U.S. stocks declined on Thursday, pulled lower by a renewed sell-off in high-flying artificial intelligence stocks as investors grew increasingly concerned about their steep valuations.
The Dow Jones Industrial Average dropped 296 points, or 0.6%, while the S&P 500 slipped 0.8%. The tech-heavy Nasdaq Composite declined 1.3%, and the Nasdaq 100 is on pace for its worst week since early April. Major technology firms led the downturn, with significant losses posted by Nvidia, Microsoft, Broadcom, Advanced Micro Devices (AMD), and Palantir Technologies.
The volatile trading in the AI sector continued, with Qualcomm shedding 3% despite a strong quarterly report, as the chipmaker warned of potentially losing future business with Apple. AMD, a top performer on Wednesday, fell 6%, while Oracle and Meta Platforms also sank.
“So much of this stuff from a valuation standpoint was so lofty and priced for perfection that we’re seeing in the market a bit of a dichotomy,” said Mike Mussio, president at FBB Capital Partners. He noted a sharp split between companies “that are beating and raising versus those that maybe are beating on the top line but providing tepid guidance… That’s the difference between some of these companies on earnings being up double digits versus being down double digits.”
Worsening the negative sentiment were fresh concerns over the labor market. A report from Challenger, Gray & Christmas revealed that job cut announcements in October surged to over 153,000, nearly tripling the rate from September and marking a 175% increase from the same period last year. This represents the highest number of layoffs for October in 22 years.
Mussio suggested that such data points are contributing to “some market weakness,” but he does not believe this signals “the start of a major skid.” He added that if upcoming data shows consumer spending remains strong through the holiday season, a typical year-end rally could still materialize.
Thursday’s decline capped a volatile week for the AI sector. The sell-off on Tuesday, triggered by a slump in Palantir despite strong results, was briefly interrupted by a rebound on Wednesday after AMD reported better-than-expected earnings. However, the downward pressure resumed, erasing the previous day’s gains and leaving all major indexes significantly lower for the week.
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