(Feb 24): Stocks fell and bonds rose as renewed anxiety over the impact of artificial intelligence (AI) on company profits joined lingering tariff uncertainty in squelching risk appetites. Bitcoin dropped below US$65,000. Gold rallied.
The S&P 500 slid 1%. Tech, delivery and payment shares got hit as Citrini Research laid out the potential AI risks to various industries. DoorDash Inc and American Express Co sank over 6.5%. An ETF focused on software firms lost 4.8%. International Business Machines Corp (IBM) tumbled 13% in its worst day since October 2000 as Anthropic said its Claude Code can help modernise COBOL, a programming language mainly run on IBM computers.
“The software sell-off is a reminder of what can happen when momentum-driven sectors shift into reverse,” said Steve Sosnick at Interactive Brokers. “The broader, more important question is: How many sectors can go into reverse before they drag the broader market along with them?”
Rising anxiety over the impact of AI disruption is prompting traders to dump shares of any company seen at the slightest risk of being displaced. Those worries have also grown despite solid results from megacaps amid doubts over whether big investments in the technology will pay off soon.
Investors also parsed the implications of trade developments. After the Supreme Court’s decision Friday to nix President Donald Trump’s “reciprocal” tariffs, the White House announced plans to replace the prior levies with a new, across-the-board 15% tariff on US imports.
“The push and pull with tariffs is likely to be a distracting theme for markets for the remainder of the year, albeit with less volatility than the initial shock last April,” said Michael Landsberg at Landsberg Bennett Private Wealth Management.
See also: JPMorgan predicts trading unit will set record this quarter
As caution prevailed, haven currencies outperformed while gold topped US$5,200. A rally in Treasuries sent 10-year yields down five basis points to 4.03%.
Key events this week include Trump’s State of the Union address on Tuesday, Nvidia Corp’s results on Wednesday and a Friday reading on producer prices. Federal Reserve governor Christopher Waller said his March rate call will hinge on jobs data.
“Given the various economic risks and uncertainties that can be linked to the tariff drama, we expect the Fed’s wait-and-see approach to be reinforced,” said Ian Lyngen at BMO Capital Markets.
See also: S&P 500 slides as fresh AI worries hit financials; Nvidia wavers
At Edward Jones, Angelo Kourkafas said the newly announced 15% tariff rate is unlikely to have a meaningful impact on economic activity.
“We advise investors not to overreact to headlines, and we reiterate our constructive outlook for global equity markets, supported by strong corporate profit growth and healthy economic activity,” he added.
With the tech sector lagging amid concerns about AI disruption, he says a balance between growth- and value-style sectors will be key to investor success this year.
“We recommend overweight positions in industrials, healthcare, and consumer discretionary, offset by underweights in consumer staples and utilities,” Kourkafas noted.
Uploaded by Isabelle Francis
