Another week, another round of jitters caused by fears of widespread AI disruption.
Shares of brokerages and wealth managers wavered for a second day on Wednesday after falling in the previous session. On Tuesday, tech firm Altruist boasted its new Hazel AI tool could assist with tax planning for clients "within minutes," sparking a sell-off in a hanful of financial services names. LPL Financial dropped 11%, Charles Schwab lost 10%, and Raymond James was down 9%.
Here were the moves on Wednesday:
- LPL Financial: -4%
- Charles Schwab Corporation: -3%
- Stifel Financial: -1%
- Raymond James: -0.2%
The iShares U.S. Broker-Dealers & Securities Exchanges ETF was down 3% after dropping 4% in Tuesday's session.
The fear isn't explicitly tied to the tax services these companies provide, but rather that cheap AI tools will soon be more widely available for a range of financial services offered by big companies, eating into margins.
It's a nearly identical fear that shook the software space last week. After Anthropic rolled out new tools for its Cowork agent aimed at professionals in the legal space, the entire sector sold off as investors eyed the potential for wider disruption.
Other brokerage stocks, such as Interactive Brokers and Morgan Stanley, fared slightly better on Tuesday. The fact that both firms cater to institutional traders implies that Wall Street is more concerned about retail-facing brokerage stocks.
Companies in the accounting space, such as QuickBooks owner Intuit, fell about 3%. Accounting software makers SAP SE and Xero rose 1% and 2% respectively.
Meanwhile, OpenAI approved the integration of an AI application on ChatGPT to enable users to receive direct insurance quotes on the platform.
Neither platform directly offers users the ability to trade stocks, but for the market, the key concern is that AI disruption is poised to upend the financial sector, as it did the legal technology field last week.
Markets have largely recovered from the tech plunge last week, with multiple analysts saying this week that the event represents a buy-the-dip moment. Still, markets are on edge as new disruptive tools continue to emerge.
