[New York Stock Market] Indexes Close Lower Across the Board...Walmart Market Cap Tops 1 Trillion Dollars

The three major U.S. stock indexes in New York all closed lower on the 3rd (local time). Concerns grew that artificial intelligence (AI) will upend the existing landscape of the software industry, triggering a decline led by technology stocks.

On the New York Stock Exchange that day, the blue-chip Dow Jones Industrial Average fell 166.67 points, or 0.34%, from the previous session to close at 49,240.99. The large-cap S&P 500 Index lost 58.63 points, or 0.84%, to finish at 6,917.81. The tech-heavy Nasdaq Composite slipped 336.922 points, or 1.43%, to end at 23,255.185.

Reuters and Yonhap News Agency

Most technology stocks declined in the session. Shares of Microsoft (MS), Meta, and Apple fell 2.87%, 2.08%, and 0.2%, respectively. Nvidia, the leading AI stock, dropped 2.84%.

In particular, concerns intensified that generative AI tools could threaten software companies' existing growth models after Anthropic released a new AI automation tool. Shares of software companies plunged, with Salesforce and ServiceNow each logging losses in the 7% range.

Art Hogan, chief market strategist at B. Riley Wealth Management, said, "If the pace of technological development is as fast as the news we are hearing from OpenAI and Anthropic, it will be a problem," adding, "Investors have begun to focus on companies that could be disrupted by innovation, and this includes software application (app) companies."

Meanwhile, shares of Palantir, which had recently been weak, surged 6.85% on the back of its previous day's fourth-quarter earnings release and upbeat guidance.

Although technology stocks broadly declined, Walmart stood out as both a growth stock and a defensive stock, pushing its market capitalization above 1 trillion dollars. Walmart is the 11th U.S. company to surpass a 1 trillion dollar market cap.

PepsiCo reported solid earnings, sending its share price up 4.93%.

Steve Sosnick of Interactive Brokers said, "There is a rotation going on," and added, "The question is whether this is simply a healthy move to reallocate investment exposure, or whether it is a sign that suggests some fundamental instability."

News that a U.S. aircraft carrier shot down an Iranian drone led to a partial rebound in risk-off sentiment and demand for safe-haven assets. Spot gold and silver prices, which had recently slumped, rebounded by 5% and 6%, respectively.

By contrast, in the virtual asset market, Bitcoin fell intraday below the 73,000 dollar level, marking its lowest level in 15 months.

International oil prices rebounded as geopolitical tensions were priced in. On the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude rose 1.07 dollars, or 1.72%, from the previous day to settle at 63.21 dollars per barrel.

The U.S. federal government budget bill passed the House floor that day, putting the partial shutdown (Shut Down, temporary suspension of government operations) on the verge of being lifted.

Markets are watching recent comments from Federal Reserve (Fed) officials.

Thomas Barkin, president of the Federal Reserve Bank of Richmond, said that policy easing had strengthened the labor market and that the Fed is now focused on bringing inflation back to its target.

Fed Governor Stephen Miran said that the lack of strong inflationary pressure means the Fed will have to cut rates again this year.

According to the CME FedWatch tool of the Chicago Mercantile Exchange (CME), the interest-rate futures market is pricing in a 91.1% probability that rates will be kept on hold in March.

The yield on the 10-year U.S. Treasury note, the global benchmark for bond rates, is moving around 4.267%, down 1 basis point (1 bp = 0.01 percentage point) from the previous session. In contrast, the yield on the 2-year U.S. Treasury note, which is sensitive to monetary policy, is unchanged from the previous day at 3.57%.