(Feb 25): A rally in technology firms spurred a rebound in stocks on Tuesday after a rout driven by fears about the disruptive impacts of artificial intelligence (AI), with sentiment also buoyed by an improvement in consumer confidence.
Beaten-down software firms climbed, with the Nasdaq 100 up 1.1%. Advanced Micro Devices Inc jumped about 9% on Meta Platforms Inc’s plans to spend billions on its gear. Texas Instruments Inc slid on concerns about heavy capital spending. Short-dated bonds underperformed. Gold fell.
Weeks after Anthropic PBC sparked a market meltdown with the release of tools that raised questions about AI’s potential to render entire businesses obsolete, the startup said it’s expanding the reach of its Claude chatbot into new sectors.
It also highlighted how Claude integrates rather than displaces existing systems, noted Adam Crisafulli at Vital Knowledge.
“This ‘we’re here to help, not hurt’ message from Anthropic is helping to trigger a fairly healthy rebound rally in software,” he said.
Traders are also bracing for Nvidia Corp’s results on Wednesday, expecting the chipmaker to trounce expectations. The report will follow its recent lacklustre stock performance, driven by investors rotating away from megacaps.
See also: S&P 500 rises as traders assess fallout from AI-fuelled slump
This week’s earnings will either “calm or exacerbate” AI fears, said David Laut at Kerux Financial. “We won’t have all of the answers this week, but worried investors are hungry for clarity,” he noted.
Before the chipmaker’s results, US President Donald Trump will deliver the State of the Union address on Tuesday evening, laying out his administration’s priorities for the year ahead.
The S&P 500 rose 0.8%. The yield on 10-year Treasuries was little changed at 4.03%. The dollar wavered.
See also: JPMorgan predicts trading unit will set record this quarter
“AI disruption risk is not new information, but the catastrophising seems overdone,” said Andrew Tyler, who runs the Global Market Intelligence team at JPMorgan Chase & Co.
While some of the concerns about AI displacing certain sectors could prove justified at the company level, the broader market effect has been a healthy moderation of optimism, according to Anthony Saglimbene at Ameriprise.
“This shift in investor psychology, if lasting, could help lower the odds of valuations becoming unanchored with reality and leave a more constructive environment for the long-term health of the market,” he said.
The business cycle should limit equity drawdown risk despite AI disruption and concerns over geopolitical shocks, according to Goldman Sachs Group Inc strategists, including Andrea Ferrario and Christian Mueller-Glissmann.
“While somewhat elevated valuations do increase the risk of smaller corrections, our current optimistic macro baseline and broadly supportive market sentiment should limit drawdown risk,” they added.
Uploaded by Isabelle Francis
