By Pranav Kashyap and Twesha Dikshit
Feb 3 (Reuters) – Wall Street’s main indexes dropped on Tuesday as a broad selloff in software and cloud stocks deepened to include other technology names, blunting upbeat results from Palantir and keeping investors on edge ahead of earnings from Alphabet and Amazon later this week.
Microsoft fell 2.8%, while Intuit and Atlassian slid around 11% each. Adobe and Datadog dropped over 7% each and Oracle slipped 4.3%.
CrowdStrike sank 4.5% and Snowflake dropped 10.6%, while Salesforce lost 8% and Accenture was down 10%.
Palantir bucked the trend, rising 7% on strong results that reinforced investor enthusiasm for demand tied to AI.
The S&P 500 software and services index dropped 4%, on pace to log its fifth consecutive day of losses.
The retreat in tech shares followed lingering concerns over how quickly newer, more capable artificial intelligence models could disrupt established businesses – reviving questions over whether today’s perceived AI winners can protect pricing power and long-term growth.
“We’ve got an expensive market and expectations are really high. Many areas, especially around AI, are priced for perfection. That’s just got us in a skittish environment,” said John Campbell, senior portfolio manager, Allspring Global Investments.
Healthcare stocks came under pressure after Wegovy maker Novo Nordisk warned that it expected a steep decline in annual sales. The company’s U.S.-listed shares dropped 12%.
Rival Eli Lilly fell 4.6%, while other obesity drugmakers Viking Therapeutics and Structure Therapeutics were down 3.7% and 6.4%, respectively.
Investors were still digesting a sharp selloff in gold and silver following the nomination of former Federal Reserve Governor Kevin Warsh, a development traders viewed as hawkish.
Away from technology, Walmart became the first retailer ever to hit $1 trillion in market valuation, with its shares rising 2.4%.
Mega-cap movers, Alphabet dipped 1%, while Amazon dropped 2.7%.
Both the companies – members of the “Magnificent Seven” – are due to report later this week. Their results will be scrutinized on whether companies can show tangible returns on surging capital expenditure.
Advanced Micro Devices and server maker Super Micro Computer, both due to report after the close, fell over 2.5% each.
Meanwhile, Walt Disney named theme parks head Josh D’Amaro as CEO, placing a longtime insider at the helm and ending succession uncertainty. Its shares were marginally lower.
PayPal forecast 2026 profit below estimates, sending its shares plunging 20%.
At 1:16 p.m. ET, the Dow Jones Industrial Average fell 0.81%, to 49,006.27, the S&P 500 lost 1.22%, to 6,891.45 and the Nasdaq Composite lost 1.93%, to 23,135.95.
EARNINGS DELUGE
With one quarter of the S&P 500 set to report quarterly results this week, analysts expect companies to have grown their earnings nearly 11% in the December quarter, up from an estimate of about 9% at the start of January, according to LSEG data.
Pfizer shares fell 3.4% despite posting fourth-quarter profit above estimates, while Merck rose 2.5% after quarterly results.
PepsiCo shares gained 4.3%, with the brand announcing a price cut on core brands such as Lay’s and Doritos.
Meanwhile, legislation to end a U.S. government shutdown narrowly cleared a procedural hurdle in the House of Representatives, setting up a vote on final passage later in the day.
The partial shutdown has postponed releases of key jobs data on Friday along with the JOLTS report, originally expected on Tuesday.
(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Maju Samuel)
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