US stocks fell sharply on Thursday, as investors continued to question lofty valuations in the artificial intelligence sector and growing signs of weakness in the US labour market.
The Dow Jones Industrial Average slid 399 points, or 0.84%, to close at 46,912. The S&P 500 fell 1.12% to 6,720, while the tech-heavy Nasdaq Composite tumbled 1.9% to 23,054. The Nasdaq 100 is now on track for its worst week since early April.
Losses were concentrated in major technology names, with Nvidia, Microsoft, Palantir Technologies, Broadcom and AMD leading declines. AMD fell 7% after strong results failed to offset future demand concerns, while Palantir and Oracle dropped 7% and 3%, respectively. Qualcomm lost nearly 4% despite upbeat quarterly earnings, after warning it could lose future Apple business. Nvidia and Meta also ended lower.
Valuation pressures and investor caution
Many large technology companies remain under pressure as investors reassess high valuations and narrow profit guidance. Analysts noted that the difference between companies raising forecasts and those offering weaker outlooks has widened significantly, contributing to sharp stock price swings across the sector.
Citigroup said stretched valuations mean markets may need sustained earnings momentum and positive guidance to maintain current levels.
Jobs data fuels economic worries
New data showed a surge in layoffs. October job cuts totalled more than 153,000, almost triple September’s figure and 175% higher than a year earlier, marking the worst October in 22 years. Analysts said the figures, coupled with a government shutdown now entering its second month, paint a shakier picture of the US economy.
Market participants expect that if the government reopens and consumers remain resilient through the holiday season, sentiment could stabilise later in the year.
Fed outlook and sector performance
Falling Treasury yields reflected rising expectations for a Federal Reserve rate cut in December, with the CME FedWatch Tool showing a 68.9% probability, up from 62% the day before. Analysts expect further policy support if employment data weakens further.
Consumer discretionary stocks led six of eleven S&P sectors lower, with Nvidia down more than 2% and Tesla off 3% ahead of a shareholder vote on Elon Musk’s $US1 trillion pay package.
Australian market set to open lower
The SPI futures point to a 0.16% fall to 8831. Macquarie will report full-year results, while News Corp, REA Group and Block are due to release quarterly updates. Annual meetings are scheduled for Nine Entertainment, Amcor and Qantas.
