(Feb 24): US stocks edged higher at the open on Tuesday as traders assessed the outlook for the artificial intelligence (AI) “scare trade” that pummelled the market the prior session.
The S&P 500 Index was up 0.2% at 9.44am in New York, with six of 11 sectors in the green, led by consumer discretionary and information-technology stocks. The Nasdaq 100 Index was up 0.6%.
Software stocks are in particular focus as investors have been ditching them for months on worries around the disruptive potential of AI. On Monday, International Business Machines Corp shares had their worst day in more than 25 years after AI startup Anthropic PBC said its Claude Code tool can help modernise a programming language run on IBM computers. IBM shares rose 4.5% in morning trading. Wall Street analysts including Melius Research defended the stock following Monday’s plunge.
Anthropic is hosting another demonstration event for its Claude tool on Tuesday, which is “arguably today’s biggest risk event”, according to Mark Taylor, managing director of sales trading at Panmure Liberum.
“If the event is a recap of what’s already out, there could be an argument for relief in some of the most beaten-down sectors of the past couple of weeks,” Taylor said. At the same time, “seeing real-world use cases could also reinforce the existing heightened concerns of what is already achievable”.
Tuesday brings results from Workday Inc after the close. The company is expected to show double-digit revenue growth. Shares were little changed. Also among software companies, reports from Salesforce Inc, Snowflake Inc, Intuit Inc and others are due later this week.
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American Express Co and Mastercard Inc declined. Those stocks were among the hardest-hit after Citrini Research on Monday mentioned them in a “thought exercise” describing the potential risk AI could pose for the global economy.
Advanced Micro Devices shares soared 5.3% after Meta Platforms said it would buy the company’s chips and computers designed to run AI models. Nvidia Corp shares dropped 0.8% ahead of its Wednesday earnings report.
JPMorgan Chase & Co stock shed 0.5% after hosting a company update Monday evening. Chief executive officer Jamie Dimon said he’s starting to see parallels to the era before the 2008 financial crisis, when a rush to make loans ended disastrously. Anxiety about Blue Owl Capital Inc has been rattling the private credit market.
See also: Stocks hit by AI-disruption fears as IBM tumbles
In economic news, home prices rose a less-than-expected 0.1% month over month in December, according to a report from the Federal Housing Finance Agency. Homebuilder stocks were little changed.
Home Depot Inc rallied 4.0% after reporting a key sales metric that beat expectations on steady demand, though the company also cautioned that customers “have been on the sideline with respect to large remodelling projects” for years. “The homeowner is one of the healthiest customer cohorts out there, but they tell us that uncertainty is growing, that there’s concern around housing affordability, around job losses,” Chief financial officer Richard McPhail said in an interview.
Later on Tuesday, affordability and tariffs are expected to be key domestic themes in President Donald Trump’s State of the Union address, posing risk for credit-card issuers, homebuilders, single-family REITs and retailers exposed to duties, according to Bloomberg Intelligence.
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