(Bloomberg) — After rebounding Friday to nearly erase a brutal mid-week slide, US stocks are facing more selling this week from trend-following algorithmic funds, according to Goldman Sachs Group Inc.’s trading desk. The S&P 500 Index (^GSPC) has already breached its short-term trigger that prompted Commodity Trading Advisers, or CTAs, to sell stocks. Goldman expects these systematic strategies — which follow the stock market direction rather than fundamental factors — to remain net sellers over the comin ...

Core Viewpoint - The introduction of a new AI automation tool by Anthropic has triggered a significant sell-off in software stocks, leading to a substantial decline in the Goldman Sachs software index, with approximately $2 trillion wiped off since its peak [1]. Group 1: Market Reaction - The sell-off in software stocks has been extensive and is now affecting hardware stocks as well, with notable declines in companies like NVIDIA and Google, while Microsoft has shown a slight rebound [3]. - The negative sentiment surrounding software stocks has become a global phenomenon, indicating a broad market reaction to the current state of the software industry [2]. Group 2: Investor Sentiment - Some investors are beginning to consider this sell-off as a potential buying opportunity, suggesting that a rally could occur if software stocks decline too much, as many are currently in oversold territory [4]. - There is a growing discussion among investors about whether it is wise to attempt to "catch a falling knife" in the current market environment [4].

Group 1 - Shares of leading Indian IT companies Infosys Ltd. and Wipro Ltd. fell over 5% following the release of a new AI automation tool by Anthropic, raising concerns about potential impacts on their core businesses [1][2] - Accenture and Cognizant experienced a 9% decline in stock prices, while RELX Plc and Wolters Kluwer NV saw drops exceeding 10% [4] - The iShares Expanded Tech-Software Sector ETF decreased by as much as 4.4%, and a UBS Group AG basket of European stocks at risk of AI disruption fell nearly 7% [5] Group 2 - Anthropic's new AI tool includes a legal automation feature that can handle tasks such as contract reviewing and legal briefings, which has sparked fears among data and information services firms [2][5] - Investors have been increasingly funding AI products for the legal industry over the past two years, indicating a growing trend in AI applications within this sector [5]