S&P 500 Heads Toward Its Biggest Advance Since May: Markets Wrap
(Bloomberg) — A renewed wave of dip buying lifted stocks in the wake of a tech rout fueled by worries over the billions of dollars those firms are throwing at artificial-intelligence development. Bitcoin jumped after a 50% plunge from its October peak. Silver and gold also bounced.
Following a drawdown in some of Wall Street’s most-crowded trades, the S&P 500 rose 1.7%, set for its best session since May. Software firms — which bore the brunt of the recent selling — climbed, with an exchange-traded fund tracking the group up 3%. A gauge of chipmakers soared 5.5%, with Nvidia Corp. leading the way. Amazon.com Inc. sank 6% on plans to spend $200 billion on AI.
In an episode reminiscent of the response to DeepSeek’s AI model at the start of 2025, a new AI automation tool from Anthropic PBC sparked a selloff in shares across the software, financial services and asset management sectors that spread to the broader market earlier this week.
“My view: this is overdone,” said Kenny Polcari at SlateStone Wealth. “This is the moment to keep your head on straight. It is not the time to panic. For long-term investors, this is the time to go shopping. A lot is on sale.”
Emotional deleveraging selloffs such as the one that took place earlier this week can be “unnerving,” but are “normal and healthy calibration” events, reminding us of the old proverb: “Trees don’t grow to the sky,” according to Mark Hackett at Nationwide.
“At this point, the macro and earnings environment remain encouraging, suggesting this is more a positioning shift and technical pause rather than a fundamental crack,” he said.
After a few data points this week underscored the fragility of the jobs market, data Friday showed consumer sentiment unexpectedly improved to the highest in six months.
Over 350 shares in the S&P 500 gained. Its equal-weighted version – which strips out market-value biases – hit all-time highs. While the Nasdaq 100 rose 1.8% Friday, it was set for the worst week since November. The Russell 2000 climbed 3%.
Bitcoin reclaimed almost all of the losses registered during Thursday’s crypto market meltdown, which was the largest since the collapse of Sam Bankman-Fried’s FTX exchange roiled the digital asset sector more than three years ago. It climbed 13%, topping $71,000 Friday.
The yield on 10-year Treasuries rose three basis points to 4.21%. The dollar fell 0.4%. Oil joined riskier assets higher despite an apparent easing in geopolitical risks. Iran said it agreed with the US to continue indirect talks to de-escalate tensions and avert a military confrontation, with Tehran describing the first day as positive.
The recent rout in technology stocks is a reason to buy the dip in the broader market as the US economic outlook remains robust, according to Anwiti Bahuguna at Northern Trust Asset Management.
“It’s clearing off some of the froth in the markets,” she said. “We are actually seeing the use case for AI become clearer. From a macro sense, this is not the time to panic.”
Four of the biggest US tech companies together have forecast capital expenditures that will reach about $650 billion in 2026 — a mind-boggling tide of cash earmarked for new data centers and all the gear housed within them. The spending planned by Alphabet Inc., Amazon, Meta Platforms Inc. and Microsoft Corp. is a boom without a parallel this century.
“That’s freaking out investors, who are worrying that such massive spending might not pay off,” said Ed Yardeni, founder of his eponymous research firm. “However, all that spending in just this year will certainly provide lots of revenues and earnings to the companies that are vendors to the hyperscalers.”
The economy will also get a big boost from so much capex, he said, adding he “doubts” the sharp selloff in technology stocks this week the beginning of a “tech wreck.”
“We doubt it because this time, the industry has many more profitable companies benefiting from the enormous capital spending on AI infrastructure by hyperscalers,” the veteran Wall Street strategist concluded.
No matter what happens today, the issues surrounding the software companies — and the profitability of the AI industry — are not going to go away, according to Matt Maley at Miller Tabak.
“Therefore, if the tech stocks roll back over in a material way at some point over the next week or two, there will still be some meaningful risks to the tech sector going forward,” he said.
The issue here isn’t if AI will be profitable, but whether those profits are imminent, according to Florian Ielpo at Lombard Odier Asset Management.
“This temporal dimension constitutes a predominant market theme, and this week’s slight increase in risk aversion actually conceals a profound sector rotation, with investors moving away from the best-performing stocks of recent quarters,” he said.
AI will remain a structural growth driver, but investor focus is shifting from broad-based enthusiasm toward differentiated business models, capital efficiency, and defensible revenue streams, said Bob Savage at BNY.
Software companies that adapt toward client-specific solutions and integrate AI as an enabler rather than a replacement should regain investor confidence, particularly outside the US, where valuations remain more compelling, he noted.
“At the same time, defense, space and energy infrastructure are converging as strategic investment themes, driven by national security priorities, power constraints, and technological ambition. FX dynamics, home bias and policy frameworks – especially around data sovereignty and energy security – will increasingly influence capital allocation,” Savage concluded.
Meantime, Bank of America Corp. strategists led by Michael Hartnett said US small- and mid-cap stocks are the best bets ahead of midterm elections as tech giants lose their appeal.
They noted that President Donald Trump’s “aggressive intervention” to reduce the price of energy, health care, credit, housing and electricity is weighing on sectors including energy giants, drugmakers, banks and big tech. That makes smaller stocks the main beneficiary from a “boom” in the run-up to US midterms.
“The theme of a ‘rotational bull market’ continues to hold true,” said Craig Johnson at Piper Sandler. “We continue to favor relative strength in sectors such as energy, materials (non-precious metals), industrials, transportation, healthcare, banks, and select areas of technology and discretionary.”
The more this market rotates, the more it truly becomes a “stock picker’s market,” he added.
“We maintain our view that opportunities in equities this year should expand across geographies, sectors, and structural themes, and investors with concentrated positions should diversify their exposure,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
The February volatility is understandable since January was such a strong month, and corrections and pullbacks are relatively common during the month of February, according to Clark Bellin at Bellwether Wealth.
“The bull market is not dead, but it is aging, and we are not surprised to see investors paying more attention to corporate earnings and profitability,” he said. “Our message to investors is to remain opportunistic when stocks dip, but not necessarily during every dip. 2026 should still be a positive year, with plenty of opportunities to buy stocks on sale.”
Corporate Highlights:
Amazon.com Inc. announced plans to spend $200 billion this year on data centers, chips and other equipment, worrying investors that its colossal bet on artificial intelligence may not pay off in the long run. Tesla Inc. isn’t waiting around to see if Elon Musk’s 100-gigawatt solar ambition is feasible — it’s already acting on it. The company is evaluating multiple sites across the US to begin manufacturing solar cells, according to people familiar with the matter. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp. boosted their bonus pools for bankers and traders by at least 10%, as the businesses benefited from a banner year in dealmaking and market activity. Exchange operator Cboe Global Markets Inc. plans to roll out options contracts that will enable binary bets on event outcomes, in a bid to enter the fast-growing prediction markets. Exxon Mobil Corp. and Chevron Corp. are setting their sights on expanding production in nations tied to OPEC, including some of the world’s riskiest geopolitical hotspots, as President Donald Trump’s assertive foreign policy helps them strike deals. ConocoPhillips Chief Executive Officer Ryan Lance’s priority in Venezuela is recouping billions his company is owed almost two decades after its oil projects were nationalized, rather than drilling new wells. Hims & Hers Health Inc. sank after Food and Drug Administration Commissioner Marty Makary said his agency will take “swift action against companies mass-marketing illegal copycat drugs, claiming they are similar to FDA-approved products.” Biogen Inc. forecast 2026 profit above Wall Street’s expectations, signaling that steep cost-cutting measures are cushioning the impact of shrinking sales from its multiple sclerosis franchise. Philip Morris International Inc. reported higher profit in the fourth quarter, helped by strong sales of smoke-free products such as Zyn nicotine pouches. Molina Healthcare Inc. forecast 2026 profit that was less than half of Wall Street’s expectations, on higher medical costs and insufficient government repayments. Roblox Corp. reported fourth-quarter users and bookings that beat analysts’ expectations thanks to a slate of hit games. Carlyle Group Inc. exceeded its goals for fee-related earnings and asset growth in 2025, while posting fourth-quarter results that surpassed Wall Street estimates. Stellantis NV is taking more than €22 billion ($26 billion) in charges mainly linked to reversing course on its electric vehicle strategy, prompting a plunge in the Jeep and Fiat owner’s shares. BNP Paribas SA is considering raising bonuses for its global markets division by close to 10%, giving traders some of the biggest increases across the bank after a record year for the division, according to people familiar with the matter. Orsted A/S plans to reinstate dividends and ramp up spending this year, even after a string of expensive setbacks in the US clouded the company’s turnaround efforts. Tata Steel Ltd.’s profit grew eight fold in the third quarter led by robust demand and output at its Indian operations that helped the steelmaker overcome rising costs. ByteDance Ltd.’s TikTok has been warned by the European Union that it needs to overhaul the design of its platform over fears addictive features could “harm the physical and mental wellbeing of its users.” What Bloomberg Strategists say…
“Solid tech earnings mask a more concerning trend emerging: returns on invested capital among hyperscalers are starting to decline. Whether this is just a stumble or the start of a durable trend is the key question.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 1.7% as of 1 p.m. New York time The Nasdaq 100 rose 1.8% The Dow Jones Industrial Average rose 2.1% The MSCI World Index rose 1.5% Bloomberg Magnificent 7 Total Return Index rose 0.4% IShares Expanded Tech-Software Sector ETF rose 3% Philadelphia Stock Exchange Semiconductor Index rose 5.4% UBS US AI Winners Index rose 3.9% The Russell 2000 Index rose 3.2% S&P 500 Equal Weighted Index rose 1.4% Amazon fell 6% Currencies
The Bloomberg Dollar Spot Index fell 0.4% The euro rose 0.3% to $1.1818 The British pound rose 0.6% to $1.3617 The Japanese yen was little changed at 157.03 per dollar Cryptocurrencies
Bitcoin rose 13% to $71,004.66 Ether rose 12% to $2,074.47 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.21% Germany’s 10-year yield was little changed at 2.84% Britain’s 10-year yield declined four basis points to 4.51% The yield on 2-year Treasuries advanced five basis points to 3.50% The yield on 30-year Treasuries advanced two basis points to 4.86% Commodities
West Texas Intermediate crude rose 1.6% to $64.31 a barrel Spot gold rose 3.7% to $4,958.04 an ounce ©2026 Bloomberg L.P.
