Wall St Rebounds From Tech Rout; Tariff, AI Concerns Long Lasting
U.S. stocks rallied on Tuesday, led by a rebound in technology stocks as investors weighed Anthropic’s announcement of new AI tools and weighed President Donald Trump’s swing on trade tariffs.
Anthropic has announced several new plug-ins targeting industries such as investment banking and HR, just weeks after its previous release caused a sell-off in traditional software stocks.
Several other sectors from commercial real estate to trucking and logistics have recently entered a major downturn, as new developments in the AI space increase concerns about industry-wide disruption.
The S&P 500 software and services index, which has fallen more than 23% so far this year, advanced 0.8% on the day with help from Salesforce, which was among the biggest gainers.
February has been a tough month for US currencies as high stock valuations and AI impacts pressure technology and other sectors, with investors questioning whether the big AI investment is really paying off.
At 11:41 am ET, the Dow Jones Industrial Average rose 338.50 points, or 0.69%, to 49,142.56, the S&P 500 added 39.24 points, or 0.57%, to 6,876.99, and the Nasdaq Composite added 39.24 points, or 0.57%, to 6,876.99. 22,824.37.
All three major indexes fell more than 1% on Monday, with financials and software stocks among the worst performers as the failure of the U.S. Supreme Court’s decision on Friday to lower Trump’s tariffs prompted an exit from high-risk stocks.
After the decision, Trump announced a temporary global tariff of 10%, which went into effect on Tuesday. In time he said the tax will be 15% but it is not clear when and when it will be effective.
Analysts also attributed Monday’s sell-off to a bearish report from Citrini Research that highlighted potential threats to the global economy from the rise of artificial intelligence.
“Yesterday’s reaction was so over the top that it can’t be contained a little bit … the opening is just a sign of the disaster that happened yesterday,” said Ken Polcari, partner and chief market strategist at Slatestone Wealth.
Most megacap and growth stocks pulled back slightly on Tuesday, with Apple leading gains by up 2.3%, while Nvidia rose 0.4% ahead of its earnings, which are due after the market closes on Wednesday.
Advanced Micro Devices jumped 7.6% after the chipmaker said it agreed to sell up to $60 billion of AI chips to Meta Platforms over five years.
Home Depot rose 3.3% after the home improvement operator raised estimates for fourth-quarter results and maintained its full-year forecasts.
Keysight Technologies rose 23.9% after the electronics maker forecast second-quarter profit ahead of Wall Street estimates.
Meanwhile, several Federal Reserve officials including Fed governors Christopher Waller and Lisa Cook spoke throughout the day.
Trump is scheduled to deliver the traditional State of the Union address to Congress later in the day.
Advancing issues outnumbered decliners by a 1.52-to-1 ratio on the NYSE, and a 1.87-to-1 ratio on the Nasdaq.
The S&P 500 posted a new 52-week high and 12 new highs, while the Nasdaq Composite recorded 71 new highs and 133 new lows.
(Reporting by Shashwat Chauhan, Ragini Mathur in Bengaluru and Chuck Mikolajczak in New York; Editing by Pooja Desai)
