U.S. stock markets took a hit on Thursday, with major indexes falling amid rising worries about the staggering valuations of tech companies closely tied to artificial intelligence.
The Dow Jones Industrial Average dropped by 309 points, about 0.7%. The S&P 500 fell 0.9%, and the Nasdaq Composite sank 1.5%. The Nasdaq 100, a key player in this tech sell-off, is facing its worst week since early April, down more than 2% since last Friday. Companies like Nvidia, Microsoft, Palantir, Broadcom, and Advanced Micro Devices led the decline, intensifying the downturn.
AI stocks haven’t been consistent lately. Qualcomm reported better-than-expected quarterly results but hinted at potential losses with Apple, causing shares to slide by 3%. AMD, which had a strong performance earlier, fell 6%. Even AI favorites like Nvidia and Meta also saw significant drops.
Market analyst Mike Mussio from FBB Capital Partners commented on the situation, noting that many tech stocks were overpriced, leading to a stark contrast between companies that are thriving and those simply meeting expectations. This divergence in earnings reports can create turbulent market conditions.
Adding to the market’s woes are recent job cuts. In October alone, over 153,000 jobs were lost, nearly three times the rate in September and a staggering 175% increase from last year. This marks the highest number of layoffs in October in over two decades. The ongoing U.S. government shutdown, which is now the longest in history, adds further uncertainty to the economic outlook.
Mussio explained that while the current data isn’t reassuring, there’s still hope for a year-end rally if consumer spending holds strong this holiday season. When markets see resilience from consumers, it can lead to optimism.
Recent stock performance has been mixed. While some AI-related equities saw a brief recovery on Wednesday after AMD’s positive results, all major indexes have struggled this week. Notably, Palantir’s stock fell about 8% despite its strong quarterly results, contributing to a sharp decline in the Nasdaq.
In political news, investors are tuning into the Supreme Court’s hearing on the Trump administration’s tariffs. Justices expressed skepticism about the legality of these trade taxes, which could impact market sentiment moving forward.
As we watch these developments, it’s clear that the tech sector’s health is closely tied to broader economic indicators. Keeping an eye on job trends and consumer confidence will be key to understanding future market movements.
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