Markets slip as AI debate and consumer caution hit stocks. The S&P 500 fell 0.8% while technology names led declines. Short term, investors are focused on whether demand for AI infrastructure can hold through the next earnings cycle. Long term, the outcome will influence chip investment, cloud spending, and the business models of AI-first startups. Globally, moves in US megacaps will echo in European and Asian markets where hyperscalers and cloud customers operate. Compared with earlier tech selloffs, today was driven more by earnings jitters and a real-world retail slowdown than by macro shocks. The timing matters because Nvidia reports earnings tomorrow and Home Depot revised its sales outlook this week.
Market snapshot and what moved the tape
The S&P 500 closed down 0.8% on the session as investors pared exposure to high-beta names. Technology and growth shares led the decline. The Nasdaq felt the pressure hardest given the concentration of AI exposure in a handful of stocks. Volatility ticked higher as traders positioned for a major earnings report from Nvidia (NASDAQ:NVDA) due tomorrow.
Investors reassessed short-term earnings risk. Meanwhile, commentators noted that an individual stock swing in Nvidia could have outsized market impact. Nvidia represents roughly 10% of the Nasdaq 100 ETF. Historically, Nvidia’s one-day move around earnings has averaged about 7.9%, a magnitude that can alter index performance on a single day.
AI trade under stress and the Anthropic deal
Concerns about the sustainability of the AI investment cycle weighed on sentiment. Market players pointed to a growing web of intercompany investments and product buying among AI leaders. The worry is that circular financing and vendor-financed deals could amplify downside if revenue or margin assumptions falter.
Today saw deeper cooperation between Anthropic and cloud and chip providers. Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA) joined Anthropic in a pact that includes a combined investment and large commitments for compute capacity. The deal highlights how models, chips, and cloud capacity are being bundled together. In the short run, the partnership signals stronger enterprise demand and a race for capacity. In the long run, the arrangement could solidify cloud vendor lock-in and concentrate risk in a few suppliers.
Major AI customers such as Meta (NASDAQ:META), Oracle (NYSE:ORCL), Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), and Alphabet (NASDAQ:GOOGL) are central to the demand story. Each name has different exposure to AI compute and software spend. Analysts will watch not only capex plans but also whether hyperscalers revise their procurement cadence after large model rollouts.
Retail slowdown and housing weakness hit Home Depot
Home Depot (NYSE:HD) set off a separate wave of selling after it trimmed its full-year comparable sales outlook. The retailer posted a modest quarter where comp sales rose 0.2% versus expectations of about 1.3%. Management blamed weaker housing activity, a lack of seasonal storms, and softer consumer sentiment.
Home Depot’s chief executive described housing activity as historically low when measured as a percentage of housing stock. Zillow data cited by management showed 53% of US homes have declined in value since 2024, the largest share since 2012. Those trends reduce both discretionary renovation spending and the frequency of larger replacement projects.
Shares of Home Depot dropped about 6% on the announcement. The move underscores how regional housing conditions and weather patterns can quickly translate into retail earnings pressure. For investors, the Home Depot report highlights the degree to which the consumer recovery is uneven across geographies and income cohorts.
Operational hiccups, regulation, and fintech developments
Operational incidents also had market impact. Cloudflare (NYSE:NET) said a configuration file that became too large caused an hours-long global outage earlier in the day. The incident knocked several major websites offline and served as a reminder that cloud and edge stability remain critical to online commerce and communications.
In regulatory news, a federal judge found that Meta (NASDAQ:META) did not violate antitrust laws in its acquisitions of Instagram and WhatsApp. The decision removes a major overhang for Meta but does not fully close the book on regulatory scrutiny for large tech acquisitions.
On the fintech front, Klarna reported revenue growth of about 26% in its most recent quarter as buy-now-pay-later products gained traction. And Intuit (NASDAQ:INTU) disclosed a partnership with OpenAI to explore integrations of TurboTax and QuickBooks into conversational interfaces. The deal indicates accelerating interest in embedding AI assistants into tax and accounting workflows.
In the gaming sector, DraftKings (NASDAQ:DKNG) and its competitors diverged from the American Gaming Association over prediction markets. The split highlights how product innovation can create rifts between newer operators and established casino giants such as MGM (NYSE:MGM) and Caesars (NASDAQ:CZR).
What traders will watch next
All eyes turn to Nvidia’s earnings report tomorrow. The results and guidance will shape investor views on the sustainability of AI hardware demand. Traders will parse chip shipment data, revenue mix between data center and gaming, and commentary on supply constraints or customer financing arrangements.
Beyond earnings, watch corporate guidance and capex plans from hyperscalers and large enterprise customers. Housing reports and regional weather patterns will continue to influence retail chains and building materials suppliers. Finally, operational resilience in cloud services and the legal environment for large tech transactions will remain themes for market participants.
The session showed how a few events can set the tone across sectors. Short-term moves reflected earnings timing and headline risk. In the longer term, outcomes around AI infrastructure and the consumer backdrop will inform capital spending and valuation norms for the next several quarters.
