Wall Street stocks tumbled on Monday as continued fears of artificial intelligence-related disruptions and the fallout from Friday’s U.S. Supreme Court ruling sent investors fleeing high-risk stocks.
A broad sell-off left all three major U.S. stock indexes down more than 1% at the closing bell, as risk appetite was dampened by a combination of lingering fears of potential disruption from emerging artificial intelligence technology and Trump’s erratic statements on trade policy, which fueled much of the market volatility during the first year of the president’s second term.
Financial stocks fell 3.3%, while software-related companies fell 4.3% on ongoing AI disruption fears.
“The question about AI is twofold: how much will it cost, and who will be disrupted?” said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis. “You’ve seen the market react to the headlines, it’s ‘sell first, judge later.’”
He added: “It’s a perspective of what could happen, as opposed to what has happened.”
On Friday, the nation’s highest court issued a 6-3 ruling that Trump exceeded his presidential authority by imposing reciprocal tariffs under an economic relief law, a ruling that drew condemnation from the president, who threatened a temporary 15% tariff on all imports despite striking trade deals with many U.S. trading partners.
The gold price, which benefited from a flight to safety, rose 2.6%.
“The Supreme Court’s decision was not unexpected,” Hainlin said. “But you put these uncertainties on top of each other, the heightened geopolitical situation in the Middle East, the tariff uncertainty and the potential displacement of AI, and that leads investors to a broad reassessment of the risks.”
A powerful winter storm buried much of the U.S. under more than 18 inches of snow and paralyzed travel in the Northeast. At airports in the New York City area, 89% to 98% of flights were canceled, according to Flightaware.com. Airline and travel and leisure stocks fell 3.8% and 3.7% respectively. Dow Transports fell 2.9%.
With only 77 of the companies in the S&P 500 yet to post results, fourth-quarter earnings season is almost over, as a few high-profile companies are expected to report this week, most notably leading edge chipmaker Nvidia, due Wednesday. Home improvement rivals Home Depot and Lowe’s are also on the docket, joined by Salesforce and Universal Health Services.
Of the companies that reported this, 73% exceeded expectations, and analysts now expect total year-over-year earnings growth for the S&P 500 of 13.9%, significantly higher than the 8.9% forecast on Jan. 1, according to LSEG data.
The Dow Jones Industrial Average fell 821.91 points, or 1.66%, to 48,804.06, the S&P 500 lost 71.76 points, or 1.04%, to 6,837.75 and the Nasdaq Composite lost 258.80 points, or 1.13%, to 22,627.27.
Of the S&P 500’s 11 major sectors, financials suffered the largest percentage, while consumer staples were the gainers.
The health care index rose 1.2%, boosted by a 4.9% rise in Eli Lilly after rival Novo Nordisk’s obesity drug CagriSema underperformed Eli Lilly’s drug Zepbound in a head-to-head trial.
Domino’s Pizza rose by 4.1%, among other things, after the fast food chain’s fourth-quarter sales exceeded Wall Street expectations.
PayPal rose 5.8% after Bloomberg News reported that the payments company is attracting takeover interest.
On the NYSE, decliners outnumbered advancers by a ratio of 2.2 to 1. There were 390 new highs and 204 new lows on the NYSE.
On the Nasdaq, 1,432 shares rose and 3,277 fell as declining issues outpaced advancers by a 2.29-to-1 ratio.
The S&P 500 posted 41 new 52-week highs and 18 new lows, while the Nasdaq Composite posted 67 new highs and 264 new lows.
Volume on U.S. exchanges was 18.39 billion shares, compared to the full-session average of 20.62 billion over the past 20 trading days.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Ragini Mathur in Bengaluru; Editing by Aurora Ellis)
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