US markets fell sharply on Thursday, with major indices recording their steepest declines in more than a month as technology names came under renewed pressure. The Dow Jones Industrial Average dropped 797 points, or 1.65%, to 47,457. The S&P 500 fell 1.66% to 6,737, and the Nasdaq Composite slid 2.29% to 22,870. The pullback marked the worst day for all three indices, as well as the Russell 2000, since 10 October.
Tech and AI sectors drive the sell-off
Losses were concentrated in mega-cap technology and artificial intelligence–related stocks. Nvidia, Broadcom and Alphabet weighed heavily on the Nasdaq, extending the index’s losing streak to a third straight session despite a strong start earlier in the week. Disney also declined almost 8% after releasing mixed fourth-quarter results, dragging down the communication services sector.
Market analysts broadly characterised the downturn as part of a natural consolidation following strong earlier gains. There is increasing focus on when AI-focused capital expenditure will begin to translate into broader productivity improvements across industries such as healthcare, manufacturing and industrials.
Rate-cut expectations shift as data delays widen
A reassessment of interest rate expectations added to the pressure on equities. Market pricing now assigns just over a 51% probability of a quarter-point Federal Reserve rate cut in December, down from almost 63% a day earlier and more than 95% a month ago.
The recalibration reflects the impact of the now-ended federal government shutdown, which left policymakers without key economic indicators, including October jobs and inflation data. The timing of future data releases remains uncertain, and the disruption is expected to persist for several weeks. The shutdown, which lasted more than six weeks, ended on Wednesday evening after President Donald Trump signed a temporary funding bill lasting through January.
Local markets set to follow Wall Street lower
Australian shares are expected to open sharply lower, tracking the global downturn. SPI 200 futures are down 136 points, or 1.55%, pointing to a fall of about 1.7% at the open.
Investors will be watching a series of annual meetings on Friday, including Lendlease, Virgin Australia and Core Lithium. Attention also turns to China, which will release October retail sales and industrial production at 1pm.
