Nasdaq 100 Slides 1.5% as Tech Selloff Deepens: Markets Wrap

(Bloomberg) — Wall Street traders kept driving a rotation out of tech giants, whose all-weather earnings made them safe bets at times of economic uncertainty, and into a broader category of firms tuned to improving growth prospects. Bitcoin extended its rout.

While most shares in the S&P 500 rose after solid US services data, the index fell. The Nasdaq 100 sank over 1.5%. Software firms were caught in another wave of selling, but moves were more pronounced in chipmakers on Wednesday, with Advanced Micro Devices Inc. tumbling 17% on an underwhelming outlook. Commodity producers, consumer staples and banks climbed.

“There might be a glass half full and a glass half empty perspective on the moves here,” said Kyle Rodda at Capital.com. “On the one hand, tech stocks are potentially too richly valued. On the other hand, the strength in the market is broadening out in a sign of improving economic fundamentals, backed up by data that shows more robust economic conditions.”

The dynamic will be brought into sharp focus in the next few days with more results from big techs. Alphabet Inc., the top performer among the “Magnificent Seven” megacaps last year, will report results after the close. Its $4.1 trillion market capitalization has approached Nvidia Corp.’s value after an over $2 trillion surge in the past eight months.

Action in the bond market was muted amid a batch of economic reports. US service providers saw the strongest back-to-back growth since 2024 as business activity picked up even as employment barely expanded. While companies added fewer jobs than expected, recent data has pointed to limited layoffs.

“The growth impetus in the US looks solid,” said Florian Ielpo at Lombard Odier Asset Management. “The employment index decline is worth monitoring, but it is not yet flashing red – ‘Goldilocks’ it is for now.”

Meantime, the US Treasury is keeping an eye on rising demand for the shortest-dated federal securities — from both the Federal Reserve and the private sector — but still offered no tilt on Wednesday toward trimming sales of notes and bonds.

The S&P 500 fell 0.5%. The Nasdaq 100 breached its 100-day moving average, a level seen by some technical analysts as a harbinger for more losses. The IShares Expanded Tech-Software Sector ETF slid 2.1%. A closely watched gauge of chipmakers sank 4.5%.

Bitcoin tumbled 3%. The yield on 10-year Treasuries was little changed at 4.27%. A key part of the US yield curve is near its steepest level in four years. The dollar added 0.3%. Gold dipped below $5,000.

“Software stocks are being decimated as worries permeate over whether AI will cannibalize their businesses,” said Bret Kenwell at eToro. “However, while the long-term implications are still somewhat unknown, many of these firms continue to generate solid earnings and revenue growth, and analyst expectations for these metrics continue to trend higher.”

Kenwell notes that the software space is quickly approaching “oversold” levels and likely “nearing capitulation.”

“Right now, investors are not asking themselves where the value is,” he said. “Instead, they’re throwing out all software stocks — even as many top firms within this space are doing just fine.”

However, the bigger long-term risk may be on valuation, Kenwell said. Once this selloff is over and the stocks recover from their oversold condition, the question is: will there be a new ceiling on just how much investors are willing to pay for them?

“If so, that could limit the upside and the recovery time for this space — high quality or not,” he concluded.

Since reaching an all-time high in October, the S&P 500 software group has plunged over 25%. For those searching for a bottom, Jeffrey Yale Rubin at Birinyi Associates Inc. notes that the average bear market in the group is a slide of 32.53%. And the worst drop – 53.94% – occured during the global financial crisis, he said.

“The news for the software stocks gets worse by the day,” said Matt Maley at Miller Tabak. “However, no matter where they are headed over the intermediate and long-term, they are getting poised for a nice bounce over the near-term. Investors should be careful about negative bets over the short-term.”

“Of course, we have been saying for some time now that if the tech sector sees a broad decline — with the all the different groups within the sector falling in unison — it’s going to be very tough for the broad stock market to hold up in the face of that kind of scenario,” Maley said.

However, we’re going to have to see more days like that before we can raise a “meaningful yellow warning flag,” he concluded.

“Ultimately, we view this as another AI scare with software and related areas bearing the brunt of it,” said Chris Senyek at Wolfe Research. “Within tech, we’d use weakness to buy AI related semiconductor stocks, and our favorite sector for new money is discretionary. In particular, stocks levered to an uptick in spending as tax refunds hit in February-April.”

“It’s been a tough week so far, but let’s keep in mind the broader picture here,” said Mona Mahajan at Edward Jones. “It is hard to get overly bearish when we are still looking at an economy that we think is growing above trend”

Mahajan also notes she’s looking at an earnings growth picture that is still double digits for 2026, driven by tech sectors but also non-tech sectors

“So a little broadening there,” she said.

Tech is stepping back as cyclical and defensive stocks step up, and while the recent volatility caught attention, the data points to a technical reset, not a fundamental break, according to Mark Hackett at Nationwide.

“This is a rotation, not a rupture,” he said. “Seeing that shift near record highs highlights the market’s underlying strength.”

Hackett also noted that the fundamental picture remains robust. Fourth-quarter earnings are set to extend the double-digit winning streak to five quarters, with elevated sales growth, record margins, greater breadth of the earnings strength, solid 2026 guidance and improving corporate sentiment, he said.

“While we remain positive on the outlook for US equities and expect the S&P 500 to move higher, we believe diversification is key to managing market risks and enhancing long-term returns,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

To position for a broadening rally, she likes financials, health care, utilities, and consumer discretionary in the US, and see attractive opportunities across Asia and Europe.

Corporate Highlights:

Nvidia Corp. is nearing a deal to invest $20 billion in OpenAI as part of its latest funding round, according to people familiar with the matter, marking the chipmaker’s single biggest investment in the ChatGPT developer. Amazon.com Inc. is taking the wrapper off its upgraded Alexa in the US, offering the AI-enhanced digital assistant to paying Prime customers and introducing a free version for everyone else. Texas Instruments Inc. has reached an agreement to buy the US chip firm Silicon Laboratories Inc. for about $7.5 billion, deepening its exposure to several long-standing markets for chips including the home appliance, power, industrial and medical-device sectors. Adobe Inc. ramped up its advertising in 2025, spending $1.4 billion to promote its brand in the face of steep competition and skepticism from Wall Street that the company is a loser in the age of AI. The owner of the Nasdaq 100 Index is proposing to speed up the inclusion of newly listed, large-cap firms in the widely followed equity benchmark as a flurry of technology giants are slated to go public this year. New York Times Co. tumbled after the company reported strong fourth-quarter results that also raised concerns on Wall Street about a jump in spending. Chipotle Mexican Grill Inc.’s doldrums are set to extend into 2026, with the burrito chain offering a full year-sales target that fell short of Wall Street’s expectations. Uber Technologies Inc. issued a mixed forecast and promoted an outspoken driverless-vehicle bull to be its new chief financial officer, signaling further investment in a closely watched area of the ride-hailing company’s business. Ford Motor Co. has held discussions with China’s Zhejiang Geely Holding Group Co. about sharing manufacturing capacity in Europe, with the US carmaker seeking new global partnerships as it overhauls its electric vehicle strategy. Prudential Financial Inc. said it would voluntarily suspend new life insurance sales in Japan for 90 days, in a move to restore trust following misconduct by employees that has prompted a regulatory probe. Boston Scientific Corp. plunged after the maker of medical devices gave a profit and sales growth forecast for 2026 that fell short of Wall Street’s expectations. Eli Lilly & Co. provided an upbeat sales forecast for the year Wednesday as strong demand for its weight loss drug cemented its position at the top of the obesity market. Novo Nordisk A/S’s chief executive officer asked investors to stick with him after a dire sales forecast caused a share price rout, saying a surge in prescriptions for cheaper obesity drugs will eventually revive growth. AbbVie Inc. forecast 2026 profits above Wall Street’s expectations, though investors saw vulnerabilities in some of the company’s key brands. GSK Plc’s new chief executive officer plans to speed up research and development and look for acquisitions as the British drugmaker tries to convince investors it can offset a looming patent cliff. Egypt banned Roblox Corp.’s gaming platform, as the Middle East’s most populous nation says it’s trying to curb children’s exposure to potentially harmful online material. D.E. Shaw & Co. criticized the board of CoStar Group Inc. in a letter to the company, putting further pressure on the real estate analytics group as it faces a separate campaign from activist investor Dan Loeb. Enphase Energy Inc. surged after the solar-equipment supplier said that the looming expiration of federal tax credits for clean electricity investments is boosting consumer demand. Johnson Controls International Plc sees its adjusted earnings per share rising at the fastest pace in a decade after strong quarterly order growth. Bunge Global SA rose on expectations the giant crop trader will benefit from emerging biofuels policy as it continues the integration of Viterra into its folds. Clear Street Group Inc., a Wall Street broker built on cloud computing technology, is looking to raise as much as $1.05 billion in an initial public offering. Brookfield Asset Management named Connor Teskey chief executive officer, marking the final step in Bruce Flatt’s long-held plans to replace himself at the helm of the $1 trillion asset manager. UBS Group AG slid even after the bank posted profit that beat expectations, amid persistent signs that the wealth management business in the US is losing ground. Infineon Technologies AG said it will ramp up its investment in technology for artificial intelligence, working to diversify its business in a prolonged slump in auto and industrial chip demand. Carlsberg A/S widened its operating profit outlook compared with last year in a move reflecting the brewer’s cautious stance over future demand for its drinks. Mitsubishi UFJ Financial Group Inc.’s profit rose in the third quarter as higher interest rates boosted lending income. BYD Co.’s German sales surged more than ten-fold last month as the Chinese automaker continues to expand in Europe’s largest electric-vehicle market. What Bloomberg Strategists say…

“The problem with ditching tech stocks en masse is that there is little fundamental reason in the long term. The rotation narrative has found some support during the current quarter, but is increasingly looking stretched based on earnings results.”

—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.5% as of 11:57 a.m. New York time The Nasdaq 100 fell 1.7% The Dow Jones Industrial Average rose 0.6% The Stoxx Europe 600 was little changed The MSCI World Index fell 0.4% Bloomberg Magnificent 7 Total Return Index fell 1.6% Philadelphia Stock Exchange Semiconductor Index fell 4.5% IShares Expanded Tech-Software Sector ETF fell 2.1% The Russell 2000 Index fell 1.2% AMD fell 16% KBW Bank Index rose 1.5% Currencies

The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.2% to $1.1801 The British pound fell 0.3% to $1.3655 The Japanese yen fell 0.5% to 156.60 per dollar Cryptocurrencies

Bitcoin fell 3.2% to $73,678.52 Ether fell 6.6% to $2,132.85 Bonds

The yield on 10-year Treasuries was little changed at 4.27% Germany’s 10-year yield declined three basis points to 2.86% Britain’s 10-year yield advanced three basis points to 4.55% The yield on 2-year Treasuries declined one basis point to 3.56% The yield on 30-year Treasuries advanced two basis points to 4.91% Commodities

West Texas Intermediate crude rose 0.5% to $63.50 a barrel Spot gold fell 0.9% to $4,904.04 an ounce ©2026 Bloomberg L.P.