Falls 1.2%, AI Disruption Concerns Weigh

The S&P 500 trades at 6,857.90 as of writing, down 83.57 points or 1.20% on the session. The decline follows broad-based selling across US equities as investors weigh the potential downside of rapid artificial intelligence adoption.

The Dow Jones Industrial Average has shed 530 points, or 1.1%, while the Nasdaq Composite has dropped 1.6%. The selloff reflects growing concern that AI tools could disrupt established business models and pressure employment across several industries.

AI Disruption Fears Spread Across Sectors

Market weakness has not remained confined to one corner of the market. Financial stocks such as Morgan Stanley have faced pressure amid fears that AI could reshape wealth management operations. Investors have also targeted trucking companies, with CH Robinson plunging 22% on concerns that AI-driven logistics efficiencies may erode certain revenue streams.

Real estate names have also declined. CBRE and SL Green Realty have both traded lower as investors assess how automation and digital tools could affect property management and brokerage services.

Software stocks have extended year-to-date losses. Salesforce has fallen 2% in the session and now stands more than 31% lower this year. Autodesk has dropped over 5%, bringing its 2025 decline to 26%. The iShares Expanded Tech-Software Sector ETF (IGV) has slipped 3% and now trades roughly 32% below its recent high.

Defensive Stocks Attract Flows

As growth-oriented sectors retreat, investors have rotated into defensive names. Walmart has gained 3%, while Coca-Cola has advanced 2%. Consumer staples and utilities have led gains among S&P 500 sectors, each rising more than 1%.

This shift signals a move toward stability during periods of uncertainty. When volatility rises, capital often flows into companies with steady cash flows and resilient demand. The rotation underscores how quickly sentiment can pivot.

Macro Data Adds Another Layer

Thursday’s drop follows a strong US jobs report released earlier in the week. The payrolls data eased fears of a sharp labor market slowdown. However, it also complicated expectations for Federal Reserve policy.

Weak employment data increased the urgency for rate cuts. That dynamic increases the importance of Friday’s consumer price index report. Economists expect January CPI to show a 0.3% monthly increase for both headline and core readings.

Source: Forex Factory

If inflation remains contained, equities could stabilize. If CPI surprises to the upside, traders may reassess rate expectations once again. The interplay between labor strength and inflation now shapes near-term market direction.

Historical Pattern Raises Questions

Despite today’s decline, recent market behavior shows resilience. Since the start of 2025, when the index has fallen between 1% and 2% in a single session, the next trading day has closed higher 74% of the time. The average gain in those instances has reached 0.96%.

Source: Bluekurtic Market Insights via X

This pattern suggests dip-buying activity has supported the broader trend. However, past performance does not guarantee future results. Investors must weigh technical levels, macro data, and sector rotation dynamics.

The S&P 500 now tests short-term support as AI disruption narratives ripple through multiple industries. Will buyers step in once again, or does volatility signal a deeper reset? The next move may hinge on inflation data and how markets interpret the evolving role of artificial intelligence in corporate earnings.