs in Sign Language, a new collection of animated musical sequences reimagined in American Sign Language (ASL), released on 27 April to mark National Deaf History Month.
Market reaction to DeepSeek’s preview of its next-generation artificial intelligence model has been relatively subdued, in sharp contrast to the global shock triggered by its breakthrough releases last year.
China has ordered Meta to unwind its more than $2 billion acquisition of artificial intelligence start-up Manus, marking a major escalation in Beijing’s scrutiny of foreign investment in sensitive technology sectors. The order was issued on Monday by the National Development and Reform Commission.
Adidas shares rose after Kenya’s Sebastian Sawe delivered a historic performance at the London Marathon on Sunday (26 April), becoming the first athlete to run an official marathon in under two hours.
The United States has issued an international warning accusing Chinese firms, including AI start-up DeepSeek, of allegedly stealing intellectual property from American artificial intelligence labs.
Meta Platforms will cut about 10% of its global workforce from 20 May, marking the start of a wider restructuring as the company increases spending on artificial intelligence (AI) and plans further layoffs later this year, according to sources familiar with the matter.
President Donald Trump has warned that the U.S. could impose "big" tariffs on British goods if the UK does not remove its digital services tax. Speaking to reporters at the White House on Thursday, Trump said Washington was ready to act in response to the levy on major American technology firms.
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