Stocks retreated as renewed anxiety over AI disruption and fresh tariff uncertainty dampened risk appetite. A sharp selloff in software and legacy tech names dragged down broader indexes, while investors rotated into Treasuries and gold. Bitcoin slid below $65,000, and haven currencies outperformed as markets digested a new 15% across-the-board US tariff proposal following the Supreme Court’s rejection of prior reciprocal duties.
Key Headlines & Market Movers:
- AI Disruption Hits Tech and Legacy Players: Shares of IBM plunged 13% after Anthropic said its Claude Code tool can help modernize COBOL systems, fueling concern that AI could erode demand for legacy infrastructure. The pressure extended across software and platform names, with delivery and payments firms such as DoorDash Inc. and American Express Co. also tumbling as investors reassessed which business models may be vulnerable to AI-driven disruption.
- Tariff Reset Revives Policy Uncertainty: After the Supreme Court struck down much of President Trump’s prior tariff framework, the White House moved to implement a new 15% blanket tariff on US imports. The shift reintroduces trade uncertainty at a time when markets were stabilizing, prompting a bid for Treasuries and gold while keeping equity volatility elevated. While some strategists argue the economic impact may be manageable, the back-and-forth is reinforcing a cautious, wait-and-see stance among investors.
Defensive Rotation Gains Traction: Safe-haven flows pushed the 10-year Treasury yield down to around 4.03%, and gold surged to fresh highs above $5,200 an ounce. Crypto assets weakened, with Bitcoin falling more than 4%, underscoring the broader pullback in risk assets. Sector leadership tilted away from high-multiple growth and toward more defensive positioning, with strategists emphasizing balance between growth and value exposures as AI and policy risks evolve.
S&P 500 Sector Performance
Looking Ahead
Markets now turn to President Trump’s State of the Union address, Nvidia earnings, and upcoming producer price data for clearer signals on policy direction and inflation trends. Federal Reserve commentary suggests rate decisions remain data-dependent, particularly on the labor market, reinforcing expectations that volatility tied to trade policy and AI investment returns could persist in the near term.
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