Markets tumble as tech leadership falters amid AI profitability questions

Tech Leaders Retreat on AI Concerns

The S&P 500 declined on Monday as tech shares tumbled, with the broad market index falling 0.37% to 7,472.79. Shares of Alphabet dropped 5%, spurred by concerns around artificial intelligence talent departures, while Amazon and Meta Platforms lost 4.8% and 2.3%, respectively. The Nasdaq Composite declined 1.32% to end at 26,166.60.

Communication Sector Under Pressure

Communication services stocks are on track to record their biggest one-day slide since President Donald Trump's tariff policy rollout roiled markets in April 2025, with the S&P 500 sector falling almost 4% in Monday afternoon trading and on pace to be the worst-performing sector of the 11 that comprise the broad index. Alphabet led the sector down with a drop of more than 5% and Fox also saw a decline of more than 5%.

Offsetting Gains in Defensive Names

The Dow Jones Industrial Average added 148.01 points, or 0.29%, led by a nearly 4% gain in Caterpillar. Warner Bros. Discovery and AT&T mitigated some losses for the group, as the stocks rose almost 3% and 1%, respectively. Goldman Sachs reinstated Estee Lauder with a buy rating, noting new changes will bolster its recent growth.

Geopolitical and Monetary Cross-Currents

Wall Street assessed the latest developments in the Iran war negotiations and awaited the release of inflation data closely watched by the Federal Reserve. Sterling dipped against the dollar, while gilt yields were largely unchanged on Monday morning in London after Prime Minister Keir Starmer announced his resignation, with the pound last seen 0.19% lower against the dollar, trading at $1.3207, and the yield on 10-year U.K. government bonds known as Gilts flat at 4.8452%.