The S&P 500 slightly rose on Tuesday, though losses in software stocks curtailed gains in the index. The broad market benchmark surged 0.1 percent and closed at 6,843.22, while the Nasdaq Composite ticked up 0.14 percent to end at 22,578.38. The Dow Jones Industrial Average rose by 32.26 or 0.07 percent and closed at 49,533.19.
Investors shifted out of battered-down software names, which contributed to the losses they already experienced this year, and into financial stocks, including Citigroup and JPMorgan. Citi stock increased by 2.6 percent, and JPMorgan stock increased by more than 1 percent.
However, ServiceNow was below 1 percent lower, and its fall in 2026 was around 31 percent. Autodesk and Palo Alto Networks were down more than 2 percent. The former has recorded an approximate 24 percent reduction this year, whereas the latter has dropped 11 percent.
Salesforce and Oracle shares decreased nearly 3 percent and almost 4 percent, and their year-to-date losses were at 30 percent and 21 percent, respectively. The iShares Expanded Tech-Software Sector ETF (IGV) fell over 2 percent, and its loss stood at 23 percent this year.
The software industry has experienced a hit over fears that artificial intelligence tools might supplant industry-specific software providers.
Leah Bennett, Chief Investment Strategist at Concurrent Investment Advisors, said in an interview with CNBC, “We just need time to see what earnings are going to look like from some of these companies. I think those that aren’t able to compete and don’t really have moats around their business, you’re going to see a deterioration,” she cited, adding that such a downward trend will also lead the market to decipher winners in the space.
AI disruption concerns overtook the software industry, real estate, trucking, and financial services last week, leading the S&P 500 to its second down week in a row. The S&P 500 and blue-chip Dow lost more than 1 percent last week, while the technology-heavy Nasdaq lost more than 2 percent.
However, the Dow and S&P 500 both logged their fourth losing weeks of the last five. The Nasdaq had its fifth consecutive negative week, the longest series of losses since 2022.
Scott Chronert, Citi U.S. Equity Strategist, added, “AI innovation and its disruption are calling into question terminal multiples in various corners of the market that is driving investors to focus on specific risks, rather than broader exposure changes. For now, the narrative is disconnected from good medium-term fundamental trends. The onus is on companies to convince markets of longer-run business moats, likely a Q1 reporting season theme, absent a renewed focus on a macro soft landing.”
Such concerns seemed to overwhelm the recent consumer price index report issued on Friday. The headline CPI figures were lower than those that economists who were polled by Dow Jones had projected in January. That was in the wake of a better-than-expected jobs report earlier in the week.
Investors will get more insight into the path of inflation this week, with the personal consumption expenditures price index report slated for Friday. Before that, they will be observing Federal Reserve meeting minutes on Wednesday. The New York Stock Exchange was closed down during the celebration of Presidents’ Day on Monday.
