US stocks mostly fell on Wednesday as Wall Street assessed a fresh wave of earnings and awaited results from Alphabet (GOOG, GOOGL), focusing on the implications of an AI-driven slump in software and tech stocks. The S&P 500 (^GSPC) slid about 0.5%, while the Nasdaq Composite (^IXIC) fell over 1.5%, continuing its decline from Tuesday’s session. The Dow Jones Industrial Average (^DJI) rose 0.4% as investors rotated away from tech stocks into more stable blue-chip names.
Wall Street has struggled to find stability following fears of AI disruption, which incited a rush out of software stocks and led to a significant global sell-off affecting markets in Europe and Asia. Broader concerns regarding AI have spurred a shift from high-profile tech stocks into value stocks, with major companies feeling the pressure. Nvidia (NVDA) fell over 3%, while Google dropped nearly 2% ahead of its earnings reveal. Other tech giants, including Amazon (AMZN) and Tesla (TSLA), also experienced significant losses, with the latter sinking more than 3%.
Even positive earnings results are failing to convince investors, according to a warning from JPMorgan, which stated that companies must demonstrate that AI will serve as a tailwind rather than a hindrance. Shares of Advanced Micro Devices (AMD) plummeted as the chipmaker’s weak sales outlook raised doubts about its competitive position against AI leader Nvidia.
In a sign of potential cracks in the labor market, an ADP report revealed that employers added just 22,000 jobs in January, significantly below the expected 45,000. The importance of private data has intensified amid delays in federal jobs data due to the recent partial government shutdown, which concluded on Tuesday. The Bureau of Labor Statistics has rescheduled the official jobs report for next Wednesday.
Elsewhere, gold prices increased amid heightened tensions between the US and Iran, although its recovery from a severe slump fell short of surpassing $5,000 an ounce. Meanwhile, Bitcoin (BTC-USD) also faced losses, trading near $72,000 at one point.
In corporate news, fortunes in the pharmaceutical sector diverged sharply, with Eli Lilly (LLY) seeing its stock surge after posting an optimistic profit forecast for 2026, driven by increased demand for its weight-loss drugs. Conversely, shares of rival Novo Nordisk (NVO, NOVO-B.CO) plummeted after the company shocked investors with a forecast of a steep drop in sales.
Alphabet’s stock exhibited volatility in after-hours trading on Wednesday, dropping 5% after the tech giant beat earnings and revenue expectations but announced capital expenditures that exceeded analyst forecasts. The company indicated its 2026 capex is expected to range between $175 billion and $185 billion, a significant increase from Wall Street’s projection of around $120 billion.
Apple (AAPL) managed to close in positive territory on Wednesday, rising more than 2% while its tech peers struggled. The iPhone maker exceeded Wall Street’s expectations in its latest quarterly results, bolstered by strong iPhone sales, which reached a record $85.3 billion, up from $69.1 billion the previous year. Bank of America indicated that there are “many tailwinds into 2026,” particularly with upcoming iPhone upgrades and expectations surrounding a more personalized AI-driven Siri.
Concerns surrounding the tech sector continued to dominate market sentiment, with significant sell-offs in software stocks such as Salesforce (CRM) and ServiceNow (NOW), which faced losses exceeding 15% over recent trading days. This climate of uncertainty has led analysts to speculate about further declines in the sector, particularly as AI-driven disruptions loom large on the horizon.
The market’s trajectory appears uncertain as earnings season unfolds and investors grapple with the implications of AI on traditional software and tech business models. With the upcoming federal jobs report likely to provide critical insights into the labor market, stakeholders will be watching closely as the economic landscape continues to evolve.
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