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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Chinese travellers made an estimated 362.58 million cross-regional passenger trips on Monday, the final day of the Spring Festival holiday, according to official data.
Thousands of people gathered across Europe and beyond over the weekend in solidarity with Ukraine, as the war with Russia entered its fifth year.
A powerful winter storm has brought large parts of the U.S. Northeast to a standstill, dumping more than a foot of snow across several states and severely disrupting transport and daily life.
The United Nations mission in Afghanistan said on Monday it had received “credible reports” that at least 13 civilians were killed and seven others injured in overnight Pakistani airstrikes inside Afghanistan.
Pakistan said it carried out cross-border strikes on militant targets inside Afghanistan after blaming a series of recent suicide bombings, including attacks during the holy month of Ramadan, on fighters it said were operating from Afghan territory.
Italy said a fond farewell to the Winter Olympics on Sunday with an open-air ceremony in the ancient Verona Arena that celebrated art and sporting achievement at a Games lauded as a model for how to stage such events.
The United States and Iran will hold a new round of nuclear negotiations in Geneva on Thursday as part of renewed diplomatic efforts to reach a potential agreement, Oman’s Foreign Minister Badr Albusaidi announced on Sunday.
Islamic State claimed two attacks on Syrian army personnel on Saturday (22 February), saying they marked the start of a new phase of operations against the country’s leadership under President Ahmed al-Sharaa.
Further Iran-U.S. nuclear talks are scheduled in Geneva on Thursday (26 February) as diplomacy resumes over Tehran’s nuclear programme following earlier mediation efforts. But will the talks move Iran-U.S. negotiations closer to a deal, and what should be expected from the meeting?
Millions of Colombian roses have arrived in the United States just in time for Valentine’s Day, keeping the country on track as the world’s second-largest flower exporter. Between 15 January and 9 February, Colombia shipped roughly 65,000 tons of fresh-cut blooms.
Russia’s car market is continuing to receive tens of thousands of foreign-brand vehicles via China despite sanctions imposed after Moscow’s full-scale invasion of Ukraine in 2022, a journalistic investigation has found.
Türkiye’s national energy company, TPAO, has struck a new cooperation deal with U.S. energy giant Chevron, signing a memorandum of understanding to explore joint oil and gas exploration and production opportunities, the Turkish Energy and Natural Resources Ministry announced on Thursday.
U.S. stock markets finished mixed on Wednesday (28 January) as investors reacted calmly after the Federal Reserve left interest rates unchanged, a decision that had been widely expected and largely priced in.
The S&P 500 edged to a record closing high on Tuesday, marking its fifth consecutive day of gains, as strong advances in technology stocks offset a sharp selloff in healthcare shares and a mixed batch of corporate earnings.
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