US futures steady as tech rout deepens, AI fears weigh on software stocks

• ServiceNow and Salesforce each dropped nearly 7%, contributing to a five-day losing streak for software stocks amid fears about competition and pricing power in an AI-driven market
• Advanced Micro Devices fell 9% after disappointing Q1 guidance, while Super Micro Computer surged over 10% on raised annual revenue outlook driven by AI server demand
• ADP private payroll data for January is expected to show 45,000 job additions, with official labor indicators delayed by a partial government shutdown

Market Summary: Tech Selloff Deepens Amid AI Concerns

Key Market Movements

US stock index futures showed modest gains Wednesday morning following a sharp technology sector selloff. S&P 500 futures rose 0.26%, Dow futures gained 173 points (0.35%), while Nasdaq 100 futures remained flat. The previous session saw the S&P 500 fall 0.8%, Nasdaq 100 decline 1.4%, and the Dow drop 167 points (0.3%).

Technology Sector Under Pressure

Software stocks experienced severe losses, with the software and services index falling for a fifth consecutive session—down over 12% during this stretch, marking the steepest decline since March 2020. ServiceNow and Salesforce each plunged nearly 7%, while private credit firms Blue Owl and TPG with software exposure also declined. AI-related concerns about competition and pricing power drove investor rotation from growth stocks to cyclical names.

Corporate Earnings Highlights

Chipotle Mexican Grill dropped 12% after missing revenue expectations and announcing planned menu price increases amid margin pressure and reduced consumer dining spending.

Advanced Micro Devices (AMD) fell 9% on disappointing first-quarter revenue guidance, raising doubts about its AI chip market competitiveness.

Super Micro Computer surged over 10% after raising annual revenue outlook on strong AI server demand.

Alphabet and Amazon edged higher ahead of earnings reports, with Alphabet scheduled to report Wednesday after market close.

Market Outlook

Investors await the ADP private payroll report Wednesday, with economists expecting 45,000 January job additions versus 41,000 in December. Small and mid-cap stocks (Russell 2000, S&P 400) showed relative strength, outperforming large-caps as investors seek value outside technology. The CBOE Volatility Index remained elevated at 17.61, indicating continued market uncertainty.