US Stock Markets Plunge as Technology Sector Selloff Deepens Ahead of Critical CPI Report

The February 12, 2026 trading session represented a significant risk-off moment in U.S. equity markets, with all major indexes declining sharply as investor sentiment soured ahead of the January Consumer Price Index inflation report [1][2]. The Bloomberg Television program “The Close” provided comprehensive coverage of the market decline, featuring discussions with US Energy Secretary Chris Wright alongside Wall Street analysts from Envestnet, KBW, Wells Fargo, Barclays, and other financial institutions [1]. The selloff erased year-to-date gains across most major indices, with the S&P 500 now trading 0.9% lower for the year and the NASDAQ down 2.8% year-to-date, highlighting the vulnerability of technology-heavy growth positions [12].

The market’s focus on the upcoming CPI report carried particular significance given that the January data had been delayed due to a government shutdown, creating uncertainty about the accuracy and implications of the inflation figures [9][10]. Economists surveyed expected headline and core CPI to show 0.3% month-over-month increases, translating to approximately 2.5% year-over-year inflation—a level that would represent a return to May 2025 readings following President Trump’s “liberation day” tariff implementations [9][10]. This timing added layers of complexity to the Federal Reserve’s policy calculus, as persistent inflation could delay anticipated interest rate cuts well into the latter half of 2026.

The sector performance data revealed a pronounced shift toward defensive assets, with Consumer Defensive stocks gaining 2.03% while Consumer Cyclical names declined 2.88%—a divergence of nearly 5 percentage points that signals meaningful portfolio repositioning by institutional investors [0]. This rotation pattern historically emerges during periods of macroeconomic uncertainty and elevated volatility expectations. The Utilities sector also provided relative protection, gaining 0.40%, while Basic Materials advanced 0.05%, suggesting investors sought refuge in essential services and commodity-adjacent investments [0].

Conversely, the Technology sector’s 2.54% decline made it the second-worst performer, trailing only Financial Services at 2.82% and narrowly ahead of Consumer Cyclical’s 2.88% drop [0]. This tech-heavy weakness reflected broader concerns about artificial intelligence capital expenditure returns and competitive dynamics within the semiconductor industry. Communication Services declined 2.16%, Industrials fell 2.26%, and Healthcare slipped 1.33%, indicating the selloff extended beyond pure technology names into growth-oriented sectors more broadly [0]. Real Estate remained flat at 0.00%, while Energy declined 1.52%, showing sector-specific performance variations that reflected mixed signals about economic growth trajectories [0].

experienced the most dramatic individual decline, falling 19.68% ($89.90) to close at $366.91 despite reporting quarterly results that exceeded profit and sales estimates [3][4]. The market’s negative reaction stemmed from revenue missing analyst expectations amid intensifying competition in the digital advertising market, with trading volume spiking to 18.70 million shares—3.7 times the average volume [3]. This disconnect between earnings beats and stock declines has become an increasingly common theme in growth stock markets, where investors punish any miss relative to elevated expectations even when absolute performance remains strong.

declined 12.32% ($10.54) to $75.00, with trading volume surging to 68.02 million shares, approximately 3.1 times average levels [4]. The company reported quarterly results that met consensus expectations but fell short of the elevated expectations that have characterized AI-related stocks during the current investment cycle [4]. This “in-line” performance becoming a negative catalyst suggests investor expectations have reached levels where merely meeting benchmarks constitutes disappointment—a phenomenon that could pressure broader tech sector valuations if it persists through the remainder of earnings season.

declined 5.00% ($13.77) to $261.73, on track for its worst single-day decline since April 2025, with elevated trading volume of 71.43 million shares indicating significant institutional participation in the decline [3]. Apple’s position as a mega-cap technology leader means its price movements carry disproportionate weight in index-level calculations, amplifying the market impact of company-specific concerns about iPhone demand, services growth, and competitive positioning in artificial intelligence applications.

demonstrated relative resilience, declining only 1.64% ($3.11) to $186.94 despite the broad technology selloff [0]. Several factors supported the stock’s relative outperformance: the company announced plans to lease data centers funded by $3.8 billion in junk bonds, providing capital efficiency benefits [5]; Anthropic’s $380 billion valuation announcement—with Microsoft and NVIDIA backing—validated enterprise artificial intelligence demand, with the company reporting $14 billion in run-rate revenue and 7-fold growth in $100,000-plus customers [6]; and researchers unveiled a new “dynamic memory sparsification” technique that could cut large language model reasoning costs by 8x without accuracy loss [7].

The broader technology selloff reflected mounting anxiety about artificial intelligence investment returns and competitive pressures that could reshape the semiconductor landscape [2][4]. Cisco’s merely “in-line” quarterly results sparked concerns about whether AI-related capital expenditure is meeting the sky-high expectations embedded in current valuations [4]. The market has witnessed a dramatic escalation in AI spending, with Amazon, Google, Meta, and Microsoft collectively expected to invest $650 billion in AI infrastructure during 2026—amounts that some analysts question will translate into proportionate revenue and profit growth [4].

Additional competitive concerns emerged from developments at OpenAI, which deployed GPT-5.3-Codex-Spark on Cerebras chips, bypassing NVIDIA’s dominance in the AI chip market [8]. This development raised questions about NVIDIA’s competitive moat and the sustainability of its premium valuation if major customers develop alternatives to its hardware ecosystem. Meanwhile, Algorhythm Holdings’ new AI freight-scaling tool triggered selloffs in trucking and logistics stocks, demonstrating how artificial intelligence disruption concerns are extending beyond the technology sector into traditional industries facing automation pressures [3].

The January CPI report’s significance extended beyond its immediate market impact to broader Federal Reserve policy implications [9][10][11]. Economists expected headline and core CPI to show 0.3% month-over-month increases, which would bring annual inflation back to approximately 2.5%—readings that may keep the Federal Reserve cautious about rate cuts despite earlier expectations for monetary easing [10]. The delayed release of the January data due to government shutdown created additional uncertainty about the numbers’ accuracy and their interpretation [9][10].

If the CPI data shows “persistent inflation” as economists anticipated, this could further delay Federal Reserve rate cuts well into the second half of 2026, creating a challenging environment for growth stocks that have benefited from easy monetary conditions [10]. The tension between strong enterprise AI demand—as evidenced by Anthropic’s $14 billion run-rate revenue and 7x growth in large customers—and elevated capital expenditure requirements creates a complex backdrop for technology sector valuation [6].

The February 12 market action revealed several interconnected themes that extend beyond single-session trading dynamics. First, the rotation from Consumer Cyclical to Consumer Defensive sectors indicates institutional risk management in anticipation of potential economic headwinds, a pattern historically preceding periods of elevated volatility and economic uncertainty. Second, the AppLovin earnings disconnect—beating estimates yet declining sharply—suggests valuation compression is occurring in growth sectors regardless of absolute performance levels.

Third, NVIDIA’s relative resilience amid broader tech weakness demonstrates the market’s differentiation between companies perceived to have durable competitive advantages versus those facing competitive pressures, even within the artificial intelligence ecosystem [5][6][7]. Fourth, the CPI report’s timing following President Trump’s tariff implementations adds political economy dimensions to the inflation analysis, as many economists expected the tariffs to push prices higher—a hypothesis the data will either validate or challenge [9].

Continued technology sector weakness could trigger broader market corrections, particularly given the concentrated nature of mega-cap technology exposure in major indices. Higher-than-expected CPI readings could further delay Federal Reserve rate cuts, pressuring growth stock valuations. Cisco’s “in-line” results sparking significant declines may prompt broader earnings estimate revisions for the technology sector, creating negative estimate revision momentum.

The defensive sector rotation may present opportunities for investors with longer time horizons to establish positions in quality consumer companies at more reasonable valuations. NVIDIA’s relative outperformance, supported by positive fundamental developments, suggests the market continues to differentiate between AI winners and losers despite sector-wide pressure. The CPI report clarity—if it shows inflation returning toward target levels—could provide a positive catalyst for risk assets.

Investors should track Federal Reserve commentary following the CPI release for signals about the interest rate trajectory, technology sector earnings revisions for evidence of estimate compression, and competitive developments in the AI chip market for NVIDIA-specific risk assessment [5][8].

While the available data provides comprehensive market coverage, several limitations warrant acknowledgment. The January CPI data’s delayed release due to government shutdown may affect its accuracy or comparability with historical readings [9][10]. The AI capital expenditure return timeline remains uncertain, creating valuation ambiguity for technology sector exposure. Geopolitical and energy policy developments—evidenced by Energy Secretary Chris Wright’s Bloomberg appearance—may introduce additional market volatility [1]. High concentration in mega-cap technology names creates asymmetric market impact from company-specific developments.

The analysis synthesizes data from Bloomberg Television coverage, major financial news outlets, and market data providers to present a comprehensive view of the February 12 market action and its broader implications for investor positioning ahead of critical economic data releases.