U.S. stock futures were little changed Monday evening as Wall Street attempted to stabilize after two straight weekly declines in the S&P 500. With the New York Stock Exchange closed for Presidents’ Day, futures tied to the broad index rose 0.1%, Dow Jones Industrial Average futures gained roughly 76 points, or 0.2%, while Nasdaq 100 futures slipped 0.2%. The muted moves reflect a market searching for direction after a period of heightened volatility driven by artificial intelligence-related disruption fears.

AI Disruption Anxiety Weighs on Market Sentiment

The S&P 500 and Dow each fell more than 1% last week, while the Nasdaq Composite dropped over 2%, marking its fifth consecutive weekly decline — the longest losing streak since 2022. The weakness has not been confined to technology stocks. Instead, concerns about AI’s broader economic impact have spread to industries such as commercial real estate, wealth management, and transportation.

Daniel Skelly, head of Morgan Stanley’s wealth management market research team, described the current environment as a “bull market in disruption hysteria.” With the S&P 500 now roughly flat for the year, momentum has clearly cooled. Investors appear increasingly focused on whether AI adoption will meaningfully compress margins or reshape labor dynamics in sectors previously viewed as defensive.

Notably, the equal-weighted S&P 500 has shown relative resilience compared with mega-cap technology names, suggesting capital rotation rather than wholesale risk aversion. However, persistent pressure on growth-heavy indexes indicates a recalibration of expectations surrounding AI’s near-term payoff.

Inflation Data and Federal Reserve Signals in Focus

Macroeconomic data provided mixed signals. Friday’s consumer price index (CPI) reading came in slightly softer than expected for January, temporarily easing concerns of reaccelerating inflation. Yet markets remain cautious.

This week’s Federal Reserve meeting minutes, due Wednesday, will offer deeper insight into policymakers’ rate outlook. More critically, Friday’s personal consumption expenditures (PCE) report — the Fed’s preferred inflation gauge — could shape expectations for the timing of potential rate cuts.

Although rate-sensitive sectors have responded positively to lower Treasury yields in recent sessions, investors remain hesitant to reprice aggressive easing. Any upside surprise in PCE could reinforce the view that the Fed will maintain restrictive policy longer than anticipated, limiting equity upside in the short term.

Earnings Season Enters a Key Phase

Corporate results may provide a counterbalance to macro uncertainty. Palo Alto Networks is set to report Tuesday after the bell, followed later in the week by DoorDash, Walmart, and Wayfair. These earnings will offer insight into consumer resilience and enterprise technology spending — two pillars underpinning current valuation levels.

Market participants are particularly sensitive to forward guidance, as stretched multiples leave little room for disappointment. With volatility elevated and liquidity thinner following the holiday, reactions to earnings could be amplified.

Looking ahead, the broader question remains whether AI-driven productivity gains will ultimately justify current valuations or whether the market’s recent retrenchment signals a more prolonged consolidation phase. For now, equities appear caught between resilient corporate fundamentals and intensifying concerns over structural disruption.