Negative Nancy. The S&P 500 fell for the third day in a row on Thursday, down 1.2%, putting the index into negative territory on the year.

The Dow Jones Industrial Average also dropped 1.2%, while the Nasdaq Composite slid 1.6%.

Tech stocks sparked the selloff earlier this week as fledgling fears over the unintended consequences of AI turned into a full-fledged panic about the future of the software industry.

“If AI begins to make entire, large sectors of tech no longer needed, that is a problem for the Nasdaq and the S&P 500 and that loss of earnings could offset AI efficiency gains in the short and medium term,” wrote Tom Essaye, president of the Sevens Report. “If AI blows up large market sectors, that won’t be good for the S&P 500.”

The market’s performance on Thursday suggests that investors’ jitters have spread to other parts of the market. Only the consumer staples and utilities sectors posted gains on Thursday as investors pulled back from riskier assets and flocked to safe haven assets instead.

To wit, crypto had a bad day, as well. Bitcoin fell to a 15-month low on Thursday to just above $63,000, down about 14%. Ethereum also fell 14%.

AI wasn’t the only thing weighing on investor sentiment on Thursday—perceptions about the economy were another culprit for the more downbeat mood, writes Steve Sosnick, chief strategist of Interactive Brokers.

Challenger, Gray & Christmas said U.S. employers announced 108,435 job cuts in January, up about 118% from the same month last year and marking the highest January layoff number since 2009. Initial jobless claims also came in above exceptions.

“The jobs data gave economic bulls a bit of pause, particularly with the January employment report pushed back from tomorrow to Wednesday,” Sosnick adds.

The Hot Stock: McKesson +16.5%
The Biggest Loser: Estee Lauder -19.2%

Best Sector: Consumer Staples +0.3%
Worst Sector: Materials -2.8%

Big-box retail earnings season may still be a few weeks away, but this week served as a preview of what’s to come. Amazon.com, Tapestry, Ralph Lauren, and Estée Lauder reported earnings on Thursday, while E.l.f. Beauty shared results Wednesday afternoon.

The reports painted an overwhelmingly positive picture of consumer demand throughout the holiday season. All five companies saw steady revenue growth. Or, in the case of Coach and e.l.f., straight up gangbuster growth — Coach sales jumped 25% year over year, while e.l.f’s total revenue rose 38%.

Tapestry, Ralph Lauren, and e.l.f. executives all told Barron’s the same thing: Demand hasn’t waned in the new year. That is a good thing for the retailers who are preparing to release results later this month.

“Looking ahead into Q4 and beyond, I think we feel good about our underlying demand trend, [it] remains healthy,” Justin Picicci, Ralph Lauren’s CFO, told me.

Tarang Amin, who heads up e.l.f.—known for its affordable cosmetics and skin care—said the company’s value proposition was resonating with consumers across income and age demographics.

“This is our 28th consecutive quarter of market share gains on e.l.f. cosmetics, which as far back as we can find, we’ve never seen another brand be able to do that,” he said. “So the consistency of the growth continues to be there.”

Granted, stocks of the four companies didn’t necessarily trade the same way after results. While e.l.f and Tapestry surged, Estée Lauder and Ralph Lauren fell. The shares’ underperformance doesn’t stem from significant issues with either company’s fundamentals, but rather because investors’ expectations were high heading into the reports.

Either way, it’s setting up to be an interesting season of retail earnings ahead.

Biogen, Cboe Global Markets, Centene, and Philip Morris International release quarterly results tomorrow.

The University of Michigan releases its Consumer Sentiment survey for February.

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