Selloff Spreads on Wall Street as Tech, Gold Sink: Markets Wrap

(Bloomberg) — Prices buckled across several asset classes as concern over technology profits and weakness in commodities spurred losses in the stock market. Gold and silver tumbled as traders plowed money into the perceived safety of Treasuries.

The S&P 500 and the Nasdaq 100 dropped 1.1% and 1.6%, respectively. Cisco Systems Inc. plunged 12% as a tepid margin outlook signaled higher memory-chip prices are taking a toll. All megacaps retreated and an ETF tracking software companies slumped 3.1%. Anthropic finalized a deal to raise $30 billion in funding at a $380 billion valuation as it gains ground on rival OpenAI.

Weeks of rising anxiety over the impact of artificial intelligence on multiple sectors showed signs of morphing into a broader reassessment of risk after more than a year of steady appreciation across assets. Some analysts attributed the quick decline in gold around midday to traders raising money to cover losses in equities.

Wall Street’s jitters over the outlook for the industry that has powered the bull market have grown despite solid results from megacaps, with traders dumping a broad range of tech shares. Besides all the worries over whether AI investments will pay off, fears about disruption have been mounting.

Those concerns have deepened since AI startup Anthropic released new tools designed to automate work tasks in various industries, sparking fears that the innovations would doom countless businesses. That’s not to mention the rush from big techs to raise unprecedented amounts of money to build out AI, making the credit market vulnerable — especially with risk premiums already near the tightest levels since the financial crisis.

“I want to be very clear and highlight this is the most uncertain outlook we’ve seen for AI and the tech-driven rally since this bull market started three years ago,” said Tom Essaye at The Sevens Report. “That does not mean tech won’t recover like it has since then. But I do want to caution against dismissing this weakness as ‘just another bump in the road’.”

In the run-up to the consumer price index, Treasuries bounced. That followed a slide driven by a solid jobs report that saw traders paring their wagers on Federal Reserve rate cuts. Data Thursday showed jobless claims edged down while home resales slid the most in four years despite lower rates.

Forecasters expect an underlying metric of inflation — which excludes food and energy costs — to rise at the slowest annual pace since early 2021. The Fed chose to hold interest rates steady in January given signs of stabilization in the labor market and inflation that’s still elevated.

“Our takeaway is that the economy is seeing neither broad-based disinflation nor an inflation pickup,” said Anna Wong at Bloomberg Economics.

The yield on 10-year Treasuries slid seven basis points to 4.10%. A $25 billion sale of 30-year bonds drew historic demand. Gold sank below $5,000. Silver plunged 9%. Bitcoin sank to around $65,500. Standard Chartered cut its year-end 2026 forecast to $100,000 and warned the cryptocurrency could drop to $50,000 before stabilizing.

“From AI-phoria to AI-phobia,” said Yardeni Research strategists in a note. “For those who lived through the advent of the Internet, this feels like ‘déjà vu all over again.’ Both AI and the Internet are technological disruptions profound enough to shift the behavior of just about everyone.”

Fears that new firms using AI will replace incumbent operators have hurt stocks across a wide range of industries over the past two weeks, they said. Software companies, insurance brokers, data providers, alternative asset managers, and investment brokerage companies have all felt the impact.

“AI might be boosting the economy thanks to massive capex investments and productivity enhancements but it’s becoming a net negative for the stock market,” said Vital Knowledge founder Adam Crisafulli. AI is “demolishing” stocks in legacy industries, he said.

Despite some stabilization in US equity benchmarks in recent days, investor concerns over the disruption of AI continue to weigh on various sectors, according to UBS Global Wealth Management’s Ulrike Hoffmann-Burchardi.

“With AI acting both as a driver and a detractor of performance, investors should hold a diversified exposure as they dynamically evaluate the AI landscape,” she said. “We also believe companies that actively use AI to enhance operations and evolve their business models should benefit, especially those in the financials and health care sectors.”

Of course, it’ll be very hard for investors to avoid the tech giants even if they want to, considering their massive position in the S&P 500. Besides, it’s doubtful that many shareholders would want to escape the group anyway considering its ability to generate profits at a faster clip than the rest of the market.

To start 2026, markets have broadened out over hopes of a “run hot” US economy, driven by a combination of monetary and fiscal stimulus and investor angst over AI capital spending plans, noted Chris Senyek at Wolfe Research.

“Throughout earnings season we’ve seen wild, whipsaw price action as AI news has created headline risk across a variety of industries, with the carnage in software spreading to other areas at risk of being “AI’d” such as asset managers and other data providers,” he said.

To be fair, he says some recent positive US economic datapoints such as payrolls and manufacturing further support a broadening out trend causing factor unwinds beneath the surface.

“Ongoing cyclical strength is generally consistent with an improving economy and rising risk appetite,” said Adam Turnquist at LPL Financial. “Recently, however, the ratio has diverged from the S&P 500 as big tech has cooled and relative strength in financials, consumer discretionary, and real estate has weakened.”

While this doesn’t yet signal a full‑scale rotation into defensive sectors, the emerging tilt toward risk aversion is something we’re monitoring closely, he said.

Equity leadership is indeed broadening beyond mega-cap tech, and if the path for longer-term yields continues to be flat to slightly higher, valuations and fundamentals take on heightened importance, according to Simeon Hyman at ProShares.

That has been one of the drivers of broadening equity market performance so far this year, he noted.

“The spreads for the hyperscalers have widened within the indices, and supply is being impacted in a meaningful way by AI,” said Christian Hoffmann at Thornburg Investment Management.

“A major theme related to AI is the ‘software scare,’ which is still playing out in equity markets,” he said. “This dynamic is also reverberating through fixed income markets, particularly in lower-quality segments. As those fears get repriced, investors are reassessing assets and applying greater scrutiny to their underlying exposures.”

Meantime, Thierry Wizman at Macquarie Group says AI may enter the monetary policy debate very soon.

“Hawks on the FOMC may rely on the real-time inflation and unemployment data to justify raising the policy rate,” he said. “If the ‘AI scare’ sinks sentiment further, the ‘burden of proof’ may soon rest with the hawks to justify why policy shouldn’t ease.”

Traders continued to assign little chance that policymakers lower rates when they meet next in March, with a July cut fully priced in.

A survey conducted by 22V Research showed 33% of investors believe that the market reaction to CPI will be “risk-on,” 43% “mixed/negligible” and only 24% “risk-off.” In addition, the tally shows that 62% of investors think core CPI is on a Fed friendly glide path while 38% think financial conditions need to tighten, which is the highest share since September.

Markets are complacent on the outlook for US inflation, making trades that pay out if price pressures climb look attractive, said Benjamin Wiltshire at Citigroup Inc. Investors may be underestimating the resilience of the US consumer and market expectations for inflation are likely to be revised slightly higher, he noted.

“Markets seem to have this conviction that inflation is going to come down,” Wiltshire said in an interview. “We’re still in a structurally higher inflation environment.”

Corporate Highlights:

OpenAI is releasing its first artificial intelligence model that runs on chips from semiconductor startup Cerebras Systems Inc., part of a push by the ChatGPT maker to broaden the pool of chipmakers it works with beyond Nvidia Corp. Alphabet Inc.’s YouTube released a dedicated app for Apple Inc.’s Vision Pro on Thursday, filling a notable gap in the headset’s lineup of entertainment options two years after its debut. Alphabet has updated its Gemini Deep Think artificial intelligence model for better performance in math and science research, the company said. AppLovin Corp. reported its fourth-quarter results and gave an outlook. While both were above consensus expectations on key metrics, they may not be strong enough to assuage recent concerns over AI-related disruption. Fastly Inc., an infrastructure software company, posted fourth-quarter results that beat expectations and it gave a robust full-year forecast. William Blair upgraded their recommendation on the stock. Anthropic PBC is donating $20 million to a political advocacy group called Public First that’s backing congressional candidates who favor safety rules for artificial intelligence, bolstering the company’s fight for “responsible AI” as Silicon Valley money floods into congressional races across the US. Lenovo Group Ltd. expects the memory crunch to affect the global hardware industry for the rest of the year, Chief Executive Officer Yang Yuanqing said on Thursday. SoftBank Group Corp. sprang back to a quarterly profit after investment gains from OpenAI neared $20 billion, a promising start for one of Masayoshi Son’s signature gambles alongside ByteDance Ltd. and Alibaba Group Holding Ltd. Samsung Electronics Co. claimed an early lead in the race to supply advanced memory for AI accelerators like those made by Nvidia Corp., a milestone for a Korean company that’s seeking to displace its rivals in a pivotal market. McDonald’s Corp.’s US sales grew at the fastest pace in more than two years in the fourth quarter as value meals continued to resonate with cost-conscious diners. CarMax Inc. named Keith Barr as chief executive officer, bringing in the former InterContinental Hotels Group Plc chief to modernize the company and revive performance. Southwest Airlines Co. plans to rapidly equip its aircraft with in-flight Wi-Fi from Elon Musk’s Starlink, joining larger rivals. Hilton Worldwide Holdings Inc. is conducting an internal review of a Frankfurt hotel and weighing whether to terminate a management agreement amid scrutiny over the property’s ultimate beneficial owner, according to people familiar with the matter. Clear Street Group Inc. slashed the targeted size of its initial public offering by nearly two thirds, after the broker faced pushback from prospective investors. Telus Corp. appointed former bank chief Victor Dodig to replace longtime Chief Executive Officer Darren Entwistle, a surprise move for a telecommunications company that’s under pressure from investors over its slow growth. Kioxia Holdings Corp. projected better-than-expected full-year operating income, reflecting a surge in NAND flash memory prices and strong demand for the data storage needed for artificial intelligence. Brookfield Corp.’s profit rose in the fourth quarter as the company reported record earnings from its asset manager and strong growth in its wealth business. Birkenstock Holding Plc saw robust holiday demand for its clogs, boots and high-end shearling-lined footwear as the German sandal maker continues a push to become a footwear brand for all seasons. Novo Nordisk A/S is planning to boost investment in Ireland where it will make its hit Wegovy weight-loss pill for markets outside the United States. Sanofi abruptly replaced Chief Executive Officer Paul Hudson after a massive research spending boost failed to deliver rapid results, appointing its first female leader, Merck KGaA’s Belén Garijo. L’Oréal SA sales missed estimates in the final months of last year after the French beauty group’s luxury division disappointed. Ubisoft Entertainment SA reported net bookings that beat analysts’ estimates in the fiscal third quarter, buoyed by strong demand for the video game publisher’s most popular franchises such as Assassin’s Creed. Nuveen is buying Schroders Plc in a £9.9 billion ($13.5 billion) deal, creating one of the world’s largest active asset managers with nearly $2.5 trillion of assets. President Donald Trump’s $10 billion defamation lawsuit against the British Broadcasting Corp. has been set for trial in February 2027. Siemens AG expects the boom in artificial intelligence for industry and related software solutions to keep fueling its business, after data center and automation demand rose. Deutsche Lufthansa AG canceled almost 800 flights Thursday after pilots and cabin crew called a one-day strike in response to stalled contract negotiations. Thyssenkrupp AG reaffirmed its full-year outlook despite restructuring costs at its steel division and a weak industrial backdrop weighing on performance. Unilever Plc’s cautious sales guidance disappointed investors as the consumer goods group warned it faced a “slower” market in the US, offsetting strong growth in key emerging nations. Anheuser-Busch InBev offset a slump in volumes in western markets with growth in Africa and South America, alongside stronger sales of premium beer. Hermès sales grew on robust demand for its coveted Birkin bags, with one of the luxury industry’s most resilient players chalking up gains across all markets and most of its products. ICON Plc shares plunged after the health care services contractor said it may have overstated some of its past revenue and pulled its guidance for the year. Nissan Motor Co. said it’s progressing in a push to recover from its worst financial crisis in decades, with the automaker narrowing a full-year loss forecast as a cost-cutting drive ramps up. CK Hutchison Holdings Ltd. has warned A.P. Moller-Maersk A/S of legal action should the Nordic company’s terminal unit try to take over operations at two ports near Panama’s strategic canal. What Bloomberg strategists say…

“Stock futures are sharply lower after the triggering of Commodity Trading Advisor sales hit in E-mini Nasdaq 100 contracts first and more recently in E-mini S&P 500 futures, according to dealers that see the flow. If a price recovery does not materialize, that puts the broader market at risk of a deepening the selloff.”

— Alyce Andres, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 1.1% as of 2:14 p.m. New York time The Nasdaq 100 fell 1.6% The Dow Jones Industrial Average fell 0.9% The MSCI World Index fell 0.9% Bloomberg Magnificent 7 Total Return Index fell 2% Philadelphia Stock Exchange Semiconductor Index fell 1.9% IShares Expanded Tech-Software Sector ETF fell 3.1% The Russell 2000 Index fell 2% Cisco fell 12% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1863 The British pound was little changed at $1.3619 The Japanese yen rose 0.2% to 152.93 per dollar Cryptocurrencies

Bitcoin fell 3.4% to $65,429.88 Ether fell 2.6% to $1,918.3 Bonds

The yield on 10-year Treasuries declined seven basis points to 4.10% Germany’s 10-year yield declined one basis point to 2.78% Britain’s 10-year yield declined two basis points to 4.45% The yield on 2-year Treasuries declined five basis points to 3.46% The yield on 30-year Treasuries declined eight basis points to 4.73% Commodities

West Texas Intermediate crude fell 3% to $62.66 a barrel Spot gold fell 2.9% to $4,934.45 an ounce –With assistance from Chris Nagi.

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