U.S. stock markets experienced a significant downturn on Thursday, February 12, 2026, as growing concerns over artificial intelligence (AI) disruption and mixed economic signals triggered selling across major equity benchmarks. The S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and Russell 2000 all posted notable losses, reversing recent gains and signaling increased volatility in markets.
Major Index Moves
- The S&P 500 dropped 1.6%, recording its second-worst trading day since Thanksgiving while settling near 6,832.76.
- The Dow Jones Industrial Average declined 1.3%, sliding below the 50,000 mark.
- The Nasdaq Composite fell 2%, weighed down by technology sector weakness.
- The Russell 2000 small-cap index also lost 2%, reflecting broad market participation in the selloff.
The pullback erased year-to-date gains in the S&P 500 and reaffirmed investor caution amid escalating AI-related fears and macroeconomic uncertainty.
Technology & AI Concerns Drive Sector Weakness
Technology and AI-linked stocks were among the hardest hit, as investors reassessed valuations and risk in sectors perceived to face heightened disruption. Key drag on benchmarks included warnings and sharp share declines in major tech companies, underscoring persistent sentiment challenges in the sector.
Sentiment was further pressured by worries that automation and AI could displace revenue streams in segments such as logistics, real estate, and software services — broadening the selloff beyond traditional “mega-cap” tech names.
Economic Data & Market Drivers
Jobs Report Influence
Investors entered the session digesting a recent strong jobs report, which reduced expectations for near-term Federal Reserve rate cuts. Solid labor data can complicate the Fed’s decision-making by bolstering confidence in the economy while also stoking inflation concerns — both of which can amplify market swings during earnings seasons.
CPI on the Horizon
Market participants also awaited forthcoming Consumer Price Index (CPI) inflation data, anticipating whether continued disinflation trends could ease monetary policy pressures. Futures trading hinted at modest declines ahead of the report, reflecting hesitancy in positioning amid the pending macroeconomic release.
Breadth & Sector Rotation
The selloff’s reach extended beyond tech, affecting a range of sectors including energy, materials, and small caps. Historically defensive sectors such as utilities, consumer staples, and real estate exhibited relative resilience as traders rotated into perceived lower-risk assets.
In contrast, stocks tied to logistics, data services, and niche software saw heightened selling pressure, highlighting investor wariness about AI’s potential to disrupt business models across traditional supply chains and services.
What Comes Next
With markets reeling from Thursday’s losses, attention has turned to Friday’s CPI release and the potential implications for Federal Reserve policy. A continued divergence between inflation expectations and economic growth metrics could keep markets choppy in the near term.
Market Outlook Considerations:
- Inflation data will be critical in shaping Fed expectations and rate-sensitive asset performance.
- Earnings reports from key sectors may either reinforce rotation themes or cement risk-off sentiment.
- Technology valuations remain under scrutiny, particularly for firms whose AI-related business prospects are in flux.
Investors and analysts alike are parsing data for clues on how markets will balance growth, innovation, and monetary policy risks in the weeks ahead.
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