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Stock Market Today, Feb. 5: S&P 500 Loses 1.23% as Tech Sell-Off Continues

NEW YORK, Feb. 5, 2026 – U.S. equities fell sharply on Monday, extending last week's losses as a potent combination of disruptive artificial intelligence developments and signs of a weakening labor market sent a chill through trading floors. The technology sector remained the epicenter of the sell-off, with software-as-a-service (SaaS) stocks bearing the brunt of investor anxiety over AI's potential to automate and replace their core functions.

The broad-based decline saw all three major indexes close deep in negative territory. The benchmark S&P 500 lost 1.23%, the tech-heavy Nasdaq Composite slid 1.59%, and the Dow Jones Industrial Average fell 1.20%. The session underscored a growing tension in the market: the long-term promise of AI is now clashing with the immediate, tangible threat of disruption to established business models, all against a backdrop of mounting economic uncertainty.

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Broad-Based Declines Grip Wall Street

Monday's session was characterized by widespread selling pressure, with few sectors spared. Investor sentiment, already fragile after a losing week, soured further on dual fronts.

The S&P 500 (^GSPC) shed 84.62 points to close at 6,798.40. The Nasdaq Composite (^IXIC), home to many of the technology firms at the center of the AI narrative, dropped 362.89 points to end the day at 22,540.59. The Dow Jones Industrial Average (^DJI) fell 594.62 points, closing at 48,908.72.

Two primary factors drove the day's negative action:

• AI Disruption Fears: The announcement of a powerful new AI model from Anthropic accelerated a rout in software stocks, as investors reassessed the value of companies whose services could be automated.
• Weak Economic Data: A report indicating a surge in planned job cuts in January stoked fears that the U.S. economy is slowing more rapidly than anticipated, weighing on the broader market.

AI Fears Trigger Deepening Tech Rout

The technology sector, long the market's primary engine of growth, has become its biggest source of anxiety. The narrative has shifted from AI as a tool for efficiency to AI as a direct competitor.

The Catalyst: Anthropic's 'Opus 4.6'

The proximate cause for Monday's SaaS-pocalypse was the unveiling of a new model from AI research firm Anthropic.

• New Capabilities: The model, named Claude Opus 4.6, was demonstrated to be capable of conducting sophisticated, multi-step tasks autonomously. This includes complex financial research, legal analysis, software development, and customer service functions—areas that form the core business of many high-flying SaaS companies.
• Investor Reaction: The news sent a shockwave through the software sector. The fear is that corporations may soon opt for powerful, general-purpose AI models like Opus 4.6 instead of renewing expensive, specialized software licenses, hollowing out the revenue streams of incumbent players.

SaaS Stocks in Freefall

The market's reaction was swift and brutal for leading software firms. These companies, once seen as impenetrable digital utilities, are now being repriced for a future where their services are potentially commoditized by AI. The Nasdaq has now fallen 4.83% over the last five trading days, largely driven by this reassessment.

• ServiceNow (NOW): The enterprise software giant, which provides digital workflow solutions, plummeted 7.60% to close at $102.63. Investors are concerned its platform could be challenged by AI assistants capable of managing internal corporate processes.
• Salesforce (CRM): A titan in customer relationship management, Salesforce saw its stock fall 4.76% to end the day at $189.94. The potential for advanced AI to handle sales, marketing, and customer support tasks directly threatens its primary value proposition.
• Mega-Cap Pressure: Even the largest tech firms were not immune. Alphabet (GOOGL) initially fell sharply on concerns about the massive capital expenditures required to compete in the AI arms race, which could pressure margins. The stock recovered some of its losses but still finished down 0.60% at $331.33.

Economic Worries and Labor Market Jitters

Adding to the tech-specific fears was a deteriorating macroeconomic picture. The Challenger, Gray & Christmas report on planned corporate layoffs revealed that job cuts surged in January, reaching their highest level in over a year. This data point, a leading indicator for the official government jobs report, heightened worries of a broader economic slowdown and tempered expectations for corporate earnings growth.

Outliers Buck the Negative Trend

Amid the sea of red, a few companies managed to post gains, largely due to company-specific news that insulated them from the day's prevailing narratives.

• Nio's Profit Alert: Chinese electric-vehicle maker Nio (NIO) was a standout gainer, surging 5.97%. The company issued an unexpected profit alert, signaling stronger-than-expected margins and delivery figures, which delighted investors in a sector that has faced significant headwinds.
• Corporate Restructuring: Dow components Verizon (VZ +0.19%) and Phillips 66 (PSX +0.29%) both ended the day with modest gains. The stocks traded higher on headlines related to new leadership appointments and ongoing corporate restructuring plans, respectively, demonstrating that specific strategic moves can still attract buyers even in a risk-off market.

Risk-Off Sentiment Spreads

The flight from risk was not confined to the equity markets. Other speculative and risk-sensitive assets also experienced significant declines.

• Crypto Winter Deepens: Bitcoin (BTC) continued its precipitous fall, tumbling below the key $65,000 level. The world's largest cryptocurrency is now down nearly 35% year-on-year. The pain spread to crypto-related equities, with Bitcoin miner and treasury holding company Mara Holdings (MARA) crashing almost 20% on the day.
• Precious Metals Suffer: In a typical risk-off environment, precious metals like gold and silver might catch a bid as safe havens. However, they also fell on Monday, pressured by a strengthening U.S. dollar. The ProShares Ultra Silver (AGQ), a leveraged exchange-traded fund designed to deliver twice the daily return of silver, amplified these losses, dropping by a staggering 30.46%.

What to Watch Next

Investors are now grappling with a complex and uncertain landscape. The structural repricing of the tech sector is colliding with cyclical concerns about the economy's health.

• The AI Narrative: Market participants will be laser-focused on upcoming earnings calls from tech companies. Commentary on the true impact of AI on both capital expenditures and revenue streams will be critical in determining whether this sell-off is a temporary panic or the beginning of a long-term revaluation.
• Economic Data: The weak Challenger report places even greater importance on forthcoming economic data, particularly the official Bureau of Labor Statistics (BLS) jobs report. Any confirmation of a cooling labor market will intensify recession fears.
• Federal Reserve Watch: While a slowing economy is negative for corporate profits, it could force the Federal Reserve to reconsider its monetary policy stance. Traders will be watching for any shift in rhetoric from Fed officials that might hint at a more dovish pivot in response to weakening growth.