TheDrop Market Analysis, 02/03/26

Markets fell significantly as many stocks seek correction from the several short highs from yesterday, in addition to some skepticism over the future vitality of many top tech/AI tickers.

U.S. Capitol Building.

The S&P 500 fell by 0.8%, slightly less than that of the much smaller dip experienced by the Dow Jones Industrial Average, which fell by a marginal 0.3%. Meanwhile, the Nasdaq Composite actually underperformed the rest of the market - which it rarely does in the current day and age - falling 1.4%, far exceeding that of other sectors of the economy. Even more shockingly, the small-cap heavy Russell 2000 index rose 0.3% as smaller companies proved strong with investors through earnings and disassociation with the broader pessimism toward bloated stock valuations.

Tech weakness was prominent, with major tech companies Nvidia, Microsoft, Google, Amazon, and others all falling, with deeper losses in Salesforce, Datalog, and Adobe contributing to the Nasdaq Composite's overall pushback. Though, Big Tech player Palantir surged past 6% during the day as its earnings report proved to be very strong, providing many investors with some hope that AI demand may exceed that of investment.

One of the biggest losers today was PayPal, which plummeted by almost 20% as investors saw its newly adjusted profit guidance to be far too weak compared to expectations

Markets did ripple as Elon Musk announced that he would be arranging a massive merger between his artificial intelligence firm xAI and his space technology company SpaceX, with the expectation of allowing for a public offering, or IPO, later this year along with deeply integrating AI with satellite internet, social platforms, and space launch systems, according to The Guardian.