Wall Street muted as tech stocks waver after sell-off; financials outshine

NEW YORK: The main US stock indexes were subdued in volatile trading on Tuesday after a long weekend, as heavyweight technology stocks teetered following an AI-led sell-off and the financials sector outperformed the broader market.

The S&P 500 information technology sector pared declines to trade slightly higher as gains in Nvidia and Apple were limited by a decline in Microsoft.

Worries about artificial intelligence disrupting business models had sparked a selloff in software firms, brokerages and trucking companies the previous week, causing Wall Street’s three main indexes to log their steepest weekly decline since mid-November. Potential risks from Chinese AI players exacerbated the uncertainty. On Monday, Alibaba unveiled a new AI model, Qwen 3.5, designed to independently execute complex tasks.

Software stocks remained pressured, with the broader S&P 500 software index falling 1.4percent. CrowdStrike fell 5percent, Adobe lost 2percent and Salesforce was down between 2percent and 5percent.

“It’s an indiscriminate selling in all things tech, with more of a focus on software and the potential for some software application companies to be disrupted,” said Art Hogan, chief market strategist at B Riley Wealth. “When this movement against technology gains momentum, it’s very hard to find something that’s going to stand out for a while.”

At 11:45 a.m. ET, the Dow Jones Industrial Average rose 33.25 points, or 0.07percent, to 49,534.18, the S&P 500 gained 0.63 points, or 0.01percent, to 6,836.80, and the Nasdaq Composite lost 21.58 points, or 0.10percent, to 22,525.09.

The S&P 500 financials index was a bright spot, adding 1.2percent. Big banks such as Goldman Sachs and JPMorgan Chase were up 1.5percent each, also supporting the Dow. Materials and energy on the S&P 500 fell tracking a dip in commodity prices.

This week, the personal consumption expenditure report - the US Federal Reserve’s preferred inflation gauge - will be in focus for insights into inflation and how it could impact the central bank’s rate-cut trajectory.

The data follows cooler-than-expected consumer inflation data last week that slightly raised bets on interest-rate cuts this year. Traders are pricing in a 25-basis-point reduction in June, with the odds at 52percent, compared with a close-to-49percent chance a week ago, according to CME’s FedWatch Tool. Fed policymakers including Michael Barr and Mary Daly are scheduled to speak on the day. Norwegian Cruise Line topped the S&P 500 with an about 10percent jump after activist investor Elliott said it had built a more than 10percent stake in the cruise operator.

Warner Bros rejected Paramount’s revised takeover bid, giving the studio a week to negotiate a better deal. The companies rose 2.9percent and 6.9percent, respectively.

Fiserv’s shares gained almost 6percent after the Wall Street Journal reported activist investor Jana Partners had taken a stake in the payments company.

Masimo surged 34percent after Danaher said it would acquire the pulse-oximeter maker for USD9.9 billion, including debt. Danaher shed 3percent.

Meanwhile, Iran reached an understanding with the United States in a second round of nuclear talks, held in Geneva, but said more work needed to be done. Declining issues outnumbered advancers by a 1.25-to-1 ratio on the NYSE, and by a 1.28-to-1 ratio on the Nasdaq. The S&P 500 posted 37 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 62 new highs and 170 new lows.