U.S. Markets: What happened
- U.S. markets closed lower on Feb 5, extending the recent pullback.
- The Dow fell but held up better than growth-heavy indices, while the S&P 500 and Nasdaq saw sharper declines.
- Technology stocks remained at the center of the sell-off, and unlike the previous session, the tone felt more cautious.
- This was less of a pause and more of a continuation of the market reassessing risk.
What pulled markets down
• Tech and AI-linked stocks saw another round of selling as investors questioned how quickly heavy AI spending will translate into profits.
• Valuations in software and mega-cap tech looked stretched in a higher-rate environment.
• Bond yields stayed elevated, which reduced the appeal of long-duration growth stocks.
• The selling was concentrated, but persistent.
What kept things from getting worse
• Some defensive and value-oriented sectors held up relatively better.
• There was no major negative economic data to trigger panic selling.
• Liquidity conditions remained orderly, suggesting this was controlled risk reduction rather than forced selling.
What didn’t matter much
• Fed commentary stayed in the background, with no fresh policy signals driving moves.
• Commodities and currencies had limited influence on equity direction.
• Rate-cut speculation took a back seat to earnings and valuation concerns.
How to read this session
• This is a valuation reset, not a macro shock
• Investors are pulling back from crowded growth trades
• Markets are digesting AI optimism more realistically
• The tone is cautious, but not disorderly