US stocks continued their descent on Wednesday as Wall Street digested another round of earnings and anxiously awaited Alphabet’s results amidst fears of an AI-induced downturn in software and tech shares. The S&P 500 experienced a 0.2% drop, while the Nasdaq Composite fell over 1%, prolonging the previous day’s setbacks. Conversely, the Dow Jones Industrial Average ticked up slightly, as investors pivoted towards more stable blue-chip stocks.
In recent days, Wall Street has struggled to stabilise due to concerns surrounding AI disruptions, which have propelled a retreat from software stocks, leading to a widespread global sell-off affecting both Europe and Asia. Reuters reported on the mass exit from high-profile tech assets in favour of value stocks, resulting in steep declines for industry giants. Nvidia tumbled more than 4%, while Google slid nearly 3% ahead of its earnings announcement. Meanwhile, Amazon dropped over 2%, and Tesla declined more than 5%.
Furthermore, an underwhelming report from ADP highlighted emerging cracks in the labour market. Employers added a mere 22,000 jobs in January, well short of the anticipated 45,000. Bloomberg noted the significance of private data as federal jobs statistics were delayed due to a recent government shutdown.
Elsewhere, markets saw diverse movements. Gold prices (GC=F) gained amid US-Iran tensions but subsequently slipped below $5,000 an ounce. Bitcoin also faced setbacks, trading near $72,000. Treasury Secretary Scott Bessent clarified that the US would not bail out the volatile cryptocurrency sector, contributing to Bitcoin’s decline.
In the corporate arena, fortunes diverged among pharmaceutical giants. Eli Lilly shares surged following a promising 2026 profit forecast, buoyed by strong demand for its weight-loss medications. Conversely, Novo Nordisk suffered a sharp fall, projecting a significant sales drop and losing about $50 billion in market value since February’s start.
Transitioning to more positive corporate news, Eaton Corporation experienced a noteworthy surge in data centre orders, tripling them in the fourth quarter of last year. The company’s robust backlog growth by 31% in its “Electrical Americas” division reflects strong demand driven by the AI sector. Yahoo Finance highlighted how Eaton’s market optimism is rooted in sustained demand from AI hyperscalers.
Moreover, Silicon Laboratories saw a significant leap after Texas Instruments announced a $7.5 billion acquisition of the chip designer. This strategic move is set to expand Texas Instruments into the wireless connectivity chip market.
Not all was gloom on Wall Street, however. Eli Lilly cheered investors with its strong sales outlook, driving its shares up by 7%. Meanwhile, Enphase Energy saw a 20% increase in premarket hours, surpassing profit and revenue expectations. The technology firm’s shares have experienced a 10% rise over the past month though they remain down for the year.
Alphabet was in the spotlight too as all eyes were on their upcoming quarterly earnings. Despite Microsoft’s recent stumble, analysts are closely watching Alphabet for signs of resilience amid AI pressures. Yahoo Finance predicts that Alphabet’s AI advancements may bolster investor sentiment.
In the tech sector, notable movements included SAP SE, Salesforce, and ServiceNow. These firms have seen over a 15% drop in stock prices, triggered by pervasive fears of AI-induced sector disruption. However, some analysts like Brian Sozzi see further room for market retractions.
The overarching theme remains one of caution as the market grapples with AI’s evolving influence and shifts within the economic landscape. Despite promising pockets of growth, the broader market continues to face unpredictable challenges.
