(Feb 24): US stocks sank on Monday as fresh concerns about the impact of artificial intelligence (AI) hit financial and software companies, while President Donald Trump’s move to impose a new, across-the-board levy on US imports sowed confusion around global trade. Shares of Nvidia Corp erased earlier gains before Wednesday’s earnings report.
The S&P 500 Index dropped 1.2% at 11.06am in New York, led by losses in financial and consumer discretionary sectors. Consumer staples and healthcare were in the green. The Nasdaq 100 Index dropped 1.5%.
“If sophisticated investors are confused about all the new details, nuances, and transition rules, you can bet that businesses will be,” Wolfe Research’s Tobin Marcus wrote in a Monday note about Trump’s new tariff. On Friday, the Supreme Court struck down the bulk of the president’s sweeping gloabl levies imposed last year.
Blackstone Inc, American Express Co, and Capital One Financial Corp were among top financial decliners after Citrini Research mentioned them in an article asking “What if our AI bullishness continues to be right... and what if that’s actually bearish?” DoorDash Inc, Uber Technologies Inc, and Salesforce Inc were among software-related companies that were discussed in the report and were declining. On Friday, Citigroup’s multi-asset strategists downgraded technology stocks as they diversify exposure away from the Magnificent Seven.
Nvidia shares were little changed after Aletheia Capital raised the stock to a buy, saying it’s too cheap to ignore before earnings. Shares have been drifting sideways for months and are in the bottom half of performers this year for the S&P 500. They were also the most under-owned large-cap tech stock at the end of the fourth quarter.
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Tech stocks were slumping broadly as OpenAI was said to have told investors it’s planning to spend about US$600 billion on infrastructure by 2030 after previously saying it was committed to spending more than US$1.4 trillion. The plan for a smaller outlay spurred concern the explosive spending powering the AI trade may be unsustainable.
Shares of cybersecurity software companies including Crowdstrike Holdings extended Friday’s losses after Anthropic PBC introduced a new security feature into its Claude AI model.
JPMorgan Chase & Co stock dropped as much as 4.6%, the most intraday since December. The bank is due to host a company update after the bell. Chief executive officer Jamie Dimon will seek to persuade investor that spending US$2 billion a week is necessary for growth, according to The Financial Times.
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Energy stocks advanced. Oil prices rose as investors continued to assess the potential for US-led conflict with Iran.
In earnings news, Domino’s Pizza Inc rallied 2.2% after the company reported US comparable sales topped expectations and boosted its dividend.
Novo Nordisk A/S ADRs sank 16% as its next-generation obesity shot CagriSema delivered less weight loss than Eli Lilly & Co’s rival blockbuster in a trial. Lilly gained 4.2%.
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