Stocks Finish Sharply Lower on Trade Uncertainty and AI-Disruption Fears

The S&P 500 Index ($SPX) (SPY) on Monday closed down -1.04%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -1.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.21%.  March E-mini S&P futures (ESH26) fell -1.02%, and March E-mini Nasdaq futures (NQH26) fell -1.19%.

Stock indexes sold off sharply on Monday, with the Dow Jones Industrial Average falling to a 3-week low, as uncertainty over American trade policy sparked risk-off sentiment in asset markets.   President Trump signed an executive order raising global tariffs under Section 122 of the Trade Act of 1974 to 15% from 10%, which he initially imposed after the Supreme Court struck down his global “reciprocal” tariffs last Friday. 

AI jitters also weighed on stocks on Monday, pressuring the broader market.  Delivery, payment, and software stocks retreated on Monday after Citrini Research published a report outlining the potential risks artificial intelligence could pose to various segments of the global economy. 

Geopolitical risks are also negative for stocks.  US-Iran nuclear talks are scheduled to resume on Thursday in Geneva, and Iranian Foreign Minister Araghchi said he saw a “good chance” of a diplomatic solution to the standoff over his country’s nuclear program. Last Friday, President Trump said that he’s considering a limited military strike on Iran to ramp up pressure on the country to strike a deal over its nuclear program, and that he thought 10 to 15 days was “pretty much” the “maximum” he would allow for negotiations to continue.

The US Jan Chicago Fed National Activity Index rose +0.39 to a 9-month high of 0.18, stronger than expectations of 0.01.

US Dec factory orders fell -0.7% m/m, right on expectations.

The US Feb Dallas Fed manufacturing outlook level of general business activity survey rose +1.4 to a 7-month high of 0.2, stronger than expectations of -0.5.

Fed Governor Christopher Waller said his decision on whether to support an interest rate cut at the March FOMC meeting will hinge on labor market data for February.

The market’s focus this week will be on corporate earnings results and economic news.  On Tuesday, the Conference Board’s Feb consumer confidence index is expected to climb +2.5 to 87.0.  Tuesday evening, President Trump delivers his State of the Union address.  On Wednesday, Nvidia releases its earnings results after the close.  On Thursday, initial weekly unemployment claims are expected to climb by +10,000 to 216,000.  On Friday, the Feb MNI Chicago PMI is expected to slip -1.8 to 52.2. 

Q4 earnings season is nearing its end, with more than 80% of the S&P 500 companies having reported earnings results.  Earnings have been a positive factor for stocks, with 74% of the 429 S&P 500 companies that have reported beating expectations.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting a 5% chance for a -25 bp rate cut at the next policy meeting on March 17-18.

Overseas stock markets settled lower on Monday.  The Euro Stoxx 50 fell from a new record high and closed down -0.28%.  China’s Shanghai Composite is closed for the week-long Lunar New Year holidays.  Japan’s Nikkei Stock 225 is closed for the Emperor’s birthday holiday.

Interest Rates

March 10-year T-notes (ZNH6) on Monday closed up by +14 ticks.  The 10-year T-note yield fell -5.6 bp to 4.027%.  Mar T-notes matched a 2.75-month high on Monday, and the 10-year T-note yield fell to a 2.75-month low of 4.016%.  Monday’s equity market slump spurred some safe-haven demand for T-notes.  Also, the action by President Trump to raise his global tariff rate to 15% from 10% under Section 122 of the Trade Act of 1974 may curb global growth and is supportive for T-notes. 

European government bond yields moved lower on Monday.  The 10-year German bund yield fell to a 2.75-month low of 2.710% and finished down -2.7 bp to 2.711%.  The 10-year UK gilt yield dropped to a 14.25-month low of 4.310% and finished down -3.9 bp to 4.314%.

The German Feb IFO business climate survey rose +1.0 to a 6-month high of 88.6, stronger than expectations of 88.3.

Swaps are discounting a 2% chance of a -25 bp rate cut by the ECB at its next policy meeting on March 19.

US Stock Movers

Software stocks sold off on Monday and weighed on the broader market after Citrini Research published an article detailing a hypothetical scenario about the impact of AI on the global economy.  Datadog (DDOG) closed down more than -11% to lead losers in the Nasdaq 100, and Atlassian (TEAM) and CrowdStrike Holdings (CRWD) closed down more than -10%.  Also, Intuit (INTU) closed down more than -5%, and Oracle (ORCL) and Adobe (ADBE) closed down more than -4%.  In addition, Salesforce (CRM), Palantir Technologies (PLTR), Service Now (NOW), Autodesk (ADSK), and Microsoft (MSFT) closed down by more than -3%.

Payment and delivery stocks retreated on Monday after Citrini Research published an article detailing a hypothetical scenario on the impact of AI on the global economy.  Capital One Financial (COF) closed down more than -8%, American Express (AXP) closed down more than -7%, DoorDash (DASH) closed down more than -6%, and Mastercard (MA) closed down more than -5%.  In addition, JPMorgan Chase (JPM), Visa (V), and Uber Technologies (UBER) closed down more than -4%.

Packaging stocks were under pressure on Monday after RISI reported that domestic containerboard prices had declined by $20 per ton m/m.  As a result, Smurfit West Rock (SW), International Paper (IP), and Clearwater Paper (CLW) closed down more than -5%.  Also, Packaging Corp of America (PKG) closed down more than -4%, and Greif Inc (GEF) closed down more than -1%. 

Cryptocurrency-exposed stocks sold off on Monday as Bitcoin (^BTCUSD) fell more than -4% to a 2-week low.  Coinbase Global (COIN) closed down more than -6%, and Strategy (MSTR) closed down more than -5%.  Also, Galaxy Digital Holdings (GLXY) closed down more than -4%, MARA Holdings (MARA) closed down more than -1%, and Riot Platforms (RIOT) closed down -0.19%.

International Business Machines (IBM) closed down more than -13% to lead losers in the S&P 500 and Dow Jones Industrials after Anthropic said its Claude Code tool can help with modernizing COBOL, a programming language run mainly on IBM computers. 

AppLovin (APP) closed down more than -9% after the SEC said its probe involving the company is “still active and ongoing.”

Monday.com (MNDY) closed down more than -7%, and Workday (WDAY) and DocuSign (DOCU) closed down more than -6% after Jeffries downgraded the stocks to hold from buy, citing “more persistent risk and negative sentiment” as a result of AI-disruption fears. 

VF Corp (VFC) closed down more than -7% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $18.

Arcellux Inc (ACLX) closed up more than +77% after Gilead Sciences agreed to buy the company for $7.8 billion, or $115 per share.

Veris Residential (VRE) closed up more than +12% after Affinius Capital, in partnership with Vista Hill Partners, agreed to acquire the company for about $3.4 billion or $19 per share. 

PayPal Holdings (PYPL) closed up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after Bloomberg reported the company has attracted takeover interest from several potential buyers. 

Akamai Technologies (AKAM) closed up more than +4% after Raymond James Financial raised its price target on the stock to $100 from $90.

Eli Lilly (LLY) closed up more than +4% after Novo Nordisk said its Cagrisema product fell short of Lilly’s Zepbound in a trial.

Domino’s Pizza (DPZ) closed up more than +4% after reporting Q4 revenue of $1.54 billion, better than the consensus of $1.52 billion.

Earnings Reports(2/24/2026)

American Tower Corp (AMT), Axon Enterprise Inc (AXON), Constellation Energy Corp (CEG), CoStar Group Inc (CSGP), EOG Resources Inc (EOG), Expeditors International of Washington Inc  (EXPD), Fidelity National Information (FIS), First Solar Inc (FSLR), GoDaddy Inc (GDDY), Henry Schein Inc (HSIC), Home Depot Inc/The (HD), HP Inc (HPQ), Keurig Dr Pepper Inc (KDP), MercadoLibre Inc (MELI), Mosaic Co/The (MOS), NRG Energy Inc (NRG), Realty Income Corp (O), Workday Inc (WDAY).