Dow closes more than 350 points higher as software stocks bounce back from AI disruption sell-off: Live updates

The three major averages finished higher on Tuesday.

The S&P 500 rose 0.77% to 6,890.07, while the Nasdaq Composite jumped 1.04% to finish at 22,863.68. The Dow Jones Industrial Average climbed 370.44 points, or 0.76%, to 49,174.50.

— Sean Conlon

Eli Lilly is outpacing its competitors in the race to become the top GLP-1 provider, says Deutsche Bank.

The bank reiterated a buy rating and price target of $1,285, implying a 21% upside from Monday's close.

The bank's bullish thesis comes after Novo Nordisk's weight loss drug underperformed Eli Lilly's. Compared to users of Eli Lilly's tirzepatide, which saw 25.5% weight loss after 84 weeks of treatment, users of Novo Nordisk's CagriSema only saw 23% weight loss in the same period.

After the news, "it's now more clear the Diabesity market is likely to coalesce around [Eli Lilly's] portfolio," wrote analyst James Shin.

Eli Lilly and Novo Nordisk were down 1% and 2%, respectively, in Tuesday afternoon trading.

— Itzel Franco

Jefferies analyst Brent Thill cautioned against putting too much stock on Monday's IBM selloff.

IBM shares fell more than 13%, marking their worst day since 2000. Investors worried that artificial intelligence startup Anthropic posed a programming language threat, though Thill said IBM's mainframe is more resilient than many expect.

"We view the sell-off as a near-term sentiment overhang on legacy services rather than an existential or structural risk," Thill said in a Monday note to clients.

— Alex Harring

Trump will announce at the State of the Union this evening a pledge from the top technology companies to pay higher electricity prices in communities where they are building new data centers, a White House official confirmed.

Microsoft promised in January that households won't pay more for electricity due to the company's data centers. The pledge came hours after Trump said he was working with Microsoft to ensure utility bills don't increase due to the artificial intelligence boom.

Peter Navarro, Trump's trade and manufacturing advisor, said earlier this month that the White House will force tech companies to "internalize the cost" of data centers.

Electricity prices are increasing in many regions of the U.S. as the grid faces high demand and tight supply. Data centers are facing growing political blowback as people blame them for higher utility bills.

The Wall Street Journal first reported Trump's plan to announced the tech sector pledge.

— Spencer Kimball

The U.S. labor market showed some signs of improvement in the early part of February, according to payrolls processing firm ADP.

Private payrolls increased by 12,750 for the week ended Feb. 7, the fourth consecutive improvement over the period week. The total was the best one-week gain since Nov. 29, 2025.

ADP notes that the numbers are preliminary and could change, but appear to provide momentum for the February nonfarm payrolls total. The Bureau of Labor Statistics uses the week entailing the 12th day of the month for its payroll sample.

— Jeff Cox

Investor Bill Gross said an "elite" group of stocks are facing difficulties and that market participants should instead be content with seeing smaller gains in other names.

Gross listed Oracle, Microsoft and IBM as part of a cohort that's being "cut quickly" in an X post on Tuesday.

"Maybe it's not a single elimination game but it feels like it," wrote Gross, the co-founder of PIMCO. "I'm staying away."

Gross said traders should instead "be satisfied with single digit returns," pointing to Western Midstream Partners, Verizon Communications and AT&T.

— Alex Harring

JPMorgan in an update to investors Monday didn't provide many new details about the company's outlook, but what was said only added to the bullish case for analysts.

Wells Fargo in a note reacting to the event said, "Goliath is still winning." Analyst Mike Mayo pointed to the bank's push to increase market share, even if it means hitting margins, and further investments in tech spending to serve customers more efficiently as healthy signals.

Morgan Stanley analyst Manan Gosalia in a Tuesday note also singled out the tech spending. "Given the scale and scope of these investments, and JPM's large dataset across its businesses, there is room for benefits to compound on both the revenue and expense side through the organization," Gosalia wrote. "We believe JPM and other large banks will be net beneficiaries of AI."

Gosalia also viewed guidance on investment banking fees and markets revenues as positive and hiked earnings forecasts for the current quarter and the year. Bank of America analyst Ebrahim Poonawala did the same. "Our management conversations during BofA's annual financial services conference indicated that significant underlying strength is driving continued momentum in investment banking and trading activity," Poonawala wrote.

— Davis Giangiulio

Check out the companies making headlines in midday trading:

• Dillard's — Shares fell 7% after the department store posted weaker-than-expected revenue in the holiday quarter. Fourth-quarter revenue came in at $1.99 billion, while analysts polled by FactSet anticipated $2.03 billion. Dillard's cited winter storms as a driver behind its sales results, which it says hurt more than a third of its stores.
• Planet Fitness — Shares fell 8% after the fitness chain offered weak guidance. Planet Fitness said to expect between around 9% and 10% in full-year adjusted earnings per share growth, while analysts polled by FactSet anticipated a rate of 16.5%. The New Hampshire-based company said revenue growth should come in at 9%, while Wall Street anticipated 11.1%.
• Novo Nordisk — Shares of the obesity drugmaker fell 2% after it said it would slash monthly list prices for Wegovy and Ozempic by as much as 50%, starting in 2027. With the latest pullback, Novo Nordisk shares are down almost 24% year to date.

Read here for the full list of names.

— Sarah Min, Christina Cheddar Berk

Megacap tech stocks broadly advanced on Tuesday, but there was one key exception: Alphabet.

Shares of the Google parent sat modestly below the flatline in midday trading. Meanwhile, the Roundhill Magnificent Seven ETF (MAGS) climbed 1% in the session.

Apple and Amazon led the Magnificent 7 higher with gains of around 2.3% and 2.1%, respectively.

— Alex Harring

Technology stocks regained ground on Tuesday as Anthropic's closely followed event didn't shake up the sector as much as Wall Street worried it could.

Software stocks climbed, with Salesforce and ServiceNow adding more than 4% and 2%, respectively. Zscaler and Cloudflare were among cybersecurity stocks rebounding after a sharp Monday selloff.

The iShares Expanded Tech-Software Sector ETF (IGV) rose more than 1% in Tuesday's midday trading after tumbling close to 5% in the prior session. The Nasdaq Composite climbed nearly 1% in the session but was still down on the week.

"We believe the notion that Anthropic is looking to enhance the capabilities of most software tools rather than disrupt came as a positive for our names," a team at Piper Sandler led by Billy Fitzsimmons and Rob Owens wrote in a note to clients.

Anthropic positioned the Claude product as an "orchestration layer" for businesses rather than a replacement for other tools at Tuesday's event, according to the Piper Sandler team. Announcements made at the Tuesday gathering ended up "not being as bad as feared" for the app layer, the note added.

— Alex Harring

Domino's Pizza has room to run as its deals-oriented business continues to be popular with cash-strapped consumers, according to JPMorgan.

The investment firm upgraded the stock to overweight from neutral. It also has a $450 price target on shares, suggesting 11% upside from Monday's close.

"Domino's steady share-taking value-driven business model again screens well to buy at the current ~$400 level," JPMorgan analysts said in a recent note to clients. "Capex has already been guided in F27 and brand permanence/resilience simply too good a value to express anything other than Overweight."

The analyst's added that Domino's low-fixed cost operating model is a big part of its winning strategy, supported by roughly 44% carryout sales and a leading fast-to-home delivery model that is unlikely to be undercut from a cost, quality and execution perspective.

They added that Domino's is also continuing to expand in China and India, which should support its top and bottom-line growth.

— Liz Napolitano

The outlook brightened for consumers in February on a slightly better outlook for the labor market, the Conference Board reported Tuesday.

The board's headline consumer confidence index rose to 91.2, up 2.2 points from the upwardly revised January level and better than the Dow Jones consensus estimate for 86.8. The Present Situation index moved lower though the expectations index improved.

On the labor market, the difference between the jobs "plentiful" and "hard to get" expanded, a positive indicator.

"Consumers' write-in responses on factors affecting the economy continued to skew towards pessimism," said Dana Peterson, the board's chief economist. "Comments about prices, inflation, and the cost of goods remained at the top of consumer's minds. Mentions of trade and politics also increased in February. Labor market mentions eased a bit in February, while observations about immigration increased somewhat."

— Jeff Cox

While the economy continues to perform well, economic "tail risks" have risen to 30% from 10%, according to a daily note by Apollo Global Management chief economist Torsten Slok. "The risk of a sudden shift in investor sentiment is rising," he said.

"What could suddenly change the current situation? It could be geopolitics, government debt levels or a rapid rise or fall in interest rates," Slok wrote. "Predicting the future path of AI adoption and productivity is particularly challenging."

The risk of a recession will grow if artificial intelligence fails to meet expectations, especially since AI continues to expand as a proportion of GDP growth, the economist added.

The labor market is another risk. "If AI were to trigger a sharp rise in unemployment, it could also have a disruptive impact on the economy and financial markets," Slok said.

— Scott Schnipper

Federal Reserve Governor Lisa Cook said Tuesday that artificial intelligence could cause an increase in unemployment that monetary policy can't help.

In a speech before the National Association for Business Economics, the central banker spoke of "new opportunities for AI while cautioning about challenges.

"if AI continues to raise productivity, economic growth could remain strong, even as churn in the labor market leads to an increase in unemployment," she said. "In a productivity boom such as this, a rise in unemployment may not indicate increased slack. As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure."

In that case, Cook said "education, workforce, and other policy that is nonmonetary" may be better-suited to address the issue than Fed rate cuts.

— Jeff Cox

The S&P 500 began Tuesday's session little changed.

The broad market index traded down 0.1% shortly after the opening bell. The Nasdaq Composite also traded just below the flatline, while the Dow Jones Industrial Average added 29 points, or 0.1%.

— Sean Conlon

Check out the companies making headlines before the bell:

• Advanced Micro Devices — The semiconductor maker rose about 11% after it inked a multiyear deal with Meta to lend up to 6 gigawatts of its graphics processing units to artificial intelligence data centers. The cost of the deal is unclear, but the companies' agreement includes a a performance-based warrant that could amount to up to 160 million of AMD shares, according to a statement dated Tuesday.
• Home Depot — The home improvement retailer gained 2.7% after posting fourth-quarter adjusted earnings of $2.72 per share on revenues of $38.20 billion. That exceeded the per-share earnings of $2.54 on revenues of $38.12 billion expected by analysts polled by LSEG.
• Hims & Hers Health — Shares dropped nearly 7% after the online health platform posted disappointing guidance. Hims & Hers Health forecasts first-quarter revenue in the range of $600 million to $625 million, far below the $653 million expected by analysts surveyed by FactSet. First-quarter adjusted EBITDA is expected to come in the range of $35 million to $55 million, below the $82M StreetAccount estimate.

Read the full list here.

— Sarah Min

Deutsche Bank sees shares of Blue Owl Capital stagnating from here, citing slower fee-related earnings growth, as the private credit poster child's struggles continue.

Analyst Brian Bedell downgraded the stock to hold from buy. He also slashed his price target to $10 from $15, which implies downside of 4%.

Shares of Blue Owl have plunged 52% over the past 12 months and 30% this year alone, swept up in an overall private credit sell-off amid fears that the sector could be cracking because of their exposure to software industry loans just as Wall Street tries to open the market up to retail investors. The stock also sank after it permanently restricted withdrawals from one of its retail-focused debt funds amid plans to wind down the portfolio.

Blue Owl stock lost 2% on Tuesday morning.

CNBC Pro subscribers can read more here.

— Lisa Kailai Han

Chicago Federal Reserve President Austan Goolsbee said Tuesday he doesn't think the central bank should be cutting interest rates further with inflation this high.

"People express that prices are one of their most pressing concerns. Let's pay attention. Before we cut rates more to stimulate the economy, let's be sure inflation is heading back to 2%," he said in remarks before the National Association for Business Economics.

Goolsbee is a voter this year on the rate-setting Federal Open Market Committee.

— Jeff Cox

Advanced Micro Devices has inked a multi-year deal with Meta to lend up to 6 gigawatts of its graphics processing units to artificial intelligence data centers.

Meta's investment in AMD includes a performance-based warrant that could amount to up to 160 million of AMD shares, according to the companies' joint statement dated Tuesday. The allocation is structured to vest as specific milestones associated with Instinct GPU shipments are hit.

The firms' agreement also includes the use of AI-optimized central processing units, or CPUs. Early shipments of MI450 GPUs in AMD's Helios rack-scale servers will begin later this year.

The cost of the deal remains unclear as of writing time. However, Meta said in an earnings report last month that it planned to commit up to $135 billion in capital expenditures this year — a bid to stay competitive with megacap peers, in addition to OpenAI and Anthropic, in the global AI race.

— Liz Napolitano

Home Depot posted better-than-expected results for the fourth quarter, sending shares up nearly 4%. The company earned $2.72 per share on revenue of $38.2 billion. Analysts polled by LSEG expected a profit of $2.54 per share on revenue of $38.12 billion.

The home improvement retailer also kept its current fiscal year forecast.

— Fred Imbert

President Donald Trump announced over the weekend that a new, blanket 15% global levy would be applied to imports to the U.S. with immediate effect. The president initially announced plans to impose a 10% duty on global imports, before saying that the rate would rise "to the fully allowed, and legally tested, 15% level."

However, when the levy came into effect on Tuesday, it was at a rate of 10%. A customs notice from U.S. Customs and Border Protection, published Monday evening, said Temporary Section 122 Duties would see "an additional 10% ad valorem duty on imported articles of every country for a period of 150 days, unless specifically exempt."

— Chloe Taylor

European stocks moved lower on Tuesday as investors assess the new global trading landscape after U.S. President Donald Trump's latest tariff move.

By 9:06 a.m. in London (4:06 a.m. ET), the pan-European Stoxx 600 was 0.1% lower, with regional bourses in mixed territory.

Read more on moves in European markets here.

— Chloe Taylor

Below are some of the biggest after-hours movers on Monday evening:

• Keysight Technologies — The manufacturer of electronics test and measurement equipment exceeded first-quarter estimates on top and bottom lines, leading shares to jump more than 15%. Keysight earned $2.17 per share, on an adjusted basis, while analysts polled by LSEG expected $2.00 per share. Revenue came out at $1.60 billion, also higher than the $1.54 billion expected.
• Diamondback Energy — Shares lost 3% in after-hours trading after the company's fourth-quarter earnings disappointed Wall Street. Diamondback reported adjusted earnings of $1.74 cents per share on $3.38 billion in revenue, while analysts polled by LSEG expected $2.08 in earnings per share and $3.31 billion in revenue.
• Vir Biotechnology — Shares surged more than 65%. The company shared positive updated Phase 1 results for its VIR-5500 treatment for patients with metastatic prostate cancer.

— Pia Singh

Sarat Sethi, managing partner at Douglas C. Lane & Associates, said he owns Salesforce and Workday ahead of their earnings results this week that will be closely watched by investors.

Both Salesforce and Workday have been punished this year, tumbling more than 33% and 40%, respectively, as investors fearful of AI disruption took a sharp pivot out of the software sector.

Sethi is hopeful that their earnings could reverse their fortunes if both companies can prove they have staying power. He noted that Salesforce has a great install base. It's also valued at roughly 13 times forward earnings, according to FactSet data, implying the stock is now a bargain.

"The question is going to be, are they getting displaced? Are they losing customers?" Sethi told CNBC's "Power Lunch." "If none of that's true, and they're still growing, and they have the potential to grow and use AI, we think now you've gone from kind of a growth-at-a-reasonable-price to a value stock."

"I'm just hoping it doesn't become a value trap," he added.

Salesforce is set to report earnings Wednesday. Workday is scheduled to release results Tuesday.

— Sarah Min

Shortly after 6 p.m. ET on Monday, futures tied to the S&P 500 and Nasdaq-100 futures each gained nearly 0.1%. Futures tied to the Dow Jones Industrial Average added 36 points, or less than 0.1%.

— Pia Singh