New York, Feb 3, 2026, 13:37 EST — Regular session
- The Dow Jones Industrial Average dropped 0.9% in afternoon trading, mirroring losses seen in the S&P 500 and Nasdaq.
- Sharp declines in several major tech-related stocks weighed heavily on the price-weighted Dow.
- Investors brace for more heavyweight earnings while keeping an eye on Washington for updates on delayed economic data.
The Dow Jones Industrial Average dropped 429.92 points, or 0.87%, to close at 48,977.74 on Tuesday afternoon. The S&P 500 fell 1.04%, and the Nasdaq Composite was down 1.68%.
This matters because the market is wrestling with whether the AI-driven rally can sustain major indexes once earnings take center stage. Sentiment has grown restless, reflected in daily volatility instead of a clear directional move.
Software and cloud stocks tumbled broadly, dragging down sentiment despite some pockets of resilience. “The market is expensive, and expectations are sky-high. Especially in AI, valuations are priced for perfection,” said John Campbell, senior portfolio manager at Allspring Global Investments. Reuters
The Dow’s setup can amplify swings. Since it’s price-weighted, stocks with higher prices have outsized influence. So, sharp declines in IBM and Salesforce hit the index hard. A $1 shift in any stock moves the Dow by roughly 6.16 points.
Monday’s rally remains recent, so the pullback is noticeable on trading floors. The Dow jumped 515.19 points to 49,407.66. The S&P 500 gained 0.5%, and the Nasdaq edged up 0.6%, following a volatile period in global markets.
Tuesday’s earnings took a toll on PayPal shares, which fell 19% after the company ousted CEO Alex Chriss and issued a 2026 profit forecast that missed estimates. CFO Jamie Miller noted to analysts, “We saw pressure across our retail merchant portfolio, particularly among lower and middle-income consumers.” Reuters
Not all AI-related stocks fell. Palantir surged 6.9% following a solid sales report, boosted by increased U.S. defense budgets. CEO Alex Karp emphasized the company’s role in “supporting in a critical manner” U.S. government operations. Reuters
Beyond stocks, the mood stayed jittery. Precious metals bounced back following a steep drop, while global markets continued to twitch at any change in rate forecasts and policy chatter.
The downside risk is straightforward: if this week’s major earnings don’t back up lofty valuations, selling could spill over from software to the wider index giants. Throw in uneven economic data — and disruptions in reporting — and traders might shift too aggressively into defensive bets.
Upcoming earnings reports are set to shake things up. Alphabet will release its fourth-quarter and full-year 2025 results on Feb. 4. Then Amazon plans to report its fourth-quarter 2025 numbers the next day, Feb. 5, at 5:00 p.m. ET. Investors will be zeroing in on profit growth and cash flow trends.
