- Sharp declines in software firms such as Palo Alto Networks and Salesforce were offset by strength in financial stocks.
- Applied Digital slid after hours as Nvidia exited its $177 million stake, and Palo Alto Networks fell on a guidance cut.
- Compass Pathways dipped in extended trading following a $150 million stock offering after positive Phase 3 trial data for its COMP360 treatment.
U.S. stock futures slipped late Tuesday, with losses in software shares and fresh AI disruption fears keeping investors cautious ahead of Fed minutes and key economic data.
As of 8:26 p.m. ET, Nasdaq 100 futures were down 0.2%, while S&P 500 futures were lower by 0.1%. Dow futures slipped 0.1%.
On Stocktwits, retail sentiment toward the SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust (QQQ) and SPDR Dow Jones Industrial Average ETF Trust (DIA) was ‘neutral’ amid ‘extremely low’ message volume.
US Market Drivers
Markets reacted to continued pressure on software and technology stocks tied to concerns that AI tools could disrupt existing business models, even as gains in financials helped steady the broader market.
In the prior session, the Dow Jones Industrial Average rose 0.07%, while the S&P 500 climbed 0.10% and the Nasdaq Composite advanced 0.14%.
During Tuesday’s session, software shares extended their year-to-date declines. ServiceNow fell more than 1%, while Autodesk fell nearly 3% and Palo Alto Networks dropped over 8% in extended trading. Salesforce slid nearly 3%, and Oracle fell almost 4%. The iShares Expanded Tech-Software Sector ETF (IGV) declined more than 2%, pushing its losses for the year to 24%.
Ryan Detrick, chief market strategist at Carson Group, said on X, "as we've been saying for weeks now, we are in the banana peel month of February, and weakness is perfectly normal."
By contrast, financial stocks outperformed, helping limit losses earlier in the day and lift major indexes into positive territory by the close. Shares of Citigroup jumped 2.7%, while JPMorgan Chase gained 1.5%. Gains in banks also helped offset weakness in technology, nudging the Dow into positive territory after being down as much as 0.7% earlier in the session.
Mark Newton, managing director at Fundstrat Global Advisors, said on X that investor focus remains heavily skewed toward Nvidia and Microsoft, even as technical breakouts are emerging elsewhere. “Don’t let Software & ‘Mag 7’ weakness get you down,” Newton said, adding that there are “plenty of great charts across sectors worth watching.”
AI-related uncertainty also resurfaced after China’s Alibaba unveiled its Qwen 3.5 AI model, which can independently execute complex tasks.
Markets also weighed developments tied to the U.S.-Japan trade deal. President Donald Trump said the first projects under the U.S.-Japan trade deal signed last year have been approved. The projects, covering oil and gas, power generation, and critical minerals, mark the initial deployment of Japan’s $550 billion investment commitment into the U.S.-selected infrastructure and manufacturing initiatives.
Trending Stocks To Watch On NYSE, Nasdaq
Applied Digital Corporation (APLD): Shares fell more than 8% in after-hours trading after Nvidia disclosed in a 13F filing that it exited its roughly $177 million stake in the company as of Dec. 31, 2025.
Palo Alto Networks, Inc. (PANW): Shares dropped over 8% in extended trading after the cybersecurity firm cut its FY26 adjusted earnings per share (EPS) forecast and issued weaker-than-expected Q3 EPS guidance.
Iamgold Corporation (IAG): Shares edged up about 0.2% after-hours as the gold miner reported record quarterly earnings before interest, taxes, depreciation, and amortization (EBITDA) and strong full-year 2025 production.
Infleqtion, Inc. (INFQ): Shares ended over 13% higher during Tuesday’s session after the quantum computing company began trading on the NYSE following its merger with Churchill Capital Corp X.
Compass Pathways plc (CMPS): Shares slipped nearly 4% in extended trading after the company announced a $150 million American Depositary Shares (ADS) offering following the release of positive Phase 3 trial data for its COMP360 treatment.
How Global Markets Are Performing Today
In broader markets, the yield on the benchmark 10-year U.S. Treasury note remained below 4.05%, its lowest level in more than two months, while gold and silver edged lower. West Texas Intermediate crude oil held losses from the prior session.
Asian markets were mostly higher in thin holiday trading on Wednesday, with stocks rising in Japan and Australia and the MSCI Asia Pacific Index gaining about 0.6%. Trading volumes were light with markets in China and Hong Kong closed for the Lunar New Year.
Among the catalysts for Wednesday are housing starts, building permits, durable-goods orders, industrial production, capacity utilization, remarks from Fed Vice Chair for Supervision Michelle Bowman, and the minutes of the Fed’s January FOMC meeting.
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