When the government posted employment rose by 130,000 in January, stocks should have risen to new highs. Instead, questions emerged about the reliability of the data. More importantly, a strong job market would decrease the chances of the Federal Reserve cutting interest rates.
Banks pulled back. JPMorgan (JPM) held up well, while Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), and Bank of New York (BK) erased recent stock gains.
Several stocks are in a slow-motion crash.
The software application sector continued to drop heavily. The fears of an AI bubble subsided. Micron (MU) gained 9.9% on Wednesday. But Intuit (INTU) and ServiceNow (NOW) led the drop. The SaaS entered a slow-motion stock crash that began around a year ago.
AI chatbots evolved exponentially throughout every iteration in the last three years. Anthropic, for example, writes code without much effort. That would give rise to ordinary people and startups offering similar software solutions. Firms like Adobe Systems (ADBE), Salesforce (CRM), and SAP (SAP) might need to cut subscription rates to avoid losing their customers.
In the gaming industry, Unity (U) dropped by 26.32%. In the first quarter, revenue of $503 million is up by 10% Y/Y. However, in Q1, revenue of $480 million to $490 million is below expectations. Vector, its advertising platform, enjoyed the best growth rate in over two years. However, markets are worried that the AI in vector cannot compete effectively against Google’s AI.
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