Wall Street Steadies After AI-Driven Sell-Off
S&P 500 steadied to 6,836.17 on Feb. 13 after a Feb. 12 AI-driven sell-off and an inflation report showing 2.4% annual consumer-price growth.
Overview
On Feb. 13 the S&P 500 rose 3.41 points to 6,836.17 while the Dow added 48.95 points to 49,500.93 and the Nasdaq fell 50.48 points to 22,546.67.
The day before, on Feb. 12 the S&P 500 sank 108.71 points, or 1.6 percent, to 6,832.76 as investors punished companies seen vulnerable to artificial-intelligence disruption.
An inflation report showed consumer prices were 2.4 percent higher year over year, Treasury yields fell, and AppLovin climbed 6.4 percent after steep losses, officials and analysts said.
For the week ending Feb. 13 the S&P 500 was down 96.13 points, or 1.4 percent, the Dow was down 614.74 points, or 1.2 percent, and the Nasdaq was down 484.54 points, or 2.1 percent.
Economists said slower inflation could give the Federal Reserve more leeway to cut interest rates later this year, and investors will keep watching AI developments and corporate earnings for further market direction.
Analysis
Center-leaning sources present this coverage neutrally: they rely on market data, inflation reports and varied corporate examples (AppLovin, Nvidia, Norwegian Cruise) and attribute views to named market participants (e.g., Brian Jacobsen). Language is descriptive rather than evaluative, and reporting balances causes (inflation, AI worries) without ideological framing.
Sources (4)
FAQ
The sell-off was triggered by new AI tools like Altruist's Hazel demonstrating concrete evidence of job displacement capabilities, with CEO Jason Wenk stating the technology can "replace any job in wealth management" for $100 per month[1]. Investors shifted from abstract AI enthusiasm to pricing in actual disruption risks across sectors including software, financial services, and asset management[2]. According to analysts, the market moved from asking "what are the use cases?" to actively discovering use cases that posed genuine threats to existing business models[1].
Markets are splitting Big Tech into "haves and have-nots" based on demonstrated AI monetization, not investment size[1]. Meta surged over 10% by showing concrete productivity gains and AI integration generating returns, while Microsoft dropped on concerns about massive AI spending without proportional cloud growth returns[1]. The key distinction is that companies must now provide concrete monetization timelines and measurable financial impacts rather than relying on strategic necessity arguments[1].
Experts suggest the market's sensitivity is partly driven by overvaluation and speculative excess rather than immediate existential threats[1]. John Belton from Gabelli Funds argues that tech disruption historically takes longer than expected, and that current sell-offs reflect inflated valuations making markets hypersensitive to negative news[1]. Additionally, the broader market context includes elevated price-to-earnings ratios in financial and industrial sectors, with AI expectations baked into valuations that rest on demanding growth assumptions[2].
Slower inflation could give the Federal Reserve more leeway to cut interest rates later in 2026, potentially providing support to equity markets[1]. Lower Treasury yields following the inflation report suggest investors are already pricing in expectations for potential rate cuts[1]. This creates a counterbalance to AI disruption concerns, as lower rates typically benefit equity valuations and could limit further market declines.
Charles Schwab President Rick Wurster contended the company is actually a "natural winner in the AI space" due to advantages in size, scale, and data that enable AI to enhance rather than replace advisors[1]. He expressed surprise at the market's negative reaction, arguing the company is already embracing AI to make financial advisors more efficient and expand customer service capabilities[1]. This position contrasts with market assumptions that financial services firms face existential AI-driven threats.
History
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