NEW YORK, Feb 3, 2026, 15:05 EST
- U.S. stocks slid as investors fretted that AI could squeeze software makers’ margins.
- A heavy earnings week is testing “priced for perfection” expectations in Big Tech.
- Walmart hit $1 trillion; PayPal fell on a CEO change and soft 2026 outlook.
U.S. stocks fell on Tuesday as investors worried that artificial intelligence would create new rivals for software makers and squeeze margins. The S&P 500 fell 1.46% and the Nasdaq dropped 2.17%, with Nvidia, Microsoft, Alphabet and Amazon sliding ahead of earnings from Alphabet on Wednesday and Amazon on Thursday. Art Hogan at B. Riley Wealth said some software names “may well be disrupted by AI,” while John Campbell of Allspring Global Investments said the market had “expectations … really high.” Reuters
Futures, contracts that track where indexes may open, were slightly higher before the bell as traders braced for the heart of earnings season. At 7 a.m. ET, S&P 500 futures were up 0.15% and Nasdaq 100 futures gained 0.4% as Teradyne jumped 20.8% in premarket trading on an upbeat forecast. “Traders are ready to re-engage with pro-risk positions,” said Chris Weston of Pepperstone. The Edge Malaysia
Some of the usual economic signposts are missing. U.S. Bureau of Labor Statistics said the January employment report will not be released on Friday because of the partial shutdown, and it also delayed the JOLTS report — a monthly read on job openings and hiring. “The release will be rescheduled upon the resumption of government funding,” said Emily Liddel in a statement. Reuters
Later Tuesday, the U.S. House of Representatives narrowly passed a bipartisan bill to end the shutdown and sent it to Donald Trump to sign into law. The measure passed 217-214 and would restore funding for several agencies while extending funding for the Department of Homeland Security temporarily, the report said.
Bond selling added pressure. The benchmark 10-year Treasury yield rose about 10 basis points to 4.287% and the two-year yield climbed to 3.580%, while gold and silver rebounded after sharp losses, Investing.com reported.
Palantir Technologies bucked the tech slide, rising 6.9% in early trading after it reported a jump in quarterly sales helped by higher U.S. defense spending. The company said revenue from the U.S. government rose 66% to $570 million, lifting total sales to $1.41 billion. Analysts at Jefferies said it will need to “maintain its impressive performance to justify its current pricing.” Reuters
PayPal sank 19% after it replaced chief executive Alex Chriss and issued a downbeat 2026 profit outlook. The board tapped Enrique Lores from HP to take over on March 1, with finance chief Jamie Miller serving as interim CEO. Analysts at Evercore ISI said “the big question” is whether the new chief brings in a new payments team to reset the turnaround. Reuters
Walmart touched a $1 trillion market value, the first retailer to do so, after a year-long rally that has lifted its shares nearly 26%. “We think of trillion-dollar market caps as being a tech-stock phenomenon, but Walmart is a gritty ‘old-economy’ company,” said Charles Sizemore. New global CEO John Furner now faces an arms race in tech spending while fending off rivals such as Amazon, Aldi and Costco. Reuters
Health stocks also weighed after Novo Nordisk forecast annual sales would fall 5% to 13%, compared with analysts’ average call for a 2% decline. Its U.S.-listed shares fell 13.8%, and rivals including Eli Lilly also slid as investors re-priced the market for GLP-1 treatments, the hormone-targeting drugs used for diabetes and weight loss. Some investors now see the obesity-drug market at $80 billion to $105 billion by 2030, down from earlier expectations near $150 billion early next decade.
Disney named theme-parks chief Josh D’Amaro as CEO, handing the job to a longtime insider and closing a succession chapter that has lingered for years. He will take over from Bob Iger at the company’s March 18 investor meeting, with Iger staying on as a senior adviser and board member until his planned retirement on Dec. 31. Board chair James Gorman said the company wanted a leader with “a deep understanding of the brand,” as Disney competes with streamers such as Netflix and Paramount. Reuters
But the tape is jumpy. With heavyweight results still to come, and investors watching whether the shutdown truly ends and whether rates settle down, a cautious forecast or another AI-themed surprise could turn this pullback into something nastier.
