Wall Street Selloff Intensifies as Software and Cloud Stocks Lead Market Decline
Wall Street Selloff Deepens Led by Software, Cloud Firms

Wall Street Selloff Intensifies as Software and Cloud Stocks Lead Market Decline

Wall Street experienced a significant downturn on Tuesday as a broad selloff in software and cloud computing stocks deepened, spreading to other technology names. This market movement overshadowed positive results from Palantir and kept investors cautious ahead of upcoming earnings reports from major tech giants later in the week.

Major Indexes Show Substantial Declines

The three main U.S. stock indexes recorded notable losses during the trading session. The Dow Jones Industrial Average fell 0.81% to 49,006.27, while the S&P 500 declined 1.22% to 6,891.45. The technology-heavy Nasdaq Composite suffered the most significant drop, losing 1.93% to close at 23,135.95.

Software and Cloud Stocks Bear the Brunt

The S&P 500 software and services index dropped 4%, marking its fifth consecutive day of losses. Several prominent companies in this sector experienced substantial declines:

  • Microsoft fell 2.8%
  • Intuit and Atlassian both slid approximately 11%
  • Adobe and Datadog dropped over 7% each
  • Oracle slipped 4.3%
  • CrowdStrike sank 4.5%
  • Snowflake declined 10.6%
  • Salesforce lost 8%
  • Accenture was down 10%

John Campbell, senior portfolio manager at Allspring Global Investments, commented on the market sentiment: "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."

Palantir Bucks the Trend with Strong Results

In contrast to the broader market decline, Palantir Technologies rose 7% following strong quarterly results that reinforced investor enthusiasm for demand related to artificial intelligence. This positive performance stood out against the backdrop of widespread tech sector weakness.

Healthcare Sector Faces Pressure

Healthcare stocks came under significant pressure after Novo Nordisk, maker of the Wegovy obesity drug, warned of an expected steep decline in annual sales. The company's U.S.-listed shares dropped 12%, dragging down other obesity drugmakers:

  • Eli Lilly fell 4.6%
  • Viking Therapeutics declined 3.7%
  • Structure Therapeutics dropped 6.4%

Walmart Achieves Historic Milestone

Away from the technology sector, Walmart made history by becoming the first retailer ever to reach a $1 trillion market valuation. The retail giant's shares rose 2.4% during the trading session, achieving this significant milestone despite broader market weakness.

Upcoming Earnings Reports Create Market Uncertainty

Investors remained cautious ahead of earnings reports from several major companies scheduled for later in the week. Alphabet dipped 1% and Amazon dropped 2.7%, with both companies set to report quarterly results that will be closely scrutinized for evidence of tangible returns on surging capital expenditures.

Advanced Micro Devices and server maker Super Micro Computer, both due to report after market close, fell over 2.5% each as investors awaited their financial results.

Other Notable Market Movements

Several other significant developments occurred during the trading session:

  • Walt Disney named theme parks head Josh D'Amaro as CEO, ending succession uncertainty, though shares were marginally lower
  • PayPal forecast 2026 profit below estimates, sending its shares plunging 20%
  • Pfizer shares fell 3.4% despite posting fourth-quarter profit above estimates
  • Merck rose 2.5% after quarterly results
  • PepsiCo shares gained 4.3% after announcing price cuts on core brands including Lay's and Doritos

Broader Market Context and Economic Factors

With one quarter of S&P 500 companies set to report quarterly results this week, analysts expect companies to have grown their earnings nearly 11% in the December quarter, according to LSEG data. This represents an increase from the approximately 9% estimate at the beginning of January.

Investors were also digesting a sharp selloff in gold and silver following the nomination of former Federal Reserve Governor Kevin Warsh, a development that traders viewed as hawkish for monetary policy.

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 originally scheduled for Friday, along with the JOLTS report that was expected on Tuesday.

The market retreat in technology shares followed lingering concerns about how quickly newer, more capable artificial intelligence models could disrupt established businesses. This has revived questions about whether today's perceived AI winners can protect their pricing power and maintain long-term growth in an increasingly competitive landscape.