[New York Stock Market] "AI Fear Swallows Wall Street"...Financial and Software Stocks Plunge (Comprehensive)

Dow Drops Back Below the 50,000 Mark

European Pressphoto Agency Yonhap News Agency

All three major indexes on the New York Stock Exchange closed lower as concerns over the spread of artificial intelligence (AI) triggered heavy selling. The Dow Jones Industrial Average fell back below the 50,000 mark, giving up all of its recent gains.

On the 12th (U.S. Eastern time), the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed at 49,451.98, down 669.42 points (1.34%) from the previous session. The large-cap S&P 500 Index fell 1.57% to 6,832.76, while the tech-heavy Nasdaq Composite Index ended 2.04% lower at 22,597.15.

The market came under pressure as concerns spread that AI tools recently released by AI startup Anthropic could threaten traditional businesses such as existing software (SW) and financial stocks.

By sector, financial stocks came under pressure on worries that AI could disrupt the wealth management business. Morgan Stanley and Goldman Sachs fell by more than 4%, while Bank of America (BoA) and JPMorgan Chase posted losses of more than 2%. Software stocks also saw deeper losses. Palantir Technologies fell 4.8% just on the day, bringing its decline since the start of the year to 23%.

The real estate sector also declined on expectations that the recent rise in the unemployment rate could dampen office demand. Real estate services companies CBRE and SL Green Realty fell by more than 8% and more than 4%, respectively. Disappointment over earnings that fell short of expectations also translated into selling pressure. Network equipment maker Cisco Systems plunged 12.32% after issuing a weak quarterly guidance.

In contrast, defensive stocks such as Walmart and Coca-Cola rose 3.78% and 0.51%, respectively. There was also rotation of funds into consumer staples and utilities.

U.S. financial media outlet CNBC reported that investors are focusing on key inflation data to be released on the 13th. According to a Dow Jones survey, economists expect the January Consumer Price Index (CPI) to have risen 0.3% month-on-month for both the headline and core measures. Core CPI excludes food and energy.

In the U.S. January employment report released the previous day, labor market indicators were strong, weakening expectations for an early interest rate cut. Ross Mayfield, strategist at Baird, told CNBC that if CPI comes in lower than expected, a renewed risk-on rally could unfold.