Stock market today: Tariff shock meets AI "scare trade" as Dow drops 800 points
US equities sold off Monday as two forces hit at once: fresh tariff uncertainty and renewed AI disruption fears. The Dow fell roughly 1.7% (over 800 points), while the S&P 500 and Nasdaq slipped just over 1% after Friday's choppy rally.
Friday's Supreme Court decision striking down much of the prior tariff regime briefly boosted sentiment. That flipped after the weekend, when the administration said a 15% baseline tariff on imports would take effect immediately - a move the EU rejected, pressing that "a deal is a deal."
Tariffs: from relief to whiplash
Markets love clarity. They're not getting it. Hopes rose after the Court's rebuff of emergency tariffs, then slumped as a blanket 15% rate landed without a clear playbook for partners or exceptions.
Expect back-and-forth headlines to drive factor rotations: domestic cyclicals vs. global earners; exporters vs. importers; value vs. quality growth. Trade-sensitive models should be re-run with 10%-20% import cost shocks and second-order effects on pricing power, volumes, and FX.
US Supreme Court opinions are the primary source for the ruling backdrop.
AI scare trade: consulting, software, and services in the crosshairs
The AI "scare trade" picked up again after Anthropic unveiled a tool aimed at automating analysis typically handled by pricey consulting teams. IBM fell 13%, with Accenture and Cognizant also lower, as investors modeled margin pressure and contract risk.
The selling wasn't contained to IT services. Software, real estate, logistics, and parts of financial services stayed weak as the market repriced labor- and process-heavy businesses vulnerable to AI-driven productivity gains. Semis were the exception - Nvidia stayed green ahead of Wednesday's report.
If your coverage includes services-heavy names, pressure test revenue per FTE, utilization, and renewal sensitivity under AI deflation. For allocators, map exposures where AI shifts the cost curve faster than clients can re-price.
Cross-asset signals: safety bid shows up
Gold hit roughly $5,230/oz and is up 19% YTD, while silver jumped to $87 as tariff risk revived hedging demand. US Treasurys rallied: the 10-year slipped to 4.01% (-6 bps), the 30-year to 4.68% (-4 bps), and the 5-year to 3.57% (-7 bps). The dollar index eased to 97.
Oil's near-term setup looks tighter than feared. Goldman now sees Brent at $60 and WTI at $56 in Q4 (higher than prior estimates) as inventories didn't build as much as expected and "stuck at sea" barrels mute onshore pressure. Spot sits near $71.40 (Brent) and $66.60 (WTI).
Flows and market internals
Goldman's desk flagged the fastest hedge fund selling since April 2025's "Liberation Day" slide, led by North America and Europe. Both single stocks and macro products were net sold, driven largely by shorts.
Payments and e-commerce names slumped on fears AI could compress the monetized "friction" across checkout and risk. Oddly, crypto didn't catch a bid, with bitcoin and majors down over 24 hours. Apple held up better as the market rewarded restraint on mega-capex for AI.
Sector and stock snapshots
- Software: The SaaS tape was heavy; IGV tested the April 2025 floor near $76-$77. Atlassian slid toward 2018 levels, Adobe toward 2019, and Workday into deep-2020 territory.
- Semis: The SOX hovered near record closing highs; Nvidia reports Wednesday - a potential volatility node for AI-linked bets.
- Airlines/Travel: Weather amplified the drawdown. AAL, UAL, DAL fell ~4%; Booking -6%, Airbnb -5% amid thousands of flight cancellations from a Northeast blizzard.
- Commodities/Energy: Natural gas briefly rallied ~2.5% on storm demand, then settled under $3 as duration and temps looked less extreme than January's spike.
- Healthcare: Novo Nordisk fell premarket after its next-gen obesity drug underperformed Lilly's tirzepatide in a head-to-head.
- M&A/Corporate: Arcellx surged premarket on a $7.8B takeout by Gilead; Fortune Brands rose after an activist stake; Domino's popped on a revenue beat despite a slight EPS miss.
Policy watch: what the Fed is signaling
Governor Waller framed rate cuts as a labor-market call - near a coin flip pending revisions to January's strong jobs print and February's data. He dissented in January in favor of a 25 bp cut.
Translation: if jobs stay firm and inflation trends toward target, the Fed can wait. If labor softens via revisions or new data, March comes back into play. Track the speeches and data cadence here: Federal Reserve speeches.
What to watch next
- Nvidia earnings (Wed): Guidance on data center spend, supply, and demand elasticity. Watch hyperscaler capex commentary and China mix.
- Macro prints: Labor and inflation updates that could swing the Fed path Waller outlined.
- Tariff clarity: Any exemptions, timelines, or bilateral updates with the EU and key Asian partners.
- Software tape: Does IGV hold $76-$77, or do stops accelerate a move lower?
Actionable playbook for finance leaders and PMs
- Re-run scenarios: Layer 10%-20% import cost shocks into 2026-2027 models; test pass-through, demand elasticity, and working capital needs.
- Hedge review: Rebalance gold and duration hedges given the safety bid; check basis risk across FX pairs exposed to tariff-sensitive trade.
- AI impact audit: For services and software names, quantify renewal risk, seat compression, and pricing pressure from AI tooling. Adjust multiples for deflation risk where unit economics shift.
- Barbell in tech: Pair semis strength with selectively hedged software/services shorts until earnings reset or AI fears abate.
- Travel/weather beta: Treat blizzard disruption as transitory; focus on forward bookings and capacity guidance vs. one-off cancellations.
- Oil path: Use Goldman's revised strip as a sanity check; monitor "stuck at sea" flows and any Iran-related supply headlines.
Signals and levels to keep on the screen
- Rates: 10Y at ~4.01% - further downside would confirm a stronger safety bid.
- IGV: $76-$77 support. Breakdown risks a "down elevator" in software.
- Gold: Holding above $5,200 keeps the inflation/uncertainty hedge firmly on.
- SOX vs. NVDA print: A beat/raise could sustain semis leadership even as AI angst hits services.
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