Another tech rout batters Wall Street

US equities finished firmly lower after an early advance faded steadily through the session, as investors adopted a more cautious tone ahead of key inflation data. Major benchmarks ended between 1 percent and 2 percent down, reversing the upbeat mood seen earlier in Asian and European equities, which have started 2026 strongly. The Nasdaq Composite fell 2 percent to 22,597.15, the S&P 500 declined 1.6 percent to 6,832.76, and the Dow Jones Industrial Average dropped 1.3 percent to 49,451.98. Technology was the weakest performing sector, weighing heavily on the broader market, while energy, financials and consumer discretionary also underperformed. By contrast, utilities, consumer staples and real estate were the only sectors to post gains, reflecting a more defensive tilt. The risk off tone was reinforced by a rally in US government bonds, with the 10 year Treasury yield falling eight basis points to 4.10 percent, its lowest level since early December, while commodity prices including oil and gold also declined.

At the company level, individual shares experienced pronounced volatility amid growing differentiation between perceived winners and losers from artificial intelligence. Apple fell more than 5 percent, contributing to weakness among the so called Magnificent Seven, while AppLovin slumped 20 percent after several broker downgrades despite reporting results that exceeded expectations. Cisco dropped 12 percent after warning that rising memory costs would weigh on margins, highlighting investor sensitivity to input price pressures linked to AI demand. Broader concerns about how artificial intelligence may reshape business models have also pressured software and real estate related equities in recent sessions. On the macro front, initial jobless claims fell to 227,000, although the four week moving average rose to a three month high, suggesting some modest softening at the margin. With inflation still elevated and January consumer price data due shortly, investors remain wary that the Federal Reserve may keep interest rates on hold for longer than previously anticipated.

Latest market and economic update

• Asian equities retreated on Friday, tracking weakness in US technology shares amid renewed concerns over artificial intelligence valuations. Despite the pullback, most regional markets remained on course for strong weekly gains. South Korea’s KOSPI hit a record high and led advances, while Japan and Australia posted solid weekly rises. Hong Kong lagged, ending flat.

• US equity futures were steady overnight as investors awaited January consumer price index data, with headline and core inflation expected to ease slightly. In after hours trade, Applied Materials surged 12 percent on strong earnings and guidance, while Rivian jumped 16 percent. Pinterest fell 18 percent on weak results.

• European equities closed mostly lower, with the FTSE 100 down 0.7% and DAX marginally weaker, as investors digested earnings and modest UK growth. Mercedes-Benz slid on a sharp profit fall, while Hermes, Siemens and Anheuser-Busch InBev gained on strong results. Unilever and BAT also beat expectations, supporting select sectors.

• The US dollar was broadly steady ahead of key inflation data but remained on track for weekly losses of around 0.7 percent. The euro traded firmly, with EUR USD at 1.1864, reflecting softer dollar sentiment despite recent support from strong payrolls data and lingering uncertainty over the Federal Reserve’s policy outlook.

• Oil prices were broadly steady in Asian trade but remained on course for weekly losses after falling nearly 3 percent previously. Brent hovered near 67.56 dollars and WTI around 62.87 dollars. Sentiment was weighed by forecasts of a sizeable 2026 supply surplus, rising US inventories and slower demand growth, while geopolitical risks appeared contained.

• President Donald Trump has repealed the 2009 ‘endangerment finding’ that greenhouse gases threaten human health, removing the legal basis for federal climate regulations. The move ends vehicle emissions standards for 2012–2027 models, marking a major rollback of US climate policy. Environmentalists warn of higher pollution, legal uncertainty and increased public health risks.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

• Applied Materials forecast second quarter revenue and profit above expectations, citing strong demand for AI processors and tight memory supply. Shares rose over 13 percent after hours, lifting peers. First quarter results also beat estimates, with record DRAM sales, as investment in advanced logic and high bandwidth memory accelerates.

• Arista Networks shares rose about 12 percent after hours after reporting stronger than expected fourth quarter earnings and revenue. Sales climbed nearly 29 percent year on year, driven by AI and data centre demand. The company forecast first quarter revenue above estimates, while margins remained robust despite a slight quarterly easing.

• Airbnb forecast first quarter revenue above expectations, sending shares 4 percent higher after hours, as it highlighted resilient demand for higher priced listings. The group is expanding into services and boutique hotels to widen its market. Quarterly revenue beat forecasts, though earnings per share fell and margins are set to remain flat.

• Expedia forecast first quarter margin growth of 3 to 4 percentage points, helped by cost reductions and one off gains, but cautioned that full year expansion will slow amid macro uncertainty. Shares fell over 6 percent after hours. Gross bookings guidance exceeded estimates, while quarterly profit and revenue beat expectations.

• Pinterest forecast first quarter revenue of 951 million to 971 million dollars, below expectations, sending shares down more than 18 percent after hours as tariff hit retailers reduced advertising spend. The company faces intense competition despite investing in AI tools. Quarterly revenue rose 14 percent, while monthly users reached 619 million.

• Instacart forecast current quarter transaction value and core profit above expectations and beat fourth quarter estimates, sending shares up 16 percent after hours. Growth was driven by strong demand for essentials and rising advertising revenue. Orders increased 16 percent, while competition from Amazon and Kroger intensifies.

• Siemens raised its full-year earnings outlook after reporting stronger-than-expected first-quarter results for fiscal 2026. Industrial profit increased 15% to €2.90 billion in the three months to December, surpassing analyst forecasts. The group now expects basic earnings per share of €10.70 to €11.10, up from its previous guidance range.

• Sanofi has ousted chief executive Paul Hudson after six years, citing slow progress in reviving its drug pipeline and reducing reliance on blockbuster Dupixent. Belén Garijo, currently head of Merck KGaA, will take over in April as the firm’s first female CEO. Shares fell amid concerns over research performance and future growth prospects.

• Nuveen has agreed to acquire UK-based asset manager Schroders for £9.9 billion, forming a group with nearly $2.5 trillion in assets under management. Schroders shareholders will receive 590 pence per share in cash, plus dividends of up to 22 pence. Chief executive Richard Oldfield will remain in post, with London as the non-US headquarters.

• Anthropic has raised $30 billion in Series G funding led by GIC and Coatue, valuing the artificial intelligence firm at $380 billion post-money. The company reports $14 billion in run-rate revenue, with strong growth in enterprise customers and its Claude Code product. Rival OpenAI is reportedly seeking up to $100 billion at a far higher valuation.

• Palantir faced scrutiny after investor Michael Burry questioned the sustainability of the AI investment cycle and sector valuations in a detailed newsletter, citing concerns including data centre depreciation. DA Davidson maintained a neutral rating, arguing the company continues to deliver strong growth and cash flow by helping clients generate clear, tangible value from AI.

• Samsung has begun shipping its latest HBM4 memory chips to customers, aiming to catch up with rivals in supplying Nvidia amid booming AI data centre demand. The new chips offer faster processing speeds than HBM3E. Samsung plans HBM4E samples later this year, facing strong competition from SK Hynix and Micron in next-generation production.

• SoftBank posted a fourth consecutive quarterly profit, reporting net income of 248.6 billion yen, supported by a $19.8 billion gain on its OpenAI investment. The group has invested over $30 billion in OpenAI and increased borrowing to fund further AI bets. Its loan-to-value ratio rose and cash reserves declined over the quarter.

• AppLovin forecast first-quarter revenue of $1.75–$1.78 billion, topping expectations, after beating fourth-quarter sales estimates on strong demand for its advertising and AI tools. Competition, particularly from Meta, remains a concern. While J.P. Morgan stayed cautious, Needham reiterated its Buy rating, citing ecommerce growth and higher 2026 profit estimates.

• Hermes reported 9.8% fourth-quarter sales growth, beating forecasts, driven by strong demand in the US and Japan. Leather goods revenues rose 14.6%, supporting a 41% full-year operating margin. The group will moderate price increases to 5–6% this year and proposed an €18 dividend, reflecting resilience despite a broader luxury sector slowdown.

• L’Oreal reported 6% fourth-quarter sales growth to €11.3 billion, marginally below forecasts, as robust demand in Europe and North America offset sluggish growth in North Asia. US sales climbed 8.6%, supported by new product launches and seasonal promotions. However, China and travel retail remained weak, reflecting cautious consumer spending and intensifying competition.

• Restaurant Brands beat fourth-quarter sales estimates, driven by strong international Burger King growth, but shares fell nearly 6% amid high costs and weak US demand. US same-store sales missed forecasts, while commodity and supply chain inflation weighed on margins. Overall comparable sales topped expectations slightly, and adjusted profit edged ahead of estimates.

• Unilever warned 2026 sales growth will be at the lower end of its 4–6% target range amid slowing demand in the US and Europe, despite a fourth-quarter beat driven by emerging markets. Annual operating profit dipped slightly. The group expects a modest margin improvement and announced a €1.5 billion share buyback programme.

• Viking Therapeutics plans to advance its oral obesity drug VK2735 into late-stage trials in the third quarter, after data showed up to 12.2% average weight loss in 13 weeks. Analysts highlighted strong commercial potential, noting demand for oral treatments. The company believes dual oral and injectable options could differentiate it in a competitive market.

• Shares in major European cement makers fell amid speculation the EU may delay tightening carbon rules. Heidelberg Materials, Holcim and Buzzi Unicem declined as investors feared a slower phaseout of free permits. Analysts warn a postponement would undermine companies that invested heavily in greener production, reducing expected competitive advantages from higher carbon costs.

• JPMorgan upgraded MercadoLibre to Overweight, citing easing competition, reduced earnings risk and robust growth in Brazil. It noted Shopee’s higher take rates and MercadoLibre’s fee increases signal a steadier backdrop. The bank expects strong revenue and profit growth through 2026, raised its price target, and named the company its top Latin American technology pick.

• Jefferies upgraded Novo Nordisk to Hold, saying sharp consensus cuts and weaker sentiment have reduced downside risk. It raised its price target slightly, noting sales forecasts now better reflect pressures. However, uncertainty over GLP-1 growth, competition and margins persists. The oral Wegovy launch and upcoming trial data remain key catalysts.

• TD Cowen downgraded Rigetti to Hold, citing funding pressures, intensifying competition and a premium valuation despite roadmap progress. It warned a planned fabrication facility could require significant capital. The broker initiated D-Wave with a Buy rating, highlighting strong revenue growth prospects, commercial traction and technological advances, though scaling risks remain.

• UBS cut its Airbus price target to €225, lowering earnings forecasts amid weaker sentiment and delivery concerns. It now expects 880 aircraft deliveries in 2026 and reduced EBIT estimates to €8.0 billion. Limited pricing upside and supply constraints weigh near term, though improved supply chain health could support longer-term capacity and growth.

• JPMorgan downgraded Kraft Heinz to Underweight, citing a weak 2026 outlook, persistent North American volume declines and risks around increased spending. The company halted plans to split its business and forecast falling sales and earnings. While quarterly profit beat estimates, organic sales dropped. Heavy investment and dividend commitments may limit financial flexibility.

Upcoming data and events

US January inflation data lead Friday’s agenda, with releases for month-on-month and year-on-year CPI and core inflation, plus updated CPI index figures. Investors will also watch the latest Baker Hughes US oil and total rig counts. Corporate earnings are due from Safran, Enbridge, NatWest, TC Energy, EDF and Cameco, among others.