The U.S. Market Divergence

A potential divergence is defining the U.S. stock market. The US30 (Dow Jones Industrial Average), an index of American industrial and economic might, is trading around all-time highs. In contrast, the US100 (Nasdaq-100), the long-reigning benchmark for technology and growth, is faltering under the weight of a sector-wide selloff. The divergence is not a random fluctuation; it is a market rotation, in which capital is systematically shifting from high-flying tech darlings into more traditional, value-driven, and defensive companies.

This analytical article examines the dynamics underlying this trend, drawing parallels between current events and a similar shock from exactly one year earlier.

Visualising the divergence

The following chart illustrates the performance gap between the US30 (green line) and the US100 (red line) since the beginning of 2025. It captures not just the current divergence, but also the critical precedent set exactly one year ago.

Two points on this chart are of critical importance. The first is the circle in February 2025. The second is the sharp downturn happening now, in February 2026.

The echo of the DeepSeek shock

As the chart clearly shows, in February 2025, the tech-heavy US100 (red line) decisively crossed below the more defensive US30 (green line). This event was not random. It was the direct result of the DeepSeek shock, when a Chinese AI startup released a highly efficient AI model that could be trained for a fraction of the cost of US competitors.

This news triggered a fundamental fear among investors: “If AI can be built this cheaply, is the expensive AI hardware from companies like Nvidia still worth its premium?”

The market’s reaction was swift and brutal. Investors began selling off high-valuation AI infrastructure stocks, causing the US100 to plunge. Simultaneously, that capital rotated into the perceived safety of the value and defensive stocks that populate the Dow Jones, causing the US30 to hold its ground and then pull ahead. The crossover on the chart marks the precise moment this rotation took hold.

The Anthropic shock

Almost exactly one year later, history appears to be repeating itself. The immediate trigger for the current tech selloff is the Anthropic shock. The release of its Claude Cowork tool, an AI colleague capable of automating complex workflows, has triggered a new wave of concern across the software-as-a-service (SaaS) industry.

This time, the market is asking a similar, but broader, question.

 “Why pay for expensive software subscriptions if a powerful AI can perform the same workflows internally, for a fraction of the cost?” 

This fear materialised in an adverse market reaction. In early February 2026, software industry ETFs plunged nearly 6%, erasing almost $1 trillion in value from the global software and services sector. Companies like Thomson Reuters (-15.8%), LegalZoom (-19.7%), Salesforce (-7%), and Intuit (-11%) saw their valuations plummet.

Will history repeat itself?

The striking similarity in timing, a major AI disruption event occurring in early February, almost exactly one year apart, raises a critical analytical question. Will the Anthropic event cause the US100 to follow the same path it did in 2025?

The chart shows the US100 taking a sharp downturn in February 2026, mirroring the initial drop from February 2025. The psychological pattern is identical; a breakthrough in AI capability leads to a rapid repricing of risk in the technology sector, sparking a flight to safety.

While past performance is not a guarantee of future results, the precedent set by the DeepSeek event provides a powerful historical parallel. The market is now closely watching whether this rotation will continue, potentially leading to a sustained period of underperformance for the tech sector and continued strength for the defensive and value-oriented companies in the Dow Jones.

Beneficiaries of the rotation

This rotation is the primary driver of the divergence among the major indices. As investors prioritise stability and profitability, capital flows into:

●     Defensive stocks: Companies in non-cyclical sectors whose products are needed regardless of the economic climate, such as consumer staples, Procter & Gamble, healthcare, Johnson & Johnson, and utilities, NextEra Energy.

●     Value stocks: Established companies trading at a reasonable price relative to their fundamentals, often found in sectors like financials, JPMorgan Chase, industrials, Caterpillar, and energy, Chevron and ExxonMobil.

The US30’s resilience is structural. With only ~20% exposure to technology, compared to the US100’s +50%, it is more insulated from these tech-specific shocks and is the primary beneficiary of this flight to safety.

The current environment highlights the importance of diversification and understanding different investment themes. Exploring opportunities within the defensive sectors, such as consumer staples, healthcare, and utilities or the value-driven sectors of energy and industrials, allows for alignment with the prevailing market trends. These areas are traditionally sought after for their potential to offer stability during periods of volatility and uncertainty.

To explore these opportunities further, you can use the platform’s tools to research individual companies in these sectors, analyse their performance with charting, and stay informed on the latest market analysis. Understanding the dynamics of a rotating market is the first step toward making informed decisions.

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** This article was prepared by BROKSTOCK analyst Maboko Seabi