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

• The Dow Jones fell roughly 240 points (0.4%) as investors cut exposure to semiconductor and software names where AI-driven optimism had pushed valuations to extremes
• A risk-off rotation is underway, with outflows from growth stocks moving into safer sectors like utilities, healthcare, and consumer staples that offer steadier earnings
• Elevated bond yields are making it harder to justify lofty tech valuations, as future profits are discounted more heavily when benchmark interest rates remain high

Market Summary: Tech Selloff Drives US Equities Lower

Market Performance (February 5, 2026 Opening):

US stocks opened sharply lower Thursday, extending a two-day tech selloff. The Nasdaq Composite fell 0.6%, the S&P 500 declined 0.46%, and the Dow Jones Industrial Average dropped approximately 240 points (0.4%).

Key Market Theme:

A classic "crowded trades" shakeout is underway, with investors rapidly exiting positions concentrated in large-cap technology and AI-related stocks. Semiconductor and software companies, which had reached extreme valuations on AI optimism, are leading the downdraft. Concerns center on whether AI capital spending will translate into tangible profits quickly enough to justify elevated price levels.

Sector Rotation:

A pronounced "risk-off" sentiment is driving capital away from growth and momentum stocks into defensive sectors including utilities, consumer staples, and healthcare. This rotation reflects investor preference for steadier earnings streams less sensitive to interest rate fluctuations and hype cycles. The divergence within the S&P 500 suggests a targeted reassessment rather than broad economic pessimism.

Contributing Factors:

Higher bond yields and Federal Reserve policy uncertainty are compounding pressure on long-duration growth stocks. Elevated yields increase the discount rate applied to future earnings, disproportionately affecting technology valuations dependent on distant cash flows. Cautious earnings guidance and exploding capital-spending plans have made investors less willing to pay premium prices for future growth.

Market Outlook:

The critical question remains whether this represents a healthy reset after a strong rally or the beginning of a deeper tech de-rating. Traders are monitoring whether dip-buyers will re-enter crowded trades or if risk-off positioning will persist.