Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 11, 2026.

Brendan McDermid | Reuters

The S&P 500 fell on Thursday, putting the benchmark on pace for its third day of losses, as investors continued to shift away from technology names toward those more poised to benefit from a growing U.S. economy.

The broad market index dropped 1.2%, while the Nasdaq Composite lost 1.7%. The Dow Jones Industrial Average shed 555 points, or 1.1%.

Investors moved into more cyclical areas of the market during the session. Shares of Walmart and Boeing, for example, posted a rise of 3% and 2%, respectively. However, tech was under pressure, as "Magnificent Seven" stocks such as Apple and Amazon were each lower by around 3%.

Within tech, software stocks recorded losses yet again. The group has been hit hard in recent weeks as fears around artificial intelligence disrupting the software space have rattled Wall Street.

Key AI play Palantir Technologies declined more than 6%, while Oracle slid more than 2%. Salesforce was down more than 1%, and the iShares Expanded Tech-Software Sector ETF (IGV) fell 3% — the fund now stands about 32% below its recent high. Additionally, Cisco Systems slid 11% after the maker of networking hardware such as switches and routers issued disappointing guidance for the current quarter.

"This rotation is, I think, driven in a lot of ways by a resilient economy," said Ross Mayfield, investment strategist at Baird. "The money coming out of software has places to go, whether it's machinery or financials or energy names."

Stocks ended the previous session lower after earlier rallying off the back of a strong jobs report, which showed sharp jobs growth of 130,000 last month, far above what economists were expecting, and much higher than the downwardly revised December gain. The unemployment rate ticked lower to 4.3% from 4.4%.

The report was a relief for investors who worried it would show a drop-off in the labor market, following a raft of recent data that's indicated slowing growth in a "no hire, no fire" environment.

Yet, the strong payrolls numbers also muddy the Federal Reserve's interest rate outlook and could mean fewer rate cuts than traders were hoping for if higher inflation also remains an issue. That underscores the importance of Friday's consumer price index, which could show the central bank just what is needed for its dual mandate to come into better balance.

Investors are now gearing up for Friday's inflation reading. Economists polled by Dow Jones are expecting the consumer price index for January to show a 0.3% increase for both headline and core, which excludes food and energy prices.

"CPI is a little bit less important now that we got the good jobs number, because it already allows the Fed to kind of pause for a substantial amount of time," Mayfield said. "If CPI came in hot, you'd have a couple of months of data to kind of get a sense of the trend before the Fed actually has to make a hard call."

On the flip side, if the data were to come in light, the strategist anticipates that Friday could be a risk-on kind of day, though "it would have to be a pretty, pretty brutal number to the upside to really impact equity markets and fed fund futures," he added.

Initial jobless claims for the week ended Feb. 7 fell from the prior weekly period, the Labor Department reported Thursday. However, the number came in slightly above expectations.

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