Market volatility surged on Tuesday, February 3, 2026, as the legal tech and data services sectors faced a localized "flash crash." The sharp downturn was triggered by Anthropic’s release of a specialized AI automation tool designed for corporate legal departments. Investors reacted with significant selling pressure, fearing the new tool could disrupt the high-margin business models of established information giants. The sentiment shifted toward "sell first, ask questions later," as traders weighed the threat of AI automation against proprietary legal databases. **Major Stock Movements** The impact on European and North American markets was immediate and severe. RELX Plc, the parent company of LexisNexis, saw its US-listed shares plunge 14.6%. Wolters Kluwer NV experienced a similar decline, with its stock dropping over 11% in European trading and a comparable slide in its ADRs. Thomson Reuters Corp. was among the hardest hit, with its share price tumbling 19% on the Toronto Stock Exchange and over 14.2% on the Nasdaq. The contagion spread to broader data service and software providers. Pearson dropped 6.2%, while Sage Group fell 5.5%. Credit reporting agency Experian and the London Stock Exchange Group both saw declines exceeding 8%, marking the latter's largest single-day drop in nearly five years. **The Disruptive Catalyst** The source of the market anxiety is Anthropic’s new legal plugin for its "Claude Cowork" suite. Unlike general-purpose chatbots, this tool is specifically engineered to automate high-volume legal workflows. Its capabilities include: - Automated contract review and risk flagging - Triage of non-disclosure agreements (NDAs) - Drafting of legal briefs and briefings - Generation of templated responses and compliance workflows While Anthropic clarified that the tool does not provide formal legal advice and requires review by licensed attorneys, the market interpreted the launch as a direct move into the "application layer." This moves AI beyond simple search and into the execution of billable professional tasks. **Sector Outlook and Sentiment** Analysts noted that the sell-off reflects a growing concern over "valuation compression" in the software industry. If general AI models can replicate the workflows of legacy platforms at a fraction of the cost, premium data subscriptions may become harder to justify. Despite the panic, some market observers point to the defensive qualities of the industry leaders. Established firms like RELX and Thomson Reuters hold vast, proprietary datasets and offer legal indemnification—protections that pure-play AI models currently lack. However, for today, the prevailing narrative remains one of intense competition. The iShares Expanded Tech-Software Sector ETF dropped 4.4% in tandem with the news, as the sector enters a period of heightened scrutiny regarding its long-term viability in an AI-first economy.