US stock indices fell sharply on Monday as concerns rose over the disruptive effects of AI. At the end of last week, Anthropic announced the release of Claude Code Security, an AI-powered tool designed to identify and help fix software vulnerabilities. This triggered a sharp selloff across cybersecurity stocks. This follows the release of Claude Cowork, which led to the rout across software company stocks.
Source: TN Trader
Now investors are wondering which sector is next in line to take an AI-related hit. Investors were also considering the fresh trade uncertainty after Friday’s US Supreme Court ruling blocked tariffs imposed last April under the International Emergency Economic Powers Act (IEEPA).
Equities initially rallied on the news but then turned down as President Trump immediately announced a new 10% (then raised to 15%, before being cut to 10%) worldwide tariff on all US imports. This is legal and can run for 150 days before it must go before Congress for an extension. But much of this tariff news was already factored in.
While it is yet another wrinkle for investors to consider, and as it does add to uncertainty to some extent, the underlying issue for stock markets is that they have lost their upside momentum.
Investors are now turning their attention to the earnings calendar. Nvidia’s results on Wednesday are seen as pivotal for broader sentiment toward AI-related corporations.
Earnings from software giants Salesforce, Snowflake and Workday are also in focus, with investors watching closely for evidence that these companies can defend margins and relevance amid rapid technological change.
Overnight, President Trump will deliver his State of the Union address to Congress. But before then, today sees a stack of FOMC members deliver speeches. It’s worth bearing in mind that the probability of a 25-basis point rate cut in June has declined, although the odds still favour 50 basis points-worth of cuts before year-end.
US stock index futures were a touch firmer in early trade. But they continue to move sideways and remain rangebound for now.
