US STOCKS-Wall Street ends sharply lower amid AI displacement fears and revived tariff angst

By Stephen Culp and Shashwat Chauhan

NEW YORK, Feb 23 (Reuters) - Wall Street stocks tumbled on Monday, as ongoing fears of artificial intelligence-related disruption and the fallout from Friday's U.S. Supreme Court ruling sent investors fleeing from high risk equities

A broad selloff sent all three major U.S. stock indexes more than 1% lower by the closing bell, as risk appetite was dampened by a combination of persistent fears over potential disruption due to emergent artificial intelligence technology and Trump's erratic statements on trade policy, which fueled much of the market volatility during the first year of the president's second term.

Financial stocks .SPSY and software-related firms .SPLRCIS underperformed the broader market.

"The question about AI is twofold: How much is it going to cost, and who all is going to be disrupted?" said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis. "You’ve seen the market react to headlines, it's 'sell first, assess later.'"

He added: "It’s a perspective of what may happen as opposed to what has happened."

On Friday, the top court in the nation issued a 6-3 ruling that Trump overstepped his presidential authority by enacting reciprocal tariffs under an economic emergency law, a ruling that provoked condemnation from the president, who threatened a 15% temporary tariff on all imports, despite having reached trade agreements with many U.S. trading partners.

Gold prices advanced, benefiting from a flight to safety.

"The Supreme Court decision wasn’t unexpected," Hainlin added. "But you put these uncertainties on top of each other, the heightened geopolitical situation in the Middle East, tariff uncertainty, and potential AI displacement and that’s leading investors to a broad risk reassessment."

A powerful winter storm buried much of the U.S. under more than 15 inches of snow and paralyzed travel in the Northeast. At airports in the New York City area, 89% to 98% of flights were canceled, according to Flightaware.com. Airlines .SPCOMAIR and travel/leisure-related stocks .SPCOMHOTL tumbled. Dow Transports .DJT also lagged.

With only 77 of the companies in the S&P 500 yet to post results, fourth-quarter earnings season has neared the finish line, a smattering of high-profile companies are expected to report this week, most notably vanguard artificial intelligence chipmaker Nvidia NVDA.O due on Wednesday. Home improvement rivals Home Depot HD.N and Lowe's LOW.N are also on the docket, which is rounded out by Salesforce CRM.N and Universal Health Services UHS.N.

Of the companies that have reported, 73% have beaten expectations, and analysts now expect aggregate year-on-year S&P 500 earnings growth of 13.9%, significantly higher than the 8.9% forecast as of January 1, according to LSEG data.

According to preliminary data, the S&P 500 .SPX lost 70.31 points, or 1.02%, to end at 6,839.20 points, while the Nasdaq Composite .IXIC lost 251.46 points, or 1.10%, to 22,634.61. The Dow Jones Industrial Average .DJI fell 810.81 points, or 1.65%, to 48,815.16.

Among the 11 major sectors of the S&P 500, financials were down the most, while consumer staples .SPLRCS enjoyed the largest percentage gain.

The healthcare index .SPXHC advanced, with a boost from Eli Lilly LLY.N after rival Novo Nordisk's NOVOb.CO obesity drug CagriSema underperformed Eli Lilly's drug Zepbound in a head-to-head trial.

Among other movers, Domino's Pizza DPZ.O surged after the fast-food chain's fourth-quarter same-store sales beat Wall Street estimates.

PayPal PYPL.O jumped following a Bloomberg report that the payments firm is attracting takeover interest.