Stocks Mount Tentative Recovery After AI Scare: Markets Wrap
(Bloomberg) — Stocks staged a cautious rebound after fears about the disruptive impact of artificial intelligence sparked an indiscriminate selloff across broad swathes of the market.
S&P 500 futures rose 0.2% on Tuesday, after the benchmark fell 1% in the previous session following a Citrini Research report outlining hypothetical AI-driven structural shifts. Gold were slightly weaker, but still held most of Monday’s haven-driven gains. The yen fell as Prime Minister Sanae Takaichi voiced opposition to further interest-rate hikes.
The so-called AI scare trade has become a dominant theme for stocks, with selling spreading beyond software to hit insurance brokers, private credit, cybersecurity and even real estate services. The flight is only one of several shifts beneath the surface of a US market that is little changed in 2026 after years of tech-led gains.
Traders also need to contend with a range of other risks, from renewed trade uncertainty to brewing tensions between the US and Iran. Focus on Tuesday will turn to President Donald Trump’s State of the Union address and consumer data that, in the previous reading, plunged to the lowest level since 2014.
“We are reducing our risk levels by a notch,” wrote Mohit Kumar, chief economist and strategist for Jefferies International. “Ongoing concerns over AI disruption and the possible exposure to private credit and private equity have made investor sentiment fragile. In this backdrop, if we do get an escalation in geopolitical risks, markets may face some wobbles.”
Shares that took the brunt of Monday’s selloff steadied in premarket trading. An ETF tracking software firms was little changed after falling to its lowest level since November 2023. International Business Machines Corp. rose 0.6% following a 13% tumble. Most tech megacaps posted modest gains ahead of Nvidia Corp.’s earnings on Wednesday.
Nasdaq 100 futures were up 0.3%. Treasuries traded flat, with the 10-year yield at 4.04%. The dollar held steady.
For Emmanuel Cau, head of European equity strategy at Barclays Plc, fears about labor-market disruption need to be counterbalanced by the job creation that typically accompanies technological progress.
As for software stocks, which have now been mispriced, “it’s very hard to go prove the market wrong on that,” Cau told Bloomberg TV. “What we are trying to do from an equity allocation standpoint is to be exposed to some of these old-economy, more tangible parts of the market.”
After Trump’s new 10% global tariff went into effect on Tuesday and a timeline for a proposed higher rate of 15% is still in question, investors will listen for any further comments on trade in his State of the Union speech.
“The focus for investors will be on three issues: tariffs, Iran and the Fed,” said Joachim Klement, head of strategy at Panmure Liberum. “Any hint that a military strike against Iran is imminent should trigger another rally in oil and gold prices. If Trump uses his platform to bully the Supreme Court or the Fed, Treasury markets will not take that lightly.”
Corporate Highlights:
JPMorgan Chase & Co. expects to earn about $104.5 billion in net interest income this year, more than it anticipated just last month when it reported quarterly earnings. PayPal Holdings Inc., the digital payments pioneer, is attracting takeover interest from potential buyers after a stock slide wiped out almost half of its value, according to people familiar with the matter. Paramount Skydance Corp. raised its offer to buy Warner Bros. Discovery Inc., extending the long-running battle for one of Hollywood’s iconic studios. Standard Chartered Plc announced a fresh $1.5 billion share buyback as it reported weaker-than-estimated fourth-quarter earnings, weeks after its share price was hit by the surprise departure of its chief financial officer. European car sales fell in January, breaking a six-month growth streak as consumer reticence in several markets overshadowed still-robust demand for electrified models. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 10:46 a.m. London time S&P 500 futures rose 0.2% Nasdaq 100 futures rose 0.3% Futures on the Dow Jones Industrial Average rose 0.2% The MSCI Asia Pacific Index was little changed The MSCI Emerging Markets Index rose 0.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1787 The Japanese yen fell 0.8% to 155.85 per dollar The offshore yuan rose 0.2% to 6.8746 per dollar The British pound was little changed at $1.3497 Cryptocurrencies
Bitcoin fell 2.1% to $63,198.58 Ether fell 2.2% to $1,823.21 Bonds
The yield on 10-year Treasuries was little changed at 4.03% Germany’s 10-year yield declined one basis point to 2.70% Britain’s 10-year yield declined one basis point to 4.30% Commodities
Brent crude was little changed Spot gold fell 1.1% to $5,171.13 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rose Henderson.
©2026 Bloomberg L.P.
