Markets Digest Software Selloff Amid Ongoing AI Spending

This Chart Pattern Looks Just Like TIO in Early 2023

Traders who got in early on $TIO saw outsized gains once the volume picked up. We’re seeing something similar again — and it's not on the radar yet.

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📈 Yesterday's Market Recap

Yesterday, the U.S. markets celebrated a historic moment as the Dow Jones Industrial Average closed above 50,000 for the first time at 50,115.67, up a robust 2.47%. Tech stocks, especially semiconductors like Nvidia and AMD, led the charge with gains over 7%, shrugging off mid-week jitters. Positive inflation expectations and Big Tech’s AI spending fueled optimism, though not without some cracks—Amazon slipped 7% on heavy capex costs. Here’s what moved the needle.

• Dow Hits 50,000 Milestone: The Dow surged 1,206.95 points to close at a record 50,115.67, marking a psychological win for bulls. → Fox Business


• Tech Rebounds with Chip Strength: Nvidia, AMD, and Broadcom each jumped over 7%, lifting Nasdaq by 2.18% to offset earlier sector weakness. → MarketWatch


• Amazon Drags on AI Spend: Amazon fell nearly 7% as investors balked at a 50%+ increase in capital spending for AI data centers. → CNBC


• Inflation Sentiment Boosts Rally: University of Michigan data showed 1-year inflation expectations at multi-year lows, easing rate hike fears. → ABC News

📉 Daily Performance Snapshot

🔭 What to Watch Today

Today’s calendar has a few critical events that could sway markets. From U.S. immigration policy scrutiny to key corporate moves, keep your eyes on these developments for potential ripples.

💡 Opportunity Watch

Amidst the noise of debt ceilings and political shifts, a few sectors and stocks are showing potential for savvy investors. Here are three opportunities tied to recent events worth a closer look.

• AstraZeneca (AZN): With elecoglipron moving to Phase III trials and Q4 revenue beating estimates, AZN could be a play in the booming weight-loss drug market. → MarketWatch
• Tech Sector Correction (Nasdaq-100): Kalshi bettors predict a Nasdaq-100 drop to under 19,000 by year-end, suggesting a potential short opportunity as AI hype cools. → Benzinga
• Gold as Inflation Hedge: With U.S. debt soaring past $38.5 trillion, allocating 5-10% to gold ETFs like GLD could shield portfolios from inflationary erosion. → Money.com

Tariffs, Debt & Inflation: Why Gold Is Back in Focus

Gold continues to attract capital amid uncertainty. Our latest report covers:

✔ Why gold holds strong during macro volatility
✔ How to buy, store, and hedge with physical gold
✔ Risk-balanced frameworks for long-term protection

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🔥 The Big Bullet

Software stocks slid hard, but AI momentum stayed in place

What happened: Big tech and software shares sold off, and one report said the drop erased about $2 trillion in value. In that $2 trillion software stock wipeout, prices fell even while many investors stayed focused on AI. At the same time, the feed notes that most S&P 500 companies have already reported fourth-quarter earnings. Those early results show profit per share is higher than a year ago, which helped keep broader market mood steady. Money is also still flowing into new AI tools, including Bretton AI’s $75 million raise for compliance work. Put together, the headlines show a split market: some software names are being marked down, while AI stories keep getting funding. Investors seem to be sorting companies into “AI winners” and “everyone else” as earnings come in. That sorting can move stock prices fast, even when the overall economy data in the feed looks mostly steady.

Why it matters: A big drop in one corner of the market can still matter, even if the index does not fall much. When investors pull $2 trillion out of software stocks, it often means they are less willing to pay high prices for growth. That can spill into other areas like cloud services, cybersecurity, and even some AI-related stocks. Companies are also warning that AI brings new business and legal risks, like in Alphabet’s updated risk filing. If firms say AI costs are rising or rules are changing, traders may cut their forecasts for future profits. Governments are moving too, including a directive to label AI content and deepfakes, which could raise compliance costs. For investors, this mix can lead to more day-to-day swings as headlines hit. It also pushes people to pay closer attention to cash flow and balance sheets, not just big promises.

What’s next: The next few weeks will bring more earnings calls, and the tone of company forecasts may set the market’s direction. Watch whether managers keep talking about higher AI spending, or if they start cutting budgets to protect profits. Shareholder payouts are another signal, since BP’s decision to halt stock buybacks shows how quickly plans can change when profits weaken. In health care, results like CVS Health’s Q4 earnings can also move sentiment because the sector is a large part of the market. Keep an eye on whether the software selloff spreads to other “growth” areas or stays limited to a few names. Also track any follow-up guidance from major tech firms about AI risks, data use, and security. On the policy side, new labeling and content rules may get clearer, and companies may update their products to comply. If these pieces line up—steady profits, controlled spending, and clearer rules—stocks may calm down; if not, volatility may stay high.

• How analysts at Jefferies think the recent software selloff may have gone too far, even though AI fears triggered it. – Investopedia
• The selloff in software and AI stocks doesn’t signal broader market trouble, pointing out that technology still plays a smaller role in debt markets and the underlying economy remains supportive – Marketwatch
• While software stocks have struggled, companies tied to AI infrastructure (like chipmakers and data center tech) are still attracting investment – WSJ

🧭 Policy & Market Ripples

• Trump’s Beef Import Order: An executive order boosts Argentine beef imports by 80,000 metric tons to combat record-high U.S. prices, though cattlemen warn of disease risks. → Fox Business
• China Property Slump Deepens: S&P slashes China’s 2026 real estate sales forecast to a 10-14% decline, signaling a ‘vicious cycle’ with inventory piling up for six years. → CNBC
• Stellantis $26.5B EV Pivot Charge: Stellantis takes a massive $26.5 billion hit as it dials back EV ambitions, citing overoptimistic demand forecasts—shares tanked 22%. → Fox Business