Bitcoin also tumbled more than 6% to its lowest level since President Donald Trump`s victory in November 2024.

Traders on the floor of the New York Stock Exchange on Jan. 20. Richard Drew / AP

Stocks broadly sank on Tuesday as investors moved to dump shares of software companies amid fears that artificial intelligence tools could eat into those companies` businesses.

On the S&P 500, the technology sector was by far the worst performer, leading the index to end the day lower by 0.8%. The Nasdaq Composite, which contains more technology companies, tumbled 1.4%.

The selling came after AI startup Anthropic on Friday announced an automated agent that could complete legal, data analytics, finance and sales tasks. Analysts said Friday`s little-noticed announcement broke through on Tuesday after a legal industry publication flagged the tool`s capability on Monday evening.

"While the leading AI labs have been innovating at a healthy clip for years, the pace of recent developments at Anthropic has been particularly notable," analysts at JPMorgan Chase said on Tuesday afternoon.

They noted that Anthropic recently said that Claude Code, its AI agent that can write computer code, "grew from a research preview to a billion-dollar product in six months."

Shares of Salesforce.com sold off by nearly 7% while shares of data provider Thomson Reuters dropped 16%. Real estate data provider CoStar fell 15% and the London Stock Exchange Group, a major supplier of stock market data tools, plunged 12%.

"While still early and preliminary with the product, this adds to investors` fear that AI-native companies will be able to break into the legal tech space and compete with larger players," Morgan Stanley`s Toni Kaplan said.

Other data-related companies also slid. QuickBooks owner Intuit, S&P Global, credit data firm Equifax, HR systems provider Workday and enterprise software company Atlassian all fell by around 10%.

Also pushing the Nasdaq lower was PayPal, which reported lackluster earnings and a CEO change on Tuesday morning. Shares of the $40 billion company were lower by more than 20%.

Bitcoin also faced steep selling.

The world`s largest cryptocurrency plunged as much as 6.7% to its lowest level since President Donald Trump`s victory in November 2024. It recovered later in the day but was still down more than 2% to trade around $76,600.

Once a skeptic of crypto, Trump was wooed by the industry during the last presidential campaign and was expected to be a boon for digital currencies. Trump and his family also launched multiple crypto products themselves.

But over the last year, bitcoin is now down more than 24%. Since Jan. 1, it`s lost more than 12% of its value, amid a broader investor shift away from assets considered more risky than mainstream currencies and companies.

It wasn`t all doom and gloom on Wall Street, though.

Shares of Palantir, a darling of the AI boom, powered higher by more than 6% after the company reported earnings on Monday night that beat traders` expectations.

Energy stocks also broadly traded higher, as did stocks in the consumer staples sector.