FX.co ★ US Stocks Sharply Lower on AI Fears

On Wednesday, U.S. stocks took a downturn, with the S&P 500 decreasing by approximately 1%, the Nasdaq dropping by 2.3%, and the Dow seeing a slight rise. This movement was primarily influenced by a risk-averse shift in the market, primarily driven by fresh concerns over AI disruptions and unimpressive forecasts. The semiconductor sector took a significant hit as AMD's nearly 17% drop due to a less-than-optimistic outlook led to substantial losses throughout the chip industry. This included Broadcom falling by 7%, Micron by 11%, Lam Research by 10%, and Applied Materials by 9%. The software segment continued its downward trend as investors re-evaluated competitive risks following recent AI product launches, which have brought up worries that automation may diminish pricing power and profit margins across the enterprise, legal, and financial software sectors. In contrast, defensive sectors outperformed, with health care emerging stronger after Amgen's shares rose by over 7% due to robust earnings. Additionally, the ADP report indicated that private payroll growth slowed to just 22,000 in January, underscoring the cooling of labor demand and providing little positive stimulus for the equities market.