Tech Stocks Get Hit as Cisco Tumbles After Results: Markets Wrap

(Bloomberg) — A selloff in tech companies dragged down stocks amid growing concerns about whether massive investments in artificial intelligence will materialize in a significant way. Bonds rebounded ahead of key inflation data, with traders looking for evidence that price pressures are on a downward path.

Most shares in the S&P 500 rose, but the gauge retreated. Economically sensitive areas of the market largely outpaced the high-profile group of tech names. The Nasdaq 100 lost 1.1%. A closely watched exchange-traded fund tracking software companies slid 3%. Cisco Systems Inc. sank 11% on a tepid margin forecast.

“While we remain bullish on stocks, the mood right now is cautious optimism with fatigue,” said Charlie Anderson at UBS Wealth Management. “Stocks are a bit tired after a very strong start to 2026 and we would not be surprised to see some near-term chop as the market figures out its next catalyst.”

Tech earnings continue to deliver, but sentiment has drifted away from purely exuberant, and some of the market’s biggest tech stocks are getting hit after reporting earnings, which shows that investor expectations have risen, he noted.

“We feel investors should position for a broadening equity rally with sectors such as financials, health care and utilities likely to perform well this year,” said Anderson.

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 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 Treasury market has entered a holding pattern ahead of Friday’s inflation data, and we’re left to consider the extent to which Friday’s CPI can potentially reprice the US rates market, noted Ian Lyngen at BMO Capital Markets.

Markets are complacent on the outlook for US inflation, making trades that pay out if price pressures climb look attractive, said to 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:

Cisco Systems Inc. gave a weaker-than-expected forecast for profitability in the current quarter, spurring concerns that mounting memory-chip prices are taking a toll on the company. 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. 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. Some of the main moves in markets:

Stocks

The S&P 500 fell 0.5% as of 11 a.m. New York time The Nasdaq 100 fell 1.1% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 was little changed The MSCI World Index fell 0.3% Bloomberg Magnificent 7 Total Return Index fell 1.5% Philadelphia Stock Exchange Semiconductor Index fell 0.5% IShares Expanded Tech-Software Sector ETF fell 3% The Russell 2000 Index fell 0.8% S&P 500 Equal Weighted Index was little changed Cisco fell 11% McDonald’s rose 2.3% Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.1% to $1.1886 The British pound rose 0.2% to $1.3654 The Japanese yen rose 0.4% to 152.65 per dollar Cryptocurrencies

Bitcoin fell 1% to $67,098.29 Ether fell 1.1% to $1,947.69 Bonds

The yield on 10-year Treasuries declined three basis points to 4.14% Germany’s 10-year yield was little changed at 2.79% Britain’s 10-year yield declined two basis points to 4.45% The yield on 2-year Treasuries declined three basis points to 3.48% The yield on 30-year Treasuries declined three basis points to 4.77% Commodities

West Texas Intermediate crude fell 1.6% to $63.62 a barrel Spot gold fell 0.5% to $5,060.34 an ounce ©2026 Bloomberg L.P.