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This is No Ordinary Tech Selloff
Equal-Weight Index Defies S&P 500’s 1.4% Decline
Meta’s First Negative Free Cash Flow Since IPO Stokes AI Fears
Tech stocks took a nosedive after Meta earnings reignited an AI trade panic on Wall Street. more than four months. The S&P 500 dropped 1.2%. The Dow Jones Industrial Average was roughly flat. The blue-chip index is the least exposed to tech of the major indexes.
It wasn’t just tech getting crushed, though. More specifically, it was the AI trade at large. Non-tech AI names such as GE Vernova and Bloom Energy were among the S&P 500’s biggest laggards. Caterpillar, another stealth AI stock, also tumbled.
That’s not to say the more classic AI stocks weren’t feeling the pressure. The PHLX Semiconductor Index was pummeled, with every single chipmaker stock in the index ending the day lower.
Despite the dramatic decline, most stocks in the S&P 500 were actually higher. In fact, the index saw its second-largest divergence in positive breadth and negative price action, since at least 1990 Thursday was second only to January 2025, when AI competition concerns from a new Chinese model from Deepseek sank the AI trade
Dan Farley, chief investment officer for U.S. Bank Wealth Management, described the day’s moves as “textbook risk-off.” Farley nodded to strength in defensive plays like consumer staple stocks, which led the S&P 500 on a sector level, and the bond market rally.
