A tumultuous trading day saw tech shares take a significant hit, contributing to heightened concerns about the impact of artificial intelligence on key sectors. This downturn was particularly evident in the S&P Software and Services Industry, which experienced a near 4% decline on Tuesday. The State Street SPDR S&P Software & Services ETF (XSW) has now fallen 24% from its peak and is down 16% year-to-date.
Among the most affected stocks, Cognizant saw a notable 10% drop, while major players such as Adobe, ServiceNow, Workday, and Salesforce lost around 7% each. The market was rattled further by the announcement of a new program from Anthropic, the firm behind the AI platform Claude, aimed at smaller attorneys’ offices. This news resonated throughout Wall Street, although many within the legal profession remain skeptical about relying on AI.
Jim Cramer from “Mad Money” voiced his discontent with the market’s reaction, considering the sell-off of CrowdStrike unjustified. The cybersecurity firm’s shares fell nearly 4%, reflecting a 25.5% decrease from its earlier highs.
The private equity sector also faced challenges due to its associations with the troubled software industry. UBS analysts have estimated that 25% to 35% of the private-credit market is vulnerable to potential AI-related disruptions. Consequently, Apollo Global lost approximately 5% of its value, with a stark 25% decline from last year’s peak. KKR’s shares plummeted nearly 10%, putting it down 37% since February 2025. Other private equity firms, including Blue Owl and Ares Management, endured similar fates, each reporting double-digit losses and significant dips from their recent highs.
In contrast, the retail sector exhibited resilience. Walmart celebrated a milestone by surpassing a trillion-dollar market cap for the first time. The retail giant’s shares surged 25% over the past three months and have increased by 7.2% just this week, coinciding with John Furner’s recent ascension to CEO.
Several Dow components also reached new heights, contributing to a sense of optimism amidst the tech downturn. Coca-Cola and Chevron both hit fresh highs, with increases of 11% and 14% over the past month, respectively. Caterpillar and Honeywell followed suit, rising 10% and nearly 18%. Cisco experienced a notable gain of 9.3%.
In the biotech and pharmaceutical sectors, anticipation builds ahead of several earnings reports. Eli Lilly is expected to announce results before the market bell, riding a 12% increase over the past three months despite a decline of 11.5% since its January high. AbbVie has seen a 6.5% uptick, while GlaxoSmithKline recorded a 15% gain, marking a new high on Tuesday. Novartis, too, reported a 21% increase over the last three months, although it remains about 2% shy of its recent high.
Finally, tech giant Alphabet is scheduled to release earnings after the bell, with expectations riding high as the stock has appreciated approximately 20% over the past three months, reaching new highs recently. Instant reactions and analyses will be available during the “Closing Bell: Overtime” segment with Melissa Lee and Mike Santoli.
As the market braces for what tomorrow may bring, investors and analysts alike are keeping a close eye on developments across these diverse sectors.
