U.S. stocks fell into the February 4, 2026 close as investors repriced the AI trade and rotated away from long-duration growth.
Market close: tech drags the indexes
U.S. stocks fell Wednesday, led by technology. The S&P 500 ended down about 0.8% and the Nasdaq slid about 1.9%, while the Dow was slightly higher.
The selling followed a familiar pattern. Investors focused less on reported earnings beats and more on forward guidance, competitive pressure, and valuation risk. U.S. stocks fell even as several non-tech pockets stayed resilient.
Semis were the center of gravity
Semiconductors drove the day’s downside. U.S. stocks fell as Advanced Micro Devices dropped about 16%–17% after its outlook failed to match elevated expectations.
Reuters described a broader chip pullback that pressured the growth complex. Nvidia and other large chip names also declined, and the Philadelphia semiconductor index fell sharply.
Reuters also tied the AMD move to concerns about competitiveness and the shape of AI demand, including customer shifts toward custom silicon.
Rotation showed up beneath the surface
U.S. stocks fell at the headline level, but breadth told a more nuanced story. Reuters reported the S&P 500 value index rose while the growth index fell, and six of eleven sectors finished higher.
That split matters for portfolio positioning. It suggests the selling was not a blanket “risk-off” event. It looked more like a de-rating of crowded AI-linked exposures.
Rates and the Fed transition stayed in the backdrop
U.S. stocks fell with one eye on rates. Equity multiples, especially in tech, remain sensitive to long-end yields.
That sensitivity has risen because investors are also digesting the Fed leadership transition narrative. Reuters reported that investors have been positioning for a steeper yield curve under a Warsh-led Fed, with attention on balance-sheet policy and long-end rate volatility.
Reuters also noted that Warsh’s nomination prompted investors to reassess Treasury-market support and pressured longer-dated yields in earlier sessions.
In practical terms, U.S. stocks fell as markets tried to answer two questions at once: how fast cuts arrive, and how high the long end settles.
Global setup: softer euro inflation, UK hold bias
Europe added a supportive counterpoint on inflation, even as growth questions linger.
Euro zone inflation fell to about 1.7% in January, with core at about 2.2%, based on widely cited flash data. That reinforced expectations that the ECB can stay on hold for now.
In the UK, the focus stayed on the Bank of England. Reuters reporting pointed to expectations for the BoE to hold rates at 3.75%, with markets watching guidance for the timing of later cuts.
These cross-currents matter because U.S. stocks fell in part on relative-rate dynamics. If Europe stays benign on inflation, it can support risk sentiment. But U.S. tech still trades on U.S. duration.
What to watch next session
U.S. stocks fell, so the next tape will test whether the move was a one-day air pocket or a broader regime shift.
AI-linked earnings and capex tone
Watch whether Big Tech guidance supports the “AI infrastructure” spend story. Also watch language around pricing power, customer churn, and AI-driven substitution in software. Reuters flagged fears that AI could disrupt legacy software models, which fed the selloff.
Semis follow-through
AMD’s move raised the bar for the group. Investors will watch peers for order visibility, data-center mix, and margin trajectory. Reuters coverage emphasized how expectations, not just results, can set the reaction function.
Rates and the dollar
U.S. stocks fell with rates in focus. A firmer dollar and a higher long end tend to tighten financial conditions for growth equities.