AI disruption hits markets with US jobs data on tap

By Lewis Kraskov

NEW YORK, Feb 27 (Reuters) – The potential for artificial intelligence to disrupt business sectors should keep the U.S. stock market on edge next week, as Wall Street looks for more insight into how the emerging technology will ripple through the economy.

The monthly US jobs report headlines next week’s economic data, while major semiconductor player Broadcom is among the remaining reports that will close the fourth-quarter earnings season.

The disruptive potential of AI has consumed investors in recent weeks, with shares in industries such as software, asset management and real estate services facing concerns about a potential business disruption.

Christina Hooper, market strategist at Main Group, said: “There continues to be … a debate about who might be the victim and who will actually emerge as winners as they use AI instead of being replaced by it.”

“There’s very little certainty about that right now, and I think that’s going to be a concern.”

Stock prices in areas such as software remain highly sensitive to AI-related developments. AI bellwether Nvidia’s highly anticipated quarterly report failed to calm nerves, with shares of the semiconductor giant falling more than 5% on Thursday and weighing on the technology sector. Investors are concerned about whether Nvidia’s “hyperscale” customers will earn enough revenue to justify their huge spending on data centers and other infrastructure.

Despite the tech sector’s struggles, gains in other sectors such as industrials and consumer staples have helped major equity indices this year.

Weakness in tech and financial stocks weighed on the major average on Friday, with the S&P 500 and Nasdaq Composite both posting their biggest monthly percentage declines in nearly a year in February.

The benchmark S&P 500 was up 0.5% so far in 2026 through Friday.

“The U.S. currency market is kind of in its last rut, trying to find the winners and losers of this new disruptive technology and very fluid,” said John Wells, Americas macro strategist at BNY.

Will February’s jobs return to January’s strength?

The US jobs report for February, due March 6, is expected to show an increase of 60,000 jobs, according to a Reuters poll. This comes after a surprisingly strong January report, with 130,000 jobs added and the unemployment rate falling to 4.3%.

The January report eased concerns about a weakening labor market, but “the concern is that January is one-off,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management.

“We saw a good January jobs report, but we also saw a really weak 2025 for the labor market,” Hooper said. “And so the question becomes, where do we go from here?”

Investors will also look for clues from the report about when the Federal Reserve might cut interest rates. Fed funds futures suggest the next rate cut will come in June or July, after Fed Chairman Jerome Powell’s term ends in May and his nominated successor, Kevin Warsh, takes over.

Fed rate hikes last year came against a backdrop of weak hiring but halted an easing cycle in January, and strong jobs data could prompt investors to scale back their hopes for further cuts. Investors typically associate low interest rates with high prices for stocks and other assets.

BNY’s Wells said the market’s reaction to the jobs data will indicate which factors are important to equity investors. For example, weak stock performance followed by strong data “is a sign that the price rationale is important,” Wills said.

Retail sales, Broadcom’s earnings also in the future

Other economic releases next week will include reports on manufacturing and service sector activity. The retail sales report for January is expected on March 6.

In addition to Broadcom’s quarterly report on Wednesday, results are expected from retailers Best Buy and Target.

Wall Street is eager for any evidence of AI’s impact on the economy, both positive and negative. In an interview with Reuters this week, outgoing Atlanta Fed President Rafael Bostic said the U.S. may be entering a period of structurally higher unemployment as companies deploy AI tools to save jobs.

“Major technological changes are creating both excitement and anxiety,” Keith Lerner, chief investment officer at Trust Advisory Services, said in a research note on Thursday. “Recently…optimism has given way to greater concern and increasingly dark narratives about AI’s impact on employment, productivity, and economic outcomes.”

(Reporting by Lewis Kraskov; Editing by Colin Barr, David Gregorio and Nick Ziminski)