Equities fall as investors rotate from tech

General market commentary

Global equity markets moved lower on Tuesday, with US stocks retreating as technology shares came under sustained pressure and investors digested a heavy flow of corporate earnings. The Nasdaq and the S&P 500 recorded their sharpest declines in two weeks, led by weakness in software stocks as concerns grew that accelerating advances in artificial intelligence could erode market share and weigh on future profitability. High profile technology names including Salesforce, Microsoft and Nvidia fell sharply, while Alphabet and Amazon also traded lower ahead of their upcoming results. Energy stocks were a clear outperformer, supported by a strong rise in oil prices, and defensive sectors such as consumer staples and utilities attracted demand as investors rotated away from growth. US Treasury yields were broadly unchanged, pointing to equity specific factors rather than macroeconomic shifts as the main driver of the move.

Elsewhere, equity market performance was mixed. Asian markets closed higher, led by a near four percent surge in Japan’s Nikkei, while European shares were little changed. Earnings remained a dominant theme, with several companies issuing cautious outlooks that heightened volatility at the stock level. PayPal and Gartner posted sharp declines after disappointing guidance, contrasting with gains in Palantir following stronger than expected results and in Walmart after its market capitalisation surpassed one trillion dollars. With more than 100 S&P 500 companies due to report this week and major technology earnings still ahead, Tuesday’s session highlighted a market increasingly focused on the sustainability of profit growth and the returns on elevated investment spending.

Latest market and economic update

Asian equity markets were mixed on Wednesday, with South Korea’s KOSPI hitting a record high, led by technology and chipmakers such as Samsung Electronics and SK Hynix. Japan’s Nikkei fell as tech momentum cooled, while Alibaba weighed on Hong Kong. Chinese markets were subdued, and Australia’s market edged higher despite cautious global sentiment.

US stock futures steadied overnight as investors weighed fresh earnings after a technology led selloff. In extended trading, AMD slid on a weaker outlook and Chipotle fell on soft demand, while Super Micro Computer jumped on strong results. Futures held broadly flat as markets assessed ongoing rotation away from high valued tech stocks.

European stocks closed mixed, as strength in banks and traditional sectors offset heavy losses in technology. The STOXX 50 fell 0.3% while the STOXX 600 held at a record high. Tech shares lagged on AI valuation concerns, with ASML and SAP falling sharply, while banks including UniCredit and ING gained over 2%, supporting broader market stability.

The US dollar steadied on Wednesday, with the dollar index holding near 97.4 as delayed economic data limited direction. Against the euro, the dollar was little changed, leaving EUR USD around 1.1834. Recent support has come from firm manufacturing data and expectations of less dovish Federal Reserve leadership, despite markets still pricing in rate cuts later this year.

Oil prices rose modestly, with Brent and WTI both gaining close to one percent, supported by strength in energy markets and a broader rotation into cyclical sectors. Prices were also underpinned by steady demand expectations and limited supply disruption concerns, although gains were capped by cautious sentiment around global growth and mixed risk appetite.

Equities on the move

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

Nvidia’s plans to resume large scale sales of its H200 AI chips to China remain delayed, despite US approval in December. Licence applications are still under national security review, prompting Chinese customers to hold back orders. Ongoing inter agency scrutiny, particularly from the state department, has slowed implementation and disrupted supply chains.

Advanced Micro Devices forecast first quarter revenue above expectations, citing strong demand for its AI chips driven by data centre expansion. Shares fell in extended trading despite the upbeat outlook. AMD continues to gain share in server processors, though memory shortages and rising prices could constrain growth and weigh on broader demand.

Super Micro Computer raised its full year revenue forecast, citing strong demand for AI focused servers as data centre investment accelerates. Shares jumped in extended trading after the company projected $40 billion in 2026 revenue. Quarterly and forward sales forecasts beat expectations, supported by partnerships with major chipmakers despite margin pressures.

Mondelez warned of a subdued outlook as price rises deter cost conscious consumers amid weak confidence and high living costs. Shares fell in after hours trading. While recent results beat expectations, higher cocoa costs and cautious shoppers are weighing on volumes. The company forecast 2026 revenue and profit growth below expectations overall.

PayPal shares fell around 18% after CEO Alex Chriss’s departure and weak results. Fourth-quarter earnings and revenue missed forecasts, while 2026 guidance disappointed, signalling market-share losses. Despite solid profitability and financial health, analysts remain cautious amid fierce payments competition, with some warning the stock could slide towards the mid-to-high $30s.

Novo Nordisk shares plunged 14% after fourth-quarter results and a warning that 2026 adjusted sales could fall 5–13% at constant exchange rates, citing US pricing pressure, patent expiries and competition. In 2025, sales rose 10% CER, operating profit grew 6% CER, and international operations outperformed the US, despite transformation costs and currency movements year.

Merck forecast 2026 sales and profit below expectations as patent expiries, notably for diabetes drug Januvia, weigh more heavily than anticipated. This overshadowed a solid fourth quarter, where results beat forecasts on strong Keytruda demand. Vaccine weakness in China and fading COVID sales also pressured outlook, despite continued deal-making and pipeline confidence.

Chipotle said it will raise menu prices by up to 2 percent this year as higher food and labour costs squeeze margins. The chain warned consumer demand remains under pressure, particularly among lower income households, and forecast flat same store sales in 2026. Shares fell sharply despite slightly better than expected quarterly results.

Mondelez warned of a subdued outlook as price rises deter cost conscious consumers amid weak confidence and high living costs. Shares fell in after hours trading. While recent results beat expectations, higher cocoa costs and cautious shoppers are weighing on volumes. The company forecast 2026 revenue and profit growth below expectations overall.

Prudential Financial reported higher fourth quarter profit, supported by strong underwriting and investment gains. Life and retirement demand remained resilient, while assets under management rose to $1.61 trillion. International operations delivered income growth, though earnings at investment arm PGIM dipped slightly. Overall adjusted operating income rose to $1.17 billion.

Pfizer released obesity drug trial data from its Metsera acquisition showing sustained weight loss but raising tolerability concerns, with 10% of patients discontinuing treatment. The update overshadowed a strong fourth-quarter earnings beat. Pfizer is targeting a 2028 approval and sees obesity drugs as key to offsetting patent losses, despite near-term growth challenges.

Walt Disney has named theme parks chief Josh D’Amaro as CEO from March 18, ending prolonged succession uncertainty. A company veteran, he replaces Bob Iger amid industry disruption from AI, consolidation and labour tensions. While parks drive profits, D’Amaro faces challenges in Hollywood relations, political scrutiny and intensifying competition.

Siemens Energy will invest $1 billion to expand U.S. power grid and gas turbine production, driven by surging data centre demand from AI. The plan includes a new Mississippi factory by 2028, boosting global turbine capacity by 20%. The U.S., now its fastest-growing market, already accounts for 22% of sales and a rising share of orders.

Banco Santander will acquire Webster Financial for $12.2bn, creating a top-ten US retail and commercial bank by assets. Webster shareholders will receive cash and Santander shares valued at $75 per share. The deal boosts Santander’s US scale, deposits and profitability, with expected 7–8% EPS accretion by 2028 and US RoTE reaching about 18%.

Homebuilding stocks rose after a Bloomberg report said major builders are discussing a ‘Trump Homes’ plan to tackle US housing affordability. The proposal would use private capital to fund up to one million entry-level homes via a rent-to-own model. However, implementation is complex, support uncertain, and the White House is not actively considering it currently.

A White House meeting to break a months-long deadlock between US banks and crypto firms ended without agreement, highlighting divisions threatening digital-asset legislation. Talks focused on stablecoin interest, opposed by banks but backed by crypto firms. The Clarity Act remains stalled after a delayed Senate vote, despite claims discussions were constructive from both sides publicly.

Baird upgraded Palantir to Outperform after strong results, citing accelerating 70% revenue growth, surging free cash flow and a more attractive valuation. The firm raised long-term cash flow forecasts, said investors may focus more on FCF, highlighted U.S. commercial momentum, and called Palantir a leading AI winner.

Baird upgraded JPMorgan to Neutral, citing a strong core business but limited upside at current valuations. While profits, loan growth and fees remain solid and capital levels healthy, the stock trades near three times tangible book. The upgrade reflects recent underperformance rather than changing fundamentals, with JPMorgan seen as fairly valued.

Bernstein analysts defended Uber after its recent decline, arguing fears over autonomous vehicles are largely priced in. A downside DCF suggests limited further risk even if US mobility is disrupted. Strong international and Delivery growth, solid EPS potential and supportive valuations underpin an Outperform rating and $115 target, according to Bernstein’s analysis.

JPMorgan upgraded SoFi to Overweight, saying a 10% post-earnings share fall created a more attractive entry point. It cited strong fourth-quarter execution, faster member and deposit growth than peers, improving credit trends and rising fee income. Guidance for about 30% 2026 revenue growth underpinned a $31 target, implying roughly 40% upside over the medium term.

Morgan Stanley upgraded Affirm to Overweight after a 20% selloff, calling growth and credit concerns overstated. Its $76 target reflects sector multiple compression, but analysts see scope to beat 31% growth forecasts. Stable credit, higher tax refunds, BNPL share gains, lower rates and partnerships with FIS and Fiserv support long-term confidence overall.

Deutsche Bank upgraded ING to Buy and raised its target to €28, citing stronger growth prospects and earnings momentum. The bank highlighted volume growth, rising fee income, an improving replicating portfolio and solid cost control. ING trades at a valuation discount to European peers despite attractive yields and returns, even on lower consensus forecasts.

Morgan Stanley downgraded Renault and Stellantis, warning expectations remain too optimistic for volume carmakers as Chinese competition intensifies. It expects weaker margins and cash generation to persist into 2026. While sector risk-reward has improved, the bank prefers premium manufacturers, naming Mercedes-Benz a top pick and keeping BMW Overweight.

Upcoming data and events

Wednesday features key inflation data from the euro zone and Italy, alongside US labour, services and housing indicators including ADP jobs, ISM services PMI and mortgage data. Energy markets focus on EIA oil inventories. Major earnings include Alphabet, Eli Lilly, Novo Nordisk, Qualcomm, Uber, AbbVie, Novartis, Costco and Banco Santander.

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