Dow Drops 800 Points: What Just Happened to Your Money?

Dow Drops 800 Points: What Just Happened to Your Money?

**Published: February 23, 2026**

Hey there. If you checked your retirement account or investment portfolio this morning and felt a little sick to your stomach, you're not alone. The market is having one of those days that makes people want to hide under their desks.

Let's break down what's happening in plain English. No Wall Street jargon, no fancy charts—just the straight story on why the Dow just dropped 800 points and what it means for regular people like us.

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## The Headline: What You Need to Know Right Now

The Dow Jones Industrial Average is down about **800 points** today. That's roughly a **1.6% drop** . The S&P 500 and Nasdaq are getting hit even harder, with tech stocks taking the worst beating .

But here's the thing—this didn't come out of nowhere. This has been building for weeks. And there are really two big reasons why your 401(k) is looking rough today: **AI disruption fears** and **tariff chaos**. Let's unpack both.

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## The Big Picture: What's Driving This Selloff?

### Reason #1: AI Is Starting to Scare People

You've heard about AI for a couple years now. ChatGPT, Microsoft Copilot, all that stuff. For a while, it was exciting. Stocks like Nvidia were going through the roof because everyone thought AI would be the next big thing.

Now? People are starting to wonder if all that AI hype was actually a problem.

Here's what's happening: The big tech companies—Google, Microsoft, Amazon, Meta—are spending **insane amounts of money** on AI infrastructure. We're talking **$740 billion** in capital spending expected for 2026 . That's trillion with a T, sort of. It's a mind-boggling number.

**Bank of America's top analyst Michael Hartnett** put it in pretty stark terms. He said all this spending could push the "Magnificent Seven" tech stocks' free cash flow down to zero. Maybe even negative . That means these companies might have to start borrowing money just to keep up with their AI spending.

And here's the really scary part for investors: Hartnett says the market is shifting from "AI-awe" (being impressed by AI) to "AI-poor" (being broke because of AI) .

**What would trigger a real turnaround?** Hartnett says it's simple: watch for one of these big tech companies to announce they're cutting back on AI spending. That hasn't happened yet. But if it does, get ready for money to move out of tech stocks and into other parts of the market .

### Reason #2: Tariff Chaos Is Back

Just when we thought the tariff mess was settled, the Supreme Court threw a wrench in everything.

**Here's the quick version:** Last week, the Supreme Court ruled 6-3 that President Trump didn't have the legal authority to impose those sweeping global tariffs he announced last year . The law he used—the International Emergency Economic Powers Act—wasn't meant for tariffs, the court said.

So what did Trump do? About 24 hours later, he announced new tariffs using a different law. First it was 10% on everything. Then he raised it to 15% .

The new tariffs take effect Tuesday. And here's the kicker: this new law only lets him do this for 150 days. After that, he needs Congress to sign off .

**What does this mean for you?** It means uncertainty. And markets hate uncertainty. Every time the tariff rules change, companies have to adjust. Prices go up and down. Planning becomes impossible.

One small business owner told the BBC it's been a complete rollercoaster. His tariffs went from zero to 30% to 100% to 145% and back down again, all in the span of months. Last Friday, after the court ruling, they went to zero for a few hours. Then up to 10%. Then 15% .

Try running a business when you have no idea what you'll pay on your imports next week.

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## The "SaaSpocalypse": Why Software Stocks Are Getting Crushed

There's a new word floating around Wall Street: **"SaaSpocalypse."** It sounds dramatic, but it captures what's happening .

Remember how we talked about AI agents? The new ones from Anthropic and OpenAI aren't like the old chatbots. These things can actually do work. They can navigate computer programs, write code, manage workflows—basically do tasks that humans used to do .

**Why this matters:** Companies pay for software licenses based on how many people use them. If AI can do the work of several people, companies might buy fewer licenses. That threatens the whole business model of companies like Salesforce, Adobe, and others.

The numbers tell the story:

- The S&P 500 software index is down almost 23% this year 

- More than $1 trillion in market value has evaporated from software stocks 

- Hedge funds are bailing on software stocks at the fastest pace since March 2025 

Salesforce, which is a Dow component, is helping drag the index down today .

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## What the Numbers Look Like Right Now

Let's put some actual numbers on this so you can see the scale.

**Table 1: Today's Market Movers (as of this morning)**

| **Index/Stock** | **Change** | **Why** |

| :--- | :--- | :--- |

| Dow Jones | Down ~800 points (1.6%) | Broad selloff, led by Salesforce and American Express  |

| S&P 500 Software Index | Down ~2.9% today, 23% year-to-date | AI disruption fears  |

| Amazon | Down ~2% | Consumer discretionary weakness  |

| Tesla | Down ~2% | Tech selloff  |

| Nvidia | Up 1.8% | Bucking the trend ahead of earnings  |

| Eli Lilly | Up 3.4% | Good news on obesity drug competition  |

**What's interesting:** Even though the market is down overall, some sectors are actually doing okay. Healthcare is up. Domino's Pizza climbed 4.6% after good earnings . Money is moving out of tech and into other areas.

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## What the Experts Are Saying

I talked to a few analysts (well, read what they're saying) to get their take.

**Thomas Hayes from Great Hill Capital** put it pretty bluntly: "The market is just experiencing some profit-taking as traders realize that the relief rally from Friday may be premature. You simply can't bet against Trump. He wants tariffs, and he's going to find a way to implement them" .

**Bank of America's Michael Hartnett** has been warning about this for weeks. He sees money flowing out of "Wall Street assets" (big tech, crypto) and into "Main Street assets" (energy, small caps, international stocks) . Since October, silver is up 56%. Korean stocks up 34%. Energy up 20%. Meanwhile, the Magnificent Seven are down 8% and crypto is down 41% .

Hartnett also points to something interesting happening with the Japanese yen. For the first time since 2005, the yen and Japanese stocks are moving in the same direction. When the yen goes up, Japanese stocks go up too. That's a sign of a genuine long-term bull market, he says .

**Jamieson Greer, the U.S. Trade Representative**, is trying to calm nerves. He told ABC News that "the legal tool to implement it—that might change, but the policy hasn't changed" . So tariffs are here to stay, even if the legal justification keeps shifting.

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## What This Means for Regular People

Okay, so the market is down 800 points. What does that actually mean for you?

### If You Have a 401(k) or IRA

First, take a deep breath. This is normal. Markets go up and down. If you're investing for the long term—like for retirement 10, 20, or 30 years from now—days like this are just noise.

That said, it's worth checking your allocation. If you're heavily weighted in tech stocks, you're feeling this more than someone who's more diversified. Consider whether your portfolio matches your risk tolerance.

### If You're Thinking About Buying a House

Mortgage rates are influenced by a lot of things, including market uncertainty. The 10-year Treasury yield is sitting around 4.04% . That's not terrible. But with all this tariff and AI confusion, rates could move in either direction.

### If You Own a Small Business

The tariff situation is probably driving you crazy. The back-and-forth makes it nearly impossible to plan. If you import goods, you might want to talk to a trade lawyer or customs broker about your options. There's also a chance you could be owed refunds on those illegal tariffs—more than $130 billion worth . But sorting that out could take years.

### If You're Just Trying to Pay Bills

Higher tariffs eventually mean higher prices on imported goods. The Federal Reserve Bank of New York found that 90% of the cost of Trump's earlier tariffs was paid by U.S. companies—which means it gets passed on to you . Keep an eye on prices for electronics, clothing, and other imported stuff.

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## What to Watch This Week

A few things could move markets in the coming days:

**1. Nvidia earnings (Wednesday)** – Nvidia is the poster child for AI hype. If they report strong numbers and give good guidance, it could calm some fears. If they disappoint, watch out .

**2. The new tariffs (effective Tuesday)** – The 15% global tariff kicks in. We'll see how businesses and consumers react .

**3. February jobs data** – Fed Governor Christopher Waller said he's open to keeping rates unchanged in March if jobs data shows strength after a weak January . Good jobs news could mean rates stay higher longer.

**4. State of the Union address (Monday)** – Bank of America's Hartnett thinks this could be a turning point. If Trump doesn't get a "Trump bump" in the polls, he might push for more aggressive policies to help regular people—which could shift money into small caps and out of big tech .

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## Frequently Asked Questions

**Q: Should I sell my tech stocks?**

A: That depends on your situation. If you need the money soon, maybe. If you're investing for the long term, selling in a panic is usually a mistake. The big tech companies aren't going away. But the AI spending spree might mean slower growth ahead.

**Q: What are the new tariffs, exactly?**

A: President Trump announced a 15% tariff on essentially all imported goods, using a different law after the Supreme Court struck down his earlier tariffs . They take effect Tuesday and can last up to 150 days without Congress.

**Q: What is the "SaaSpocalypse"?**

A: It's a term for the massive selloff in software stocks driven by fears that AI agents will replace human workers and reduce the need for software licenses. Companies like Salesforce and Adobe have been hit hard .

**Q: Is this the start of a bear market?**

A: Nobody knows for sure. The S&P 500 is down but not in bear territory. Bank of America's "sell signal" is still flashing, meaning they think more downside could be ahead . But the market could also bounce back.

**Q: What's happening with interest rates?**

A: The Fed is watching data closely. December PCE inflation was 2.9%—still above the 2% target . Traders currently expect the next rate cut in June . But if inflation stays sticky, rates could stay higher longer.

**Q: Can I get a refund on those illegal tariffs?**

A: Possibly. The government collected about $134 billion in tariffs that the Supreme Court just ruled were illegal. The court didn't address refunds, so that fight will happen in lower courts and could take years .

**Q: What sectors are actually doing well?**

A: Healthcare is up today . Energy, small caps, and international stocks (especially in Asia and Latin America) have been outperforming tech since October . Money is rotating out of the Magnificent Seven and into other areas.

**Q: How worried should I be?**

A: Worried enough to pay attention, but not so worried that you make rash decisions. The economy is still growing—GDP was up 1.4% in Q4 . Unemployment is low. Corporate earnings, outside of software, are mostly fine. Markets go through rough patches. This too shall pass.

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## The Bottom Line

Look, I'm not going to tell you everything is fine and you should ignore your portfolio. An 800-point drop in the Dow is real money. It hurts.

But here's what I keep coming back to: markets are driven by fear and greed, and right now fear is winning. Fear of AI disrupting entire industries. Fear of tariffs wrecking business models. Fear that the Fed won't cut rates fast enough.

The question isn't whether the market will recover. It always does, eventually. The question is whether you can stomach the ride.

If you're feeling anxious, maybe it's time to review your portfolio with a professional. Make sure you're diversified enough that one sector—like tech—can't wipe you out. And remember that days like today are why investing for the long term works. You're not buying high and selling low. You're just along for the ride.

Hang in there. We'll get through this.

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*Got questions about how this affects your specific situation? Drop them in the comments and I'll do my best to answer.*