Wall Street stocks tumbled
on Monday, as ongoing fears of artificial intelligence-related
disruption and the fallout from Friday’s U.S. Supreme Court
ruling sent investors fleeing from high-risk equities
A broad selloff sent all three major U.S. stock indexes more
than 1% lower by the closing bell, as risk appetite was dampened
by a combination of persistent fears over potential disruption
due to emergent artificial intelligence technology and Trump’s
erratic statements on trade policy, which fueled much of the
market volatility during the first year of the president’s
second term.
Financial stocks were off 3.3%, while
software-related firms slid 4.3% amid ongoing AI
disruption fears.
“The question about AI is twofold: How much is it going to
cost, and who all is going to be disrupted?” said Tom Hainlin,
national investment strategist at U.S. Bank Wealth Management in
Minneapolis. “You’ve seen the market react to headlines, it’s
‘sell first, assess later.'”
He added: “It’s a perspective of what may happen as opposed
to what has happened.”
On Friday, the top court in the nation issued a 6-3 ruling
that Trump overstepped his presidential authority by enacting
reciprocal tariffs under an economic emergency law, a ruling
that provoked condemnation from the president, who threatened a
15% temporary tariff on all imports, despite having reached
trade agreements with many U.S. trading partners.
Gold prices, benefiting from a flight to safety, surged
2.6%.
“The Supreme Court decision wasn’t unexpected,” Hainlin
said. “But you put these uncertainties on top of each other, the
heightened geopolitical situation in the Middle East, tariff
uncertainty, and potential AI displacement and that’s leading
investors to a broad risk reassessment.”
A powerful winter storm buried much of the U.S. under more
than 15 inches of snow and paralyzed travel in the Northeast. At
airports in the New York City area, 89% to 98% of flights were
canceled, according to Flightaware.com. Airlines and
travel/leisure-related stocks tumbled 3.8% and
3.7%, respectively. Dow Transports dropped 2.9%.
With only 77 of the companies in the S&P 500 yet to post
results, fourth-quarter earnings season has neared the finish
line, a smattering of high-profile companies are expected to
report this week, most notably vanguard artificial intelligence
chipmaker Nvidia due on Wednesday. Home improvement
rivals Home Depot and Lowe’s are also on the
docket, which is rounded out by Salesforce and Universal
Health Services.
Of the companies that have reported, 73% have beaten
expectations, and analysts now expect aggregate year-on-year S&P
500 earnings growth of 13.9%, significantly higher than 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
points, or 1.13%, to 22,627.27.
Among the 11 major sectors of the S&P 500, financials
suffered the biggest percentage, while consumer staples
led the gainers.
The healthcare index advanced 1.2%, boosted by a 4.9%
gain in Eli Lilly after rival Novo Nordisk’s
obesity drug CagriSema underperformed Eli Lilly’s drug Zepbound
in a head-to-head trial.
Among other movers, Domino’s Pizza climbed 4.1% after
the fast-food chain’s fourth-quarter same-store sales beat Wall
Street estimates.
PayPal jumped 5.8% after Bloomberg News reported that
the payments firm is attracting takeover interest.
Declining issues outnumbered advancers by a 2.2-to-1 ratio on
the NYSE. There were 390 new highs and 204 new lows on the NYSE.
On the Nasdaq, 1,432 stocks rose and 3,277 fell as declining
issues outnumbered advancers by a 2.29-to-1 ratio.
The S&P 500 posted 41 new 52-week highs and 18 new lows while
the Nasdaq Composite recorded 67 new highs and 264 new lows.
Volume on U.S. exchanges was 18.39 billion shares, compared with
the 20.62 billion average for the full session over the last 20
trading days.