AI Woes Widen to Financial Sector

 

 

“The artificial-intelligence scare broadened from technology to financial services, dragging wealth-management stocks down in the process.

 

Financial-technology firm Altruist during morning trading announced an AI tool that the company says can create personalized tax strategies by interpreting financial documents without manual entry.

 

Investors were already unnerved by the recent pullback in software and tech stocks, a retreat that accelerated after AI companies unveiled new tools capable of automating high-level industry-specific functions.

 

While tech shares have stabilized lately, AI fears have now spread to a sector that had previously been a beneficiary of the rotation out of software and AI stocks.

 

Charles Schwab stock fell 7.4%, while Raymond James finished Tuesday down 8.7%, its worst percentage decrease since March 2020, during the Covid-19 pandemic.

 

Other financial-services providers were down, with LPL Financial and Stifel dropping 8.3% and 3.8%, respectively.

 

Banks with large wealth-management businesses were also under pressure, with Bank of America declining 1.8% and Morgan Stanley losing 2.4%.

 

Broader benchmarks were mixed on the day. The S&P 500 fell 0.3%, weighed down by a 0.8% drop in the financial sector.

 

The tech-heavy Nasdaq composite declined 0.6%, while the Dow Jones Industrial Average edged up 0.1% to 50188.14 -- its third straight record close.

 

Some analysts said the reaction in financial stocks was overblown.

 

"We do not see much fundamentally new here with these developments, just the market fragility on the topic," said Devin Ryan, director of financial-technology research at Citizens, in a note to its clients.

 

Meanwhile, Treasury yields, which often fall when investors expect slower economic growth, inched down after government data showed that U.S. retail sales were flat in December, defying forecasts. The 10-year yield settled at 4.144%, down from 4.197% Monday.

 

Retail giants Walmart and Target both declined nearly 2%.

 

The Federal Reserve Bank of Atlanta's GDPNow model, meanwhile, got a downgrade Tuesday after the retail-spending report. The latest estimate from the model forecasts annualized economic growth of 3.7% for the fourth quarter of last year, down from 4.2% in the last published estimate, largely due to a lower forecast for consumer spending.

 

Some analysts said that the results shouldn't overshadow the two prior months of strong retail-sales figures.

 

"Just because there's one data point, I wouldn't say that there's a sign of economic weakness," said Massimo Santicchia, head of U.S. equities at Procyon.

 

Tuesday's data will be followed later this week by the delayed January jobs report and consumer-price index.

 

Earnings season continued on Tuesday. Spotify shares surged 15% after the company added a record 38 million monthly users to its audiostreaming platform late last year. Even after the upswing, the company's shares are still off 18% in the year to date.

 

U.S.-traded shares of sports-car maker Ferrari jumped 8.1% after the company gave an upbeat forecast for 2026 -- the largest percentage increase in more than two years.

 

S&P Global was the S&P 500's biggest loser on the day, falling 9.7% after forecasting 2026 profit below Wall Street expectations.

 

The data-provider company was already pulled into last week's selloff, and is down 23% so far this year.” [1]

 

The announcement of Altruist's AI tool for automated, personalized tax strategies on February 10, 2026, sparked a sharp selloff in wealth-management stocks, including Charles Schwab (-7.4%) and Raymond James (-8.8%). Investors fear this technology will render traditional human financial advisory services obsolete, leading to fee compression, reduced demand for human advisors, and significant market share disruption.

 

This development is considered scary for several key reasons:

 

    Disruption of High-Margin Services: The core value proposition of wealth managers—personalized tax planning and financial advice—is being automated, threatening the high fees these firms typically charge.

 

    Automation of Human Work: By interpreting documents without manual entry, the tool removes the need for human advisors to perform time-consuming, tedious tasks.

 

    Broadening AI Risk: This marks a shift where AI fears are moving from tech/software firms to service-oriented, white-collar industries like wealth management, legal, and accounting.

    Significant Stock Declines: The market reacted by aggressively selling off broker and wealth manager stocks, with major players experiencing their worst sessions in years.

 

    Speed and Efficiency: The tool can generate strategies in "minutes," a speed that human-led firms may find impossible to compete with, according to Forbes.

 

As a result, investors are concerned that the traditional, human-centric model of financial advisory is at risk from, as mentioned in Yahoo Finance, rapid AI innovation.

 

1. Markets -- Tuesday's Markets: AI Woes Widen to Financial Sector. Martinez, Xavier.  Wall Street Journal, Eastern edition; New York, N.Y.. 11 Feb 2026: B11.