US stock futures edged higher late Thursday, trying to steady the tape after a bruising selloff that didn’t stay contained to megacap tech. The market’s latest wobble is being framed around a familiar worry: the cost of “keeping up” in AI, and whether heavy spending is starting to squeeze margins in the very businesses investors once treated as safe, predictable growers.
Thursday’s session was a broad retreat. The S&P 500 slid nearly 1.6% and the Nasdaq fell about 2%, while the Dow dropped roughly 670 points. The notable detail wasn’t only the size of the move, but how quickly “AI volatility” bled into the rest of the market—software, transport, and even areas investors typically call defensive on choppy days.
A quick visual of the whiplash: a steep Thursday downdraft, followed by a modest late-session futures bounce into CPI.
A big driver was software guidance shock. Cisco’s sharp drop after its outlook helped revive a narrative that’s been building in pockets of the market: businesses may be forced to spend aggressively on new computing and security stacks just to stay relevant, and that spending doesn’t always translate into near-term revenue uplift. When that fear returns, it doesn’t just hit one stock—it pressures valuation multiples across the complex.
The other big lever is rates. As risk assets sold off, the bond market leaned toward caution: the 10-year Treasury yield slid to roughly 4.10% by the close, a notable step down into a major inflation print. Lower yields can help growth stocks on paper, but the backdrop matters. If the market is buying Treasuries because it’s nervous about earnings durability and payback periods on AI spend, that isn’t the same as a clean “risk-on” drop in yields.
That’s why today’s inflation release matters even more than the headline implies. The US Bureau of Labor Statistics publishes the January CPI at 8:30 a.m. ET (you can check the official schedule here). A hotter-than-expected number would likely revive the “higher for longer” rate debate and challenge the early bounce in futures. A cooler print can calm the tape, but it won’t automatically erase the market’s newer concern: whether AI spending is becoming an unavoidable tax on profits.
What investors are watching into the open is less about one stock and more about how the market is repricing the next 6–12 months. On Thursday, every member of the “Magnificent Seven” cohort finished red, a reminder that index leadership can reverse quickly when positioning is crowded and the narrative shifts from “growth optionality” to “capex and operating leverage.”
Still, not every AI-related move is pointing down. In extended trading, some earnings reactions leaned positive, highlighting how selective this tape can be when guidance is clean and the outlook feels defensible. That split—punishing uncertainty while rewarding clarity—may be the defining feature of the next few sessions as macro data and earnings collide.
For readers following the cross-market ripple effects, it’s worth comparing how risk-off days travel. Canada’s TSX has been dealing with its own pressure wave tied to global growth and tech sentiment; see our related coverage here: Canada Stock Market Live: TSX Slides Over 700 Points as Broad Selloff Accelerates. And if you’re tracking individual large-cap stress points in North America, you may also like: Shopify Stock Tumbles as Margin Pressure Takes Center Stage.
Into Friday’s session, the most practical question isn’t “Will futures hold green?” It’s whether CPI confirms a path that lets policymakers stay patient while markets digest a new corporate reality: AI is accelerating productivity for some, but it’s also accelerating competition and raising the cost of standing still. When that tension is in the air, even small surprises in inflation—and the rate path they imply—can swing indexes fast.
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