Market Pullback Driven by Technology Weakness and Credit Card Sector Pressure

The Tuesday session saw moderate declines across major US equity benchmarks as investors digested mixed signals from corporate innovation developments and regulatory commentary. The S&P 500 Index retreated -0.19%, while the Dow Jones Industrials experienced steeper losses at -0.80%. The Nasdaq 100 slipped -0.18%, with corresponding weakness in March futures contracts (ESH26 down -0.22%, NQH26 down -0.18%).

What Triggered the Selloff

Two distinct headwinds drove the broad-based retreat. First, the software sector contracted sharply following AI startup Anthropic’s announcement of expanded tool capabilities targeting enterprise workflows beyond code development. This sparked profit-taking across the entire software complex. Concurrently, card stocks came under renewed pressure—a second consecutive day of decline—after President Trump’s comments that credit-card lenders would violate legal standards if interest rates exceed 10% annually.

Software Sector Takes the Hit

The technology selloff was led by Salesforce (CRM), which plunged over -7% to become the day’s worst performer in both the S&P 500 and Dow Jones Industrials. Adobe (ADBE) declined more than -5%, while Intuit (INTU) dropped over -4%. Mid-tier software firms also retreated, with Workday (WDAY) and ServiceNow (NOW) each falling more than -3%, Autodesk (ADSK) sliding over -2%, and Microsoft (MSFT) declining over -1%.

Credit Card Companies Face Headwinds

The card stocks sector experienced its second consecutive day of weakness. Visa (V) fell over -4%, while Mastercard (MA) and JPMorgan Chase (JPM) both dropped more than -3%, reflecting concerns about potential regulatory constraints on lending margins.

Offsetting Positive Factors

The early morning weakness was partially offset by easing inflation pressures when December core consumer prices grew less than anticipated. This data point provided temporary support for Treasury markets. Additionally, energy equities gained traction as WTI crude oil surged over +2% to a 2.25-month peak, driven by geopolitical tensions. US tariff threats on Iran and disruptions to Caspian Pipeline Consortium loadings (reduced to approximately 900,000 bpd from normal levels) contributed to crude strength.

Broader Market Context

Lingering concerns about Federal Reserve independence weighed on sentiment, following Fed Chair Powell’s disclosure that the Justice Department threatened criminal charges related to his June testimony on Fed facility renovations—ostensibly retaliatory for the Fed’s resistance to lower interest rate calls.

Key Economic Data

US December CPI held steady at +2.7% year-over-year, matching expectations. Core CPI also remained flat from November at +2.6% year-over-year, coming in below the anticipated +2.7% increase. October new home sales declined marginally by -0.1% month-over-month to 737,000 units, beating the 715,000 forecast. St. Louis Federal Reserve President Alberto Musalem reinforced a hawkish tone, stating the US economy remains robust with above-potential growth, arguing accommodative Fed policy remains unnecessary.

This Week’s Economic Calendar

Wednesday brings November PPI data (expected +2.7% year-over-year for both headline and core), November retail sales figures (anticipated +0.5% month-over-month, +0.4% excluding autos), and December existing home sales (forecast +2.2% month-over-month to 4.22 million). The Supreme Court may also rule on tariff legality.

Thursday data includes weekly initial unemployment claims (expected +7,000 to 215,000) and the January Empire manufacturing survey (anticipated +4.9 to 1.0).

Friday rounds out the week with December manufacturing production (forecast -0.1% month-over-month) and the January NAHB housing market index (expected +1 to 40).

Interest Rate Markets

March 10-year T-note futures closed +4 ticks, with yields sliding -0.8 basis points to 4.167%. The earlier CPI miss provided support, while strong demand at Tuesday’s $22 billion 20-year auction (bid-to-cover ratio 2.42 versus 10-auction average of 2.36) added to gains. European government bond yields moved higher, with the German 10-year bund rising +0.7 bp to 2.847% and UK gilt yields climbing +2.5 bp to 4.398%.

Notable Individual Stock Movers

Beyond the software and card stock declines, several companies posted significant moves. Travere Therapeutics (TVTX) plummeted over -14% after reporting an FDA request for clinical benefit clarification on its rare kidney disease therapy. Super Micro Computer (SMCI) declined over -4% following Goldman Sachs’ sell initiation with a $26 price target. CRH Plc (CRH) fell over -3% after Wells Fargo downgraded to equal weight, while Synopsys (SNPS) dropped over -3% on a Piper Sandler downgrade to neutral. Chipotle (CMG) and Delta Air Lines (DAL) each declined over -2% on respective leadership and guidance developments.

On the upside, Moderna (MRNA) surged over +17% to lead vaccine makers higher following advocacy group plans to challenge recent childhood vaccination schedule revisions. Option Care Health (OPCH) jumped over +8% after TD Cowen praised 2026 EBITDA growth guidance. Semiconductor strength emerged with Intel (INTC) climbing over +7% on a KeyBanc upgrade to overweight, and Advanced Micro Devices (AMD) rising over +6% on similar positive coverage with $270 price target. Revvity (RVTY) gained over +6% on stronger-than-expected Q4 preliminary revenue, while Albemarle (ALB) advanced over +4% following a Deutsche Bank buy rating. Cardinal Health (CAH) increased +3% on upbeat EPS guidance, Huntington Ingalls Industries (HII) climbed over +3% on raised price targets, and Alphabet (GOOGL) edged higher following the multiyear AI partnership announcement with Apple.

Fed Rate Cut Expectations

Market pricing has compressed odds for a -25 basis point cut at the January 27-28 FOMC meeting to just 3%.

Earnings Season Outlook

Q4 bank earnings commence this week with reports from Bank of America (BAC), Citigroup ©, and Wells Fargo (WFC). According to Bloomberg Intelligence, S&P 500 earnings growth is projected at +8.4% for Q4, though excluding the Magnificent Seven megacap technology stocks, the gain narrows to +4.6%.

International Markets

Overseas bourses closed mixed. The Euro Stoxx 50 rallied to fresh record highs, finishing +0.22%. China’s Shanghai Composite retreated from 10.5-year peaks, closing -0.64%. Japan’s Nikkei 225 surged to all-time highs, closing sharply higher at +3.10%.