Technology stocks weigh on Canada, U.S. markets amid risk-off rotation

L’indice composé S&P/TSX du parquet torontois a laissé 2,64 points, ou 0,01 %, pour terminer la séance de mercredi avec 33 254,19 points. THE CANADIAN PRESS/Nathan Denette

Stock markets in the U.S. and Canada fell on Thursday amid a broad flight from risky assets. 

“It’s certainly a risk-off day in the markets, that’s for sure, both in Canada and in the U.S.,” said Anish Chopra, a managing director with Portfolio Management Corp.

“If you look at the U.S., it’s really the technology sector, particularly software that’s leading the decline.” 

He said that after a Wednesday evening earnings report from Cisco Systems, there were concerns in the market about what the benefits of AI actually are. This included how AI will impact businesses outside of the technology sector and whether those big tech players would get a return on billions of investments in AI infrastructure.

Cisco Systems dropped 12.3 per cent Thursday despite topping analysts’ expectations for profit and revenue last quarter. The tech giant indicated that it may make less profit off each US$1 of revenue during the current quarter than it did in the previous one.

Analysts said that could be an indicator of higher prices for computer memory that everyone is having to pay amid the rush driven by AI.

The U.S. stock market punished companies seen as potential losers from artificial-intelligence technology.

“When you look at AI, there are definitely going to be winners and losers,” Chopra said.

“Let’s say some companies, if they’re able to reduce their cost structure, and as long as they’re able to keep their revenue lines up, they’ll certainly be winners. But there’s going to be other players where AI actually hurts their revenue lines, and they’re unable to cut the costs as much as they’d like, and so that has a big impact on their profitability.” 

U.S. investors are scheduled to get a report Friday on inflation at the consumer level. Economists expect it to show inflation slowed to 2.5 per cent last month from 2.7 per cent in December.

“When you’re looking at inflation, one of the indicators that we’ve seen is that the U.S. labour market is still strong. When you look at the possibility of rate cuts, investors are getting concerned that we may not get the rate cuts that we had foreseen,” Chopra said.

A strengthening job market could push the U.S. Federal Reserve to hold interest rates steady and keep its cuts on pause, even if U.S. President Donald Trump keeps loudly and aggressively calling for lower rates. While lower rates can give the economy a boost, they can also worsen inflation.

In New York, the Dow Jones industrial average was down 669.42 points at 49,451.98. The S&P 500 index was down 108.71 points at 6,832.76, while the Nasdaq composite was down 469.32 points at 22,597.15.

The S&P/TSX composite index was down 788.91 points at 32,465.28, driven by losses in the basic materials and technology sectors. 

Chopra said that weakness in the Canadian tech sector was likely a spillover from the U.S. sector. 

“On the commodity front, however, there are just concerns around a slowing global economy, slowing global demand, so you’re getting just that reaction in the commodity sector,” he said. 

“You’ve had certain areas, in commodities that have done very well with precious metals ... and you’re seeing quite a bit of volatility in the precious metals area.” 

Gold and silver hit record highs in recent weeks amid a flight to haven investments but prices have since pulled back.

The April gold contract was down US$150.10 at US$4,948.40 an ounce. The March crude oil contract was down US$1.79 at US$62.84 per barrel.

The Canadian dollar traded for 73.50 cents US compared with 73.67 cents US on Wednesday.

Daniel Johnson, The Canadian Press. With files from The Associated Press.

This report by The Canadian Press was first published Feb. 12, 2026.