Dow Slides as AI Fears Weigh on Tech Ahead of FOMC Minutes

The Dow Jones Industrial on Tuesday as investors returned from the Presidents’ Day holiday. Technology shares continued to struggle, with concerns that AI tools could reduce demand for traditional software weighing on market sentiment. The S&P 500 declined roughly 0.5%, while the Nasdaq led losses, dropping about 0.8% as software and semiconductor stocks were hit hardest. The Dow and S&P 500 have now fallen in four of the past five weeks, while the Nasdaq marked its fifth consecutive weekly decline. A dip in the 10-year Treasury yield to two-month lows near 4.03% offered only limited support to rate-sensitive sectors.


AI-Driven Selloff Persists

Software and tech stocks remained under pressure, reflecting ongoing worries about AI automation. Enterprise software companies and cybersecurity firms saw notable declines, while chipmakers experienced losses as investors questioned whether datacenter investments would deliver the returns previously expected. In contrast, select financial and technology firms found modest gains, supported by lower Treasury yields.


Major Deals Shake the Market


Life sciences saw significant M&A activity, with one company announcing a nearly $10 billion acquisition of a medical device maker, offering a premium over the previous closing price. The target’s shares surged on the announcement, while the acquiring company’s stock declined. In entertainment, a major studio reopened acquisition talks with a rival after a short waiver period, adding intrigue to ongoing media mergers.


Economic Calendar in Focus

Investors are now looking ahead to the Federal Open Market Committee (FOMC) Minutes, which are expected to shed light on why policymakers held rates steady at 3.50–3.75%. Markets anticipate around two 25-basis-point rate cuts by year-end, with the first likely in June. Other key data this week include the Personal Consumption Expenditures (PCE) Price Index and preliminary fourth-quarter GDP figures, both of which could influence market direction.


Market Takeaways


Overall, markets remain cautious amid AI disruption fears, ongoing mergers, and the upcoming FOMC report. The combination of tech volatility and economic uncertainty is keeping investors alert, highlighting the challenges of navigating a market influenced by both innovation-driven risks and macroeconomic developments.