Stock Market Suffers AI-Inspired Meltdown. The Real World Wins Again.
Feb 13, 2026, 2:28 pm EST
Wall Street is taking comfort in physical objects—and the companies that sell them, such as Sherwin-Williams. (Angus Mordant/Bloomberg)
Some questions have no answers—and the lack of answers was a real problem for the stock market this past week.
The question: How much damage will artificial-intelligence technology unleash, and on what? On Monday, it was insurance brokers, including Aon, Arthur J. Gallagher, and Marsh. On Tuesday, it was wealth managers’ turn, with Charles Schwab and LPL Financial Holdings among those getting hit. Wednesday brought a selloff for real estate companies like BXP and Jones Lang LaSalle. Logistics companies, including XPO and J.B. Hunt Transport Services, got clobbered on Thursday.
All told, the Dow Jones Industrial Average
DJIA+0.10% and the S&P 500 indexSPX+0.05% are down more than 0.7% this week, and the Nasdaq CompositeCOMP-0.22% has slid 1.3%. Big Tech provided no succor, with the Roundhill Magnificent SevenMAGS-0.94% exchange-traded fund dropping 2.3%.Dow Jones Industrial AverageS&P 500 IndexNASDAQ Composite IndexRoundhill Magnificent Seven ETFFeb. 9Feb. 10Feb. 11Feb. 12Feb. 13-4-3-2-1012%
Good economic data wasn’t able to give the stock market a boost this past week. Wednesday’s jobs report was stronger than expected. But that just means that the Federal Reserve’s rate cuts will be postponed for a couple of months, says Andrew Szczurowski, a strategic income portfolio manager at Morgan Stanley Investment Management. There could be more clues about that when the minutes from the Fed’s January meeting are released on Feb. 18.
But even if the Fed doesn’t cut rates as quickly—or as often—as the market expects, Mabrouk Chetouane, head of global market strategy at Natixis Investment Managers, doesn’t think that’s a bad thing. “The Fed is maybe going to be less accommodative, but for good reason,” he said. “If there are fewer rate cuts because the economy is healthy, that won’t derail the U.S. equity market.”
Meanwhile, Wall Street is taking comfort in physical objects —and the companies that sell them. Caterpillar, Sherwin-Williams, McDonald’s, Walmart, and Home Depot were among the stocks in the Dow Jones Industrial Average that rallied during a tough week overall.
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Dividends, too, are real, tangible things—and investors flocked to them too. Verizon Communications, with a dividend yield of 5.8%, was the second-best Dow performer in the past week, and shares are up more than 20% so far this year. Johnson & Johnson, UnitedHealth Group, and Procter & Gamble, which also pay healthy dividends, were standouts in the Dow too. Utilities and real estate stocks also rallied, while the broader market dipped. “Investors still want dividends,” said Rick Ratkowski, director of investment strategies at NISA Investment Advisors.
More value-oriented sectors could get a boost as well. Natixis’ Chetouane points to good values in the energy and financial sectors, while the recent outperformance of the equal-weighted S&P 500 and midsize stocks—the S&P MidCap 400
MID+0.89% index is up 7% this year—should continue.
Someday, the AI worries—and the selloff they sparked—will end. Until then, the real world is your friend.
Write to Paul R. La Monica at paul.lamonica@barrons.comShow Conversation (36)
Stock Market Reels From ‘Sell First, Ask AI Questions Later’ Tech Slump
Feb 13, 2026, 6:32 am EST
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Investors fear disruptions from artificial intelligence, and big capex. (Getty Images)
Key Points
About This Summary
- U.S. stocks have given up all their gains for the year, with the S&P 500 now negative amid AI-driven market repricing.
- AI disruption has led to significant declines in sectors like software and . stocks falling up to 20.5%.
- While more volatility is expected, the AI spending boom may eventually boost S&P 500 earnings and U.S. economic productivity, say analysts.
U.S. stocks have given up all of their gains for the year, a key index of the so-called Magnificent Seven tech giants has slid into correction territory, and volatility gauges have spiked amid a rotation trade tied to artificial-intelligence disruption that likely will weigh on markets for the coming weeks.
The selloff, which began as concern that the biggest players in the AI investment boom had committed too much capital and were seeing too little return, has spread to a deeper worry that the new technology will trigger massive changes to the way companies do business in all sectors of the economy.
That’s forced a repricing of everything from risk appetite to cash flow and ultimately corporate profit forecasts from all corners of the market, with those at the coalface of AI disruption, like software and financial services, getting hurt the most. Non-tech stocks have reaped the benefits.
“Investors are scrambling to get out of the digital world and back to the analog, physical world, which is less likely to be disrupted by AI,” said Ed Yardeni, president and founder of Yardeni Research.
“Many of the trade’s stock market casualties will survive and boost their productivity and profits using AI,” he added. “However, AI is a disruptive technology causing lots of known unknowns about its ultimate impact on the earnings and the earnings growth of companies likely to be disrupted.”
It certainly feels like a “sell first, ask questions later” market at the moment, with investors dumping stocks on the back of headlines linked to new AI offerings that could challenge their respective businesses.
“The AI selloff is no longer confined to a single corner of tech,” said Charu Chanana, chief investment strategist at Saxo Bank. “The market is increasingly pricing dispersion and separating likely AI beneficiaries from businesses where AI could compress margins or automate away fee pools.”
Trucking and logistics stocks were casualties Thursday, with market leaders C.H. Robinson and RXO falling 14.5% and 20.5% respectively, following the release of a new AI tool from Algorhythm Holdings.
Software and services stocks have been in free fall for weeks, dragging the iShares Expanded Tech-Software Sector ETF to the lowest levels in nearly a year and more than 30% from its mid-September peak.
Megacap tech stocks aren’t immune, either, and angst tied to the pressure on margins, profit, and cashflows from the combined $650 billion in AI capex committed this year by the four largest hyperscalers – Microsoft
MSFT-0.13%, GoogleGOOGL-1.06%, Amazon, and Meta Platforms – has weighed on the market’s biggest cohort.
The Roundhill Magnificent Seven ETF
MAGS-0.94% closed in correction territory on Thursday, declining some 10.6% from its late October peak.
More broadly, the S&P 500
SPX+0.05% is now negative for the year, having shed nearly 109 points during Thursday’s slump, while the Nasdaq CompositeCOMP-0.22% is now down 2.78%.
There’s more weakness ahead, as well, with all three major indexes set to open lower on Friday and the Cboe Group’s VIX volatility gauge surging nearly 19% to 20.89, a level that suggests daily swings of around 1.3%, or 88 points, for the S&P 500.
Still, Jeff Buchbinder, chief equity strategist at LPL Financial, thinks the AI spending boom which kick-started the current market malaise will ultimately come to its rescue. But he does concede that could take some time.
“The elevated spending will likely be a boon for earnings across the S&P 500 as hyperscalers and beyond pay for the materials and industrial equipment associated with the data center buildout,” he said. “Plus, expected productivity gains from AI development are also expected to be supportive for corporate America and the overall U.S. economy.”
“But we expect additional bouts of volatility for big tech and the broad market as the AI debate continues,” he added.
Write to Martin Baccardax at martin.baccardax@barrons.com
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