US stocks open lower as Nasdaq falls 0.6% and tech selloff deepens

• The selloff centers on 'crowded trades' where excessive investor concentration in AI and semiconductor stocks has created vulnerability as earnings guidance turns cautious and capital spending concerns mount
• Higher bond yields are making it harder to justify elevated tech valuations, as future earnings are discounted more heavily when benchmark interest rates remain elevated
• Market divergence shows this is a targeted reassessment rather than broad economic pessimism, with defensive sectors holding up better while investors demand proof of profitability from high-growth narratives

Summary: US Stocks Open Lower as Tech Selloff Deepens

Market Performance (February 5, 2026 open):

• Nasdaq Composite fell 0.6%
• S&P 500 declined 0.46%
• Dow Jones Industrial Average dropped 240 points (0.4%)

Key Developments:

US equities opened Thursday under pressure as a tech-driven selloff intensified, marking a two-day retreat in high-growth stocks. The downturn centers on a "crowded trade" unwind, where excessive investor concentration in AI and large-cap technology names has created vulnerability.

Primary Catalysts:

Semiconductor and software stocks are leading losses as investors reassess extreme valuations following cautious earnings guidance and ballooning capital expenditure plans. Despite some companies beating earnings forecasts, the market has become "unforgiving," with traders questioning when AI spending will translate into tangible profits.

Market Rotation:

A pronounced "risk-off" sentiment is driving capital away from growth stocks toward defensive sectors including utilities, consumer staples, and healthcare. This represents a targeted reassessment rather than broader economic concern, as many non-tech S&P 500 components held steady.

Contributing Factors:

Higher bond yields and Federal Reserve policy uncertainty are pressuring long-duration growth stocks. Elevated yields increase discount rates on future earnings, disproportionately impacting technology valuations heavily weighted toward distant cash flows.

Outlook:

The critical question facing traders is whether this marks the beginning of a sustained tech de-rating or a temporary correction after an extended rally. The market is now demanding proof of profitability rather than funding narratives on speculation alone. Investor conviction will be tested as participants decide whether to buy the dip or maintain defensive positioning.