Anthropic AI tool routs technology stocks in the US; NASDAQ closes 1.4% lower on Tuesday

After finishing near record-high levels on Monday, the US markets clawed back all the gains and closed sharply lower on Tuesday. The tech-heavy NASDAQ index fell 1.4% on Tuesday as investors rotated towards more cyclical stocks and away from highly valued chip stocks like Nvidia, Micron and AMD. The Dow Jones and S&P500 fell 0.3% and 0.8% on Tuesday.

Anthropic led rout in software stocks

On the stock-specific front, Anthropic launched a new AI tool to automate corporate and legal workflows. The new tool is expected to disrupt the traditional workflow automation by software companies. Following this, the software companies like Cognizant, Gartner, Accenture, and EPAM fell 10% to 25% on Tuesday. The ADRs of Infosys and Wipro also plunged up to 6% on Tuesday.

Geopolitcal tensions

On the geopolitical front, the US Navy shot down an Iranian drone in the Arabian Sea, increasing the risk of a faceoff between the two nations. The diplomatic stocks are scheduled to take place later this week. Following the development, the crude oil prices jumped over 1.5% on Tuesday. The Brent crude oil prices traded half a percent higher on Wednesday morning at $68 per barrel.

Gold and Silver

The gold prices climbed back above the $5000 mark in the global markets as geopolitical tensions continued to drive the safe-haven demand after a massive selloff over the weekend. Gold prices jumped from $4,650 per ounce to $5,000 per ounce on Tuesday, and the gains were extended on Wednesday morning as well.

In other news, PayPal dropped 19.7% after reporting weaker results for the latest quarter than analysts expected. It also named a new CEO after it said “the pace of change and execution” over the last two years “was not in line” with the board of directors' expectations.

Pfizer fell 3.5% even though it reported stronger profit for the latest quarter than analysts expected. The pharmaceutical company gave a forecasted range for profit in 2026 whose midpoint was below analysts' expectations.

The Walt Disney Co. slipped 0.6% after it said Josh D'Amaro, head of the company's parks business, will become its next CEO in March.

On the winning side of the market was PepsiCo, which rose 3.2% after the snack and beverage giant's profit and revenue for the latest quarter nudged past analysts' expectations. It also said it would cut prices this year on Lay's, Doritos and other snacks to try and win back inflation-weary customers.