US Tech Stocks Slide Sharply as Growth Fears and Labor Weakness Trigger Market Retreat

The technology sector led a broad market selloff in early February as US tech stocks came under sustained pressure from multiple headwinds. The S&P 500 Index dropped 1.30%, the Dow Jones Industrials fell 1.25%, and the Nasdaq 100 declined 1.49%, marking the deepest losses in several weeks. March futures on the S&P 500 (ESH26) slid 1.29%, while Nasdaq futures (NQH26) fell 1.44% as sellers dominated trading floors. The broader retreat pushed the S&P 500 to a 1.5-month low and sent the Nasdaq 100 tumbling to a 2.5-month low, signaling growing investor concern about the technology sector’s trajectory.

Technology Giants Lead the Selloff

The pullback in US tech stocks intensified as major semiconductor and software companies reported disappointing forward guidance. Qualcomm emerged as the day’s biggest loser among chip makers, plunging more than 8% after providing Q2 revenue guidance between $10.2 billion and $11.0 billion—below Wall Street’s consensus forecast of $11.18 billion. The weakness in Qualcomm triggered a cascade of selling across the semiconductor space, with Marvell Technology down 3%, Advanced Micro Devices, NXP Semiconductors, and Western Digital all declining more than 2%. Smaller chip stocks including Micron Technology, Intel, and Microchip Technology fell more than 1% each.

Beyond semiconductors, the “Magnificent Seven” mega-cap technology stocks bore the brunt of profit-taking. Alphabet declined more than 4% after announcing full-year 2026 capital expenditure guidance of $175 billion to $185 billion—substantially above the consensus expectation of $119.5 billion. Multiple analysts flagged concerns that elevated capex spending could pressure the company’s free cash flow generation. Amazon tumbled more than 4%, while Microsoft and Tesla each lost more than 3%. Nvidia dipped 0.71%, Apple fell 0.69%, and Meta Platforms declined 0.50% as the tech-heavy index succumbed to selling pressure.

Labor Market Signals Raise Recession Concerns

The acceleration of losses in US tech stocks coincided with deteriorating labor market data that heightened economic anxiety. Challenger job cuts surged 117.8% year-over-year in January to 108,435—the largest January reduction since 2009. Simultaneously, weekly initial unemployment claims jumped by 22,000 to 231,000, marking an 8-week high and exceeding economist expectations of 212,000. Perhaps most concerning, the December Job Openings and Labor Turnover Survey (JOLTS) revealed that job openings fell unexpectedly by 386,000 to 6.542 million—a 5.25-year low compared to forecasts predicting an increase to 7.250 million.

These employment figures painted a picture of a labor market losing momentum at precisely the moment when growth concerns were already weighing on technology valuations. Federal Reserve Governor Lisa Cook acknowledged the challenging backdrop, stating that she supported the Fed’s decision to hold interest rates steady at the previous meeting because she now observes “risks as tilted toward higher inflation.” Cook emphasized the importance of maintaining credibility: “After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future.”

Cryptocurrency and Risk Assets Under Pressure

The weakness extended beyond traditional equity markets into digital assets, where Bitcoin declined more than 7% to a 1.25-year low amid negative momentum throughout the cryptocurrency complex. Bitcoin has surrendered approximately 45% of its gains since reaching its October record high. Notably, inflows into US spot Bitcoin exchange-traded funds have reversed sharply, with approximately $2 billion flowing out of Bitcoin ETFs over the preceding month alone and more than $5 billion withdrawn over the past three months, according to Bloomberg data.

The cryptocurrency downturn dragged down publicly-traded companies with substantial digital asset exposure. MicroStrategy plunged more than 12%, leading losses in the Nasdaq 100, followed by Marathon Digital Holdings down more than 10%. Coinbase Global declined more than 8%, while Galaxy Digital Holdings and Riot Platforms each fell more than 5%.

Individual Stock Performance Reflects Divergent Fortunes

While US tech stocks dominated headlines, earnings season revealed sharp performance bifurcation within broader markets. On the negative side, Fluence Energy plummeted 24% after reporting a Q1 adjusted EBITDA loss of $52.1 million versus consensus expectations of $27.1 million. Estee Lauder became the S&P 500’s largest decliner, dropping 21% following full-year adjusted EPS guidance of $2.05 to $2.25 with a midpoint below consensus of $2.17. IQVIA Holdings slid 8% on guidance for 2026 adjusted EPS of $12.55 to $12.85, trailing the consensus of $12.96. Ares Management and Cummins Inc each fell more than 7% after disappointing earnings results.

Conversely, earnings beats powered select gainers across the market. McKesson Corporation surged 16% to lead S&P 500 gainers after reporting Q3 adjusted EPS of $9.34 (above the consensus of $9.27) and raising full-year adjusted EPS guidance to $38.80 to $39.20. Corpay rallied 11% following better-than-expected Q4 revenue of $1.25 billion. Align Technology jumped 10% on Q4 adjusted EPS of $3.29 versus consensus of $2.97. Hershey climbed 7% after delivering Q4 adjusted EPS of $1.71 (beating $1.40 consensus) and raising full-year guidance to $8.20 to $8.52, well above the $7.07 consensus.

Global Markets and Interest Rate Dynamics

The US market downturn reverberated across global equity benchmarks. The Euro Stoxx 50 declined 1.19%, China’s Shanghai Composite fell 0.64%, and Japan’s Nikkei Stock 225 dropped 0.88%, indicating synchronized weakness across major developed and emerging economies.

Bond markets, meanwhile, rallied as investors sought safe-haven assets amid recession concerns. March 10-year Treasury notes (ZNH26) advanced 16 ticks, with the 10-year yield declining 6.2 basis points to 4.212%. T-notes rallied to a 2.5-week high as the 10-year yield fell to a 1-week low of 4.208%. The combination of soft labor market data and moderating inflation expectations supported the Treasury rally, as the 10-year breakeven inflation rate slipped to a 1-week low of 2.318%.

European sovereigns followed suit. The 10-year German bund yield fell 1.2 basis points to 2.848%, while the 10-year UK gilt yield declined 0.8 basis points to 4.538% from a recent 2.5-month high of 4.597%. Economic data from the Eurozone painted a mixed picture: December retail sales contracted 0.8% month-over-month (weaker than the -0.4% consensus and the largest decline in 2.25 years), while German December factory orders unexpectedly rose 7.8% month-over-month (exceeding the -2.2% expected decline and marking the strongest increase in two years).

Central banks held pat in their policy decisions. The European Central Bank maintained its deposit facility rate at 2.00%, commenting that “the economy remains resilient in a challenging global environment” despite ongoing trade policy and geopolitical uncertainties. The Bank of England voted 5-4 to hold its policy rate steady at 3.75%. BOE Governor Bailey noted that upside inflation risks have diminished, suggesting scope for further rate cuts should economic and inflation developments proceed as expected.

Looking Ahead: Earnings and Economic Data

The market’s focus this week remains on earnings season, which entered full swing with 150 S&P 500 companies scheduled to report results. So far, 81% of the 237 companies that have already reported have beaten expectations—a positive sign for the full earnings cycle. According to Bloomberg Intelligence, S&P 500 earnings growth is expected to expand 8.4% in Q4, marking the tenth consecutive quarter of year-over-year expansion. However, when excluding the Magnificent Seven mega-cap technology stocks, earnings growth moderates to 4.6%, highlighting the concentration of profit growth at the largest tech companies.

Economic data releases this week will provide additional clues about consumer sentiment and labor market direction. The University of Michigan’s January consumer sentiment index is expected to decline by 1.4 points to 55.0. Fed futures are currently discounting a 25% probability of a 25 basis point rate cut at the next policy meeting scheduled for March 17-18, suggesting that markets expect the Fed to maintain its current stance barring significant economic deterioration.

The performance of US tech stocks in coming sessions will likely remain correlated with both labor market conditions and the trajectory of corporate earnings estimates. The interplay between growth concerns, valuation pressures, and central bank policy will continue to shape investor positioning heading into spring.