Wall Street ends sharply down as traders fret about AI disruption

Wall Street ends sharply down as traders fret about AI disruption

By Noel Randewich and Twesha Dikshit

Tue February 3, 2026 6:12 AM  

Wow, what a difference a day makes, but it does point out just how skittish this market is. Just yesterday, AI was once again the darling of Wall Street with optimism abounding. Today, a great panic set in as suddenly investors are suddenly so terribly worried that AI fever may hurt software developers. The reasoning here escapes me. After all, what good is AI for if not for developing very advanced software? Why would that hurt the developers? But there you have it.  The day’s plummet was actually much worse than meets the eye with the Dow dipping almost 600 points by 2 pm and corresponding plunges on the S&P at nearly a minus 120 and the Nasdaq a minus some 560 also by 2 pm.  

Then bargain hunters must have come back as about half of those losses were then recovered by close. After yesterday’s huge rally, today’s huge selloff may just be hedging against the Alphabet and Amazon reports coming later this week.  But all the AI heavyweights – Nvidia, Microsoft, Alphabet and Amazon – took big losses from 1 to 3% on the day. The S&P software index dropped a whopping 3.8% for a fifth consecutive down day. S&P gains for the year so far were cut in half today, from 2% yesterday to 1% today. Today’s expert offered this explanation, “Expectations are really high. Many areas, especially AI, are priced for perfection. That’s just got us in a skittish environment.”  Volume was huge at 23.5 billion vs the 19.6 4-week average. 

DJ: 49,407.66  +515.19       NAS: 23,592.11  +130.29       S&P: 6,976.44  +37.41           2/2

DJ: 49,240.99  -166.67        NAS: 23,255.19  -336.92        S&P: 6,917.81  -58.63           2/3

Tue 2-3-26 5:03 pm Wall Street ends sharply down as traders fret about AI disruption | Reuters