KEY POINTS
- The US stocks sell-off accelerated as technology shares dragged major indexes lower.
- Weak labor indicators added pressure to markets already rattled by heavy AI spending.
- Volatility spread to silver, gold and bitcoin, underscoring broader risk aversion.
US stocks fell sharply Thursday as a broad tech rout intensified, leaving investors searching for relief ahead of Amazon earnings while new labor data pointed to fresh weakness in the economy.
The US stocks sell-off erased more than a trillion dollars in market value, extending losses across equities, commodities and digital assets.
Markets across the United States turned decisively lower during Thursday’s session, with investors reassessing valuations in technology stocks and weighing signals that the labor market is cooling faster than expected.
The retreat reflects mounting uncertainty over whether massive artificial intelligence investments will translate into near term earnings growth.
The S&P 500 fell about 1.2 percent, the Nasdaq Composite slid 1.5 percent and the Dow Jones Industrial Average dropped more than 500 points.
The decline follows weeks of heightened volatility as investors question whether software and cloud companies face disruption from rapid advances in generative AI.
Attention remained fixed on Big Tech earnings, particularly after Alphabet outlined plans to lift capital spending for AI infrastructure to as much as $185 billion.
“The market is recalibrating expectations,” said Michael Reynolds, vice president of investment strategy at Glenmede.
“AI spending promises long term productivity gains, but investors are demanding clearer paths to profitability.”
Meanwhile, labor data added to concerns. Weekly jobless claims rose more than forecast, job openings fell to their lowest level since 2020 and January layoff announcements were the highest for that month since the financial crisis, according to Challenger, Gray & Christmas.
“These numbers suggest employers are becoming more cautious,” said Sarah House, senior economist at Wells Fargo. “That matters for consumption, which has been a key support for growth.”
Alphabet shares fell more than 5 percent after results. “Investors are uncomfortable with the scale and timing of AI investment,” said Angelo Zino, senior equity analyst at CFRA Research.
Commodity markets also buckled. Silver plunged as much as 17 percent as Chinese buyers reduced holdings. “The rally ran ahead of fundamentals,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Bitcoin slid below $70,000 after Treasury Secretary Scott Bessent said there would be no government support for digital currencies. “That comment removed a key psychological backstop,” said Markus Thielen, founder of 10x Research.
Investors are now focused on Amazon’s earnings, particularly growth at Amazon Web Services, and on next week’s US jobs report.
Policymakers at the Federal Reserve are also monitoring labor trends closely as they assess the timing of potential rate cuts.
The latest US stocks sell off highlights how intertwined earnings expectations, labor conditions and confidence have become.
With pressure spanning equities, commodities and crypto, markets appear set for continued volatility as investors demand clearer evidence that heavy AI investment and a slowing labor market can coexist without undermining growth.
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