Market Pullback Signals Trouble for Tech and Payment Sector Stocks

Tuesday’s trading session saw the major indices retreat from earlier momentum, with the S&P 500 closing down -0.19%, the Dow Jones Industrials sinking -0.80%, and the Nasdaq 100 sliding -0.18%. March E-mini S&P futures and Nasdaq futures followed suit with declines of -0.22% and -0.18% respectively.

The market’s stumble stems from weakness in two critical sectors. Software stocks faced significant pressure after AI startup Anthropic unveiled a new tool expanding beyond coding capabilities, triggering sell-offs across the sector. Payment card companies meanwhile took another beating following President Trump’s declaration that credit card lenders would violate law if they fail to cap interest rates at 10% annually—a regulatory threat that sent Visa down more than -4%, while Mastercard and JPMorgan Chase both dropped over -3%.

Tech Stock Casualties Mount

The software sector bore the heaviest losses. Salesforce led the S&P 500 and Dow Jones declines with a drop exceeding -7%, accompanied by Adobe’s -5% decline and Intuit’s -4% pullback. Workday and ServiceNow both retreated over -3%, while Microsoft and Autodesk posted more modest losses of -1% and -2% respectively.

Beyond software, several other stock names sustained damage. Synopsys fell more than -3% on a Piper Sandler downgrade to neutral. Super Micro Computer declined -4% following Goldman Sachs’ initiation of coverage with a sell rating. Delta Air Lines dropped -2% after reducing full-year EPS guidance to $6.50-$7.50 from consensus expectations of $7.20.

Economic Data Provides Mixed Signals

The broader market received some support from moderating inflation readings. December core consumer prices rose just +2.6% year-over-year—unchanged from November but below the anticipated +2.7% increase. This easing of inflation concerns helped stabilize bond markets, with the 10-year Treasury yield falling -0.8 basis points to 4.167%.

Energy stocks found footing as crude oil climbed more than +2% to a 2.25-month peak. Geopolitical tensions continued driving prices higher, including a 25% tariff announcement on nations conducting business with Iran and ongoing drone attacks near the Caspian Pipeline Consortium terminal reducing loadings to approximately 900,000 barrels per day.

Winners Emerge Amid Selective Strength

Not all stock movers pointed downward. Moderna surged over +17% after major medical organizations challenged the recent childhood vaccination schedule revision. Intel rallied more than +7% on KeyBanc Capital Markets’ upgrade to overweight with a $60 price target, while Advanced Micro Devices gained +6% on similar bullish sentiment.

Revvity climbed +6% following preliminary Q4 revenue of $772 million, beating consensus of $756.9 million. Cardinal Health jumped +3% after raising full-year adjusted EPS guidance to at least $10.00 from $9.65-$9.85. Alphabet closed up +1% after Google secured a multiyear AI partnership with Apple.

Week Ahead: Focus on Fed and Data

This week brings critical economic announcements and Q4 earnings kickoff. Wednesday features November PPI data, November retail sales figures, and December existing home sales data, with the Supreme Court potentially ruling on Trump tariff legality. Thursday brings weekly unemployment claims and the January Empire manufacturing survey. Friday will feature December manufacturing production and January NAHB housing index readings.

Earnings season momentum builds as major bank stock names including Bank of America, Citigroup, and Wells Fargo report results. Analysts expect S&P 500 earnings growth of +8.4% in Q4, though excluding Magnificent Seven megacap tech stocks, growth moderates to +4.6%.

Global Markets Navigate Mixed Terrain

Internationally, Europe’s Euro Stoxx 50 reached record highs closing up +0.22%, while Japan’s Nikkei Stock 225 surged to an all-time peak with a +3.10% gain. China’s Shanghai Composite retreated from 10.5-year highs, closing down -0.64%. The 10-year German bund yield rose +0.7 basis points to 2.847%, while UK gilts climbed +2.5 basis points to 4.398%.