Everything flows, everything changes. Over the past three years, investors tended to view the AI glass as half full. They sought winners from the adoption of new technologies. In 2026, the glass is half empty. There is an active search for losers. If on Monday those were insurance brokers, on Tuesday wealth advisers, on Wednesday real estate intermediaries, then on Thursday everything was being sold. Even the previously successful Russell 2000 was hit. The S&P 500 posted its worst daily performance since November.

Dynamics of US Stock Indices

About a year ago, the DeepSeek episode knocked US equity prices down. Now OpenAI's claim that a Chinese rival is using complex and often unfair methods to extract results from leading American AI models became the trigger for the S&P 500's widespread sell-off. Even the Dow Jones Transportation Index, which had been outperforming everything, did not hold up.

Its outperformance versus the S&P 500 over the past six weeks is at record highs. The Transport index is extremely sensitive to the state of the US economy, since it moves goods both within the United States and beyond.

Dow Jones Transportation Average and S&P 500 Performance Spread

Thus, prior to the February 12 sell-off, the market had winners — representatives of the traditional economy — yet they were forced to fall off the cliff amid widespread panic. Investors shoot first and ask questions later. They are nervous about the consequences of AI implementation, both good and bad. At present, the market's attention is focused on destructive processes.

Traditional, economically-sensitive sectors are being sold on negative news. For example, the weakest existing home sales in 16 months became a catalyst for the Dow Jones and Russell 2000 declines. This occurred despite Treasury yields falling and the odds of a June federal funds rate cut rising.

Yesterday's leaders are suffering the most. The Magnificent Seven have not recovered from the sell-off, and Apple shares plunged by 5% — twice the decline of the Nasdaq Composite. The rationale for exiting the tech giant was a Federal Trade Commission letter suggesting the company's news project may violate the law. In addition, a Bloomberg inside report says an update for the Siri virtual assistant may be delayed.

Technically, a reversal Double Top pattern has been played out on the daily S&P 500 chart. The drop below fair value at 6,940 allowed traders to open short positions. A break below the support level of 6,820 would provide grounds to increase those positions. Target levels are 6,725 and 6,615.