Markets Slide Tuesday as AI Anxiety Drags Tech Lower
U.S. stocks struggled to find their footing Tuesday as Wall Street returned from the Presidents' Day holiday to a familiar headwind — growing unease over artificial intelligence's long-term impact on corporate earnings. All three major indexes finished in the red, capping another rough session for technology shares and extending what has become an increasingly volatile stretch for markets in early 2026.
The Nasdaq Composite fell roughly 0.8%, leading the declines, while the S&P 500 dropped about 0.6% and slipped back below 6,800. The Dow Jones Industrial Average shed approximately 230 points, or 0.5%, as selling pressure broadened across sectors.
Coming Off the Worst Week of 2026
Tuesday's session follows what was a bruising week for equities — particularly in tech. The Nasdaq logged its fifth consecutive weekly decline, and both the S&P 500 and Dow lost more than 1% last week. AI-driven disruption fears hammered software and IT services stocks, overshadowing what was otherwise a constructive macroeconomic backdrop, including a tamer-than-expected January inflation report and a surprisingly strong jobs number.
The concern isn't just about near-term earnings — it's a deeper, structural worry about whether AI will erode the revenue base of legacy software and enterprise technology companies before those same companies can pivot and benefit from the technology themselves.
Fund Managers Sound the Alarm on AI Overinvestment
Adding fuel to the fire, a Bank of America fund manager survey found that a record share of investors now believe companies are overinvesting in artificial intelligence. The data point crystallizes a sentiment shift that has been building for weeks — that the AI capital expenditure boom, while impressive in scale, may not translate into proportional returns for shareholders. For a market that spent much of 2024 and early 2025 pricing in AI euphoria, that's a meaningful recalibration.
General Mills Cuts Outlook, Flags Weak Consumer
Away from tech, consumer staples giant General Mills delivered a sobering earnings update. The company lowered its full-year 2026 sales outlook, now projecting organic net sales of -1.5% to -2%, down from a prior range of -1% to +1%. Adjusted operating profit and earnings per share guidance were also slashed, now expected to fall between -16% and -20%, compared to a previous range of -10% to -15%.