Wall Street Slows Amid AI Migration Fears and Renewed Tariff Angst
Stocks on Wall Street fell on Monday, as fears of artificial intelligence-related disruptions and the collapse of the US Supreme Court’s ruling on Friday sent investors fleeing riskier stocks.
A broad selloff sent all three major US stock indexes down more than 1% at the closing bell, as risk appetite was dampened by a combination of lingering fears about potential disruptions from artificial intelligence technology and Trump’s ambiguous statements on trade policy, which fueled market volatility during the first year of the president’s second term.
Financial stocks fell 3.3%, while software-related firms fell 4.3% amid continued fears of AI disruption.
“The question with AI is twofold: How much will it cost, and who will be disrupted?” said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis. “You’ve seen the market react to the headlines, ‘sell first, check later.’
He added: “It’s a vision of what could happen as opposed to what happened.”
On Friday, the nation’s highest court ruled 6-3 that Trump had exceeded his presidential authority by imposing corresponding tariffs under the economic emergency law, a decision that drew criticism from the president, who threatened a temporary 15% tax on all sales, even though he has reached trade deals with many of America’s partners.
Gold prices, benefiting from a flight to the safe zone, rose 2.6%.
“The decision of the Supreme Court was unexpected,” said Hainlin. “But layering these uncertainties on top of each other, the tense political situation in the Middle East, tax uncertainty, and AI migration may lead investors to a broader risk reassessment.”
A powerful winter storm buried much of the US under more than 15 inches of snow and crippled travel in the Northeast. At airports in the New York City area, 89% to 98% of flights have been canceled, according to Flightaware.com. Airlines and travel/leisure-related stocks fell 3.8% and 3.7%, respectively. Dow Transports fell 2.9%.
With only 77 companies in the S&P 500 yet to post results, the fourth quarter earnings season is nearing the finish line, with high-profile companies expected to report this week, especially artificial intelligence maker Nvidia due to report on Wednesday. Home improvement rivals Home Depot and Lowe’s are also on the docket, flanked by Salesforce and Universal Health Services.
Of the companies that have reported, 73% beat expectations, and analysts now expect the S&P 500’s consolidated earnings to grow by 13.9% year-over-year, well above the 8.9% forecast as of January 1, according to LSEG data.
The Dow Jones Industrial Average fell 821.91 points, or 1.66%, to 48,804.06, the S&P 500 lost 71.76 points, or 1.04%, to 6,837.75 and the Nasdaq Composite lost 258.80, or 258.80 points.
Among the S&P 500’s 11 largest sectors, financials had the largest percentage gain, while consumer staples led the gainers.
The health care index advanced 1.2%, boosted by a 4.9% gain in Eli Lilly after Novo Nordisk’s obesity drug rival CagriSema underperformed Eli Lilly’s drug Zepbound in a head-to-head trial.
Among other movers, Domino’s Pizza rose 4.1% after fourth-quarter same-store sales beat Wall Street estimates.
PayPal jumped 5.8% after Bloomberg News reported that the payments company was attracting takeover interest.
Declining issues outnumbered advancing ones by a 2.2 to 1 ratio on the NYSE. There were 390 new highs and 204 new gains on the NYSE.
On the Nasdaq, 1,432 stocks advanced and 3,277 declined as bearish issues outnumbered advancers by a 2.29-to-1 ratio.
The S&P 500 posted a new 52-week high and 18 new highs while the Nasdaq Composite recorded 67 new highs and 264 new lows.
US trading volume was 18.39 billion shares, compared to the 20.62 billion average for the full session over the last 20 days.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Ragini Mathur in Bengaluru; Editing by Aurora Ellis)
