PiCK
"AI will encroach on every industry" fears send all three major indexes lower [New York market briefing]
Summary
- All three major U.S. stock indexes closed lower on concerns that AI could erode business models across industries.
- Technology, financials and the software sector—including ETF IGV and digital advertising platform AppLovin—tumbled on fears of AI-driven business disruption.
- By contrast, consumer staples such as Walmart, Costco and McDonald’s, along with defensive telecom stocks, gained as slowing consumption and a preference for defensive sectors came into focus.
On Feb. 12 (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 669.42 points (1.34%) from the previous session to 49,451.98, the Standard & Poor’s (S&P) 500 slipped 108.71 points (1.57%) to 6,832.76, and the Nasdaq Composite tumbled 469.32 points (2.03%) to 22,597.15, each closing lower.
Until now, advances in AI had been viewed as a catalyst for stocks amid expectations it would boost productivity. But as concerns grew that AI could move beyond productivity gains to erode business models across industries, the market took a major hit on the day.
Among major sectors in the New York market, only utilities—which generate the electricity needed to run AI—and consumer staples, essential to daily life, avoided steep declines.
Technology plunged 2.65% and financials slid 1.99%. Communication services, consumer discretionary, materials and industrials also fell more than 1%.
Weakness was especially pronounced in the software segment. The group had previously taken hits when fears first emerged that AI could disrupt business models, and on the day the Dow Jones Computer Services Index slumped 5.17%. IGV, a benchmark exchange-traded fund (ETF) covering software stocks, also fell 2.73%.
Digital advertising platform AppLovin sank nearly 20% despite posting strong fourth-quarter results, amid concerns over AI-driven business erosion.
Financial-services stocks also sold off after technology platform Altruist rolled out an AI-based tax management service. Morgan Stanley and Goldman Sachs each fell more than 4%, while Jefferies slid more than 6%.
Even real estate shares fell sharply, as worries surfaced that AI could replace many services such as property appraisals, matching homes with end users, and verifying regulations.
By contrast, Walmart rose 3.78% and Costco gained 2.12%. McDonald’s climbed 2.74% on expectations of a defensive boost as consumption cools.
Telecom shares, viewed as defensive, also posted gains of about 1% on average.
According to the CME FedWatch Tool, the federal funds futures market priced in a 92.2% probability of rates being held steady in March.
The Cboe Volatility Index (VIX) rose 3.17 points (17.96%) from the prior session to 20.82.
Han Kyung-woo, Hankyung.com reporter case@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
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