Fears of a software apocalypse are pummeling markets again to start the week.
US stocks dropped on Monday as traders reacted to new tariff uncertainty, while software in particular was pummeled by renewed fears of AI disruption prompted by a downgrade of Salesforce stock and a note making the rounds that theorized the AI boom could ultimately lead to a white-collar recession and a stock crash.
Major indexes lost more than 1% as investors continued to digest recent trade policy changes, including President Donald Trump’s announcement over the weekend that he would hike global tariffs to 15%. The announcement came a day after the Supreme Court knocked down most of his earlier tariffs.
The Dow lost more than 800 points as selling ramped up around midday.
Here’s where US indexes stood around 3:30pm ET on Monday:
“Tariff uncertainty reigned this morning, pushing stocks to early losses and raising volatility on Wall Street,” Joe Mazzola, the head trading and derivatives strategist at Charles Schwab, wrote in a note on Monday.
Investors also turned a more critical eye toward the software sector. The iShares Expanded Tech-Software Sector ETF, which tumbled into a bear market earlier this year, was down another 5%. The fund is now down nearly 30% in 2026.
Here were some of the notable moves on Monday:
Chatter about an AI-fueled meltdown picked up on Monday after the firm Citrini Research published a report outlining a hypothetical 2028 scenario in which the AI boom could trigger a recession and a stock market crash in the next couple of years.
“The system turned out to be one long daisy chain of correlated bets on white-collar productivity growth,” the note said. “The November 2027 crash only served to accelerate all of the negative feedback loops already in place.”
The fresh AI jitters also brought capex spending back into the spotlight, with investors awaiting a key update this week in the form of Nvidia’s coming earnings report due out on Wednesday.
“I think it’s really just an AI story at this point for the market,” Peter Berezin, the chief market strategist at BCA Research, told Business Insider, referring to concerns about large capex spending despite unclear monetization plans at some firms. “It’s a question of whether investors are going to revolt against all the massive spending on AI data centers that we’re having now.”
Mark Hackett, the chief markets strategist at Nationwide, attributed much of the volatility to “continued skepticism” over AI and fresh tariff uncertainty.
“Hedge funds have aggressively moved to the sidelines, with net sales of US equities at the fastest pace since last March this month, and net leverage tracking to be the second largest sharpest monthly decline in a decade,” he wrote in a note on Tuesday.
Investors will likely turn their attention to key tech earnings this week, with Nvidia and Salesforce reporting their results on Wednesday, Schwab’s Mazzola said.
