Stocks Plunge Amid Weak Labor Data and AI Worries
U.S. stocks experienced significant declines on Thursday amid concerns surrounding artificial intelligence (AI) and weakening labor market data. The market volatility was notably reflected in the Dow Jones Industrial Average, which dropped 637 points or 1.29%. The S&P 500 fell 1.37%, while the Nasdaq Composite declined by 1.74%.
Market Volatility and AI Concerns
Wall Street’s volatility was heightened by a rising VIX index, which surged by 22% to cross the 20-point mark, indicating increased market fear. This downturn for the Nasdaq represents its worst three-day performance since April, driven largely by investor concerns regarding AI’s disruptive effects on the software industry.
- Dow Jones: -637 points (-1.29%)
- S&P 500: -1.37%
- Nasdaq: -1.74%
- VIX index: +22%
Impact on Major Tech Firms
As earnings season continues, major technology companies reported mixed results. Microsoft (MSFT) saw its shares fall by 3.2%, trading lower in five of the past six sessions. Alphabet (GOOG) shares plummeted 4.5% after announcing higher spending on AI-related initiatives.
These numbers indicate a growing apprehension regarding the profitability of tech giants amid the AI boom. Mohit Kumar, a strategist at Jefferies, highlighted that investor anxiety stemmed from recent AI developments, affecting software-related revenue streams.
Weaker Labor Market Data
Economic reports released on the same day contributed to the negative sentiment. The Job Openings and Labor Turnover Survey revealed that job openings in December fell to their lowest point since 2020. Additionally, Challenger, Gray & Christmas reported that January marked the highest number of job cuts since 2009.
Broader Market Reactions
Consequently, U.S. Treasury bonds saw increased demand, resulting in lower yields. The risk-averse atmosphere also influenced cryptocurrency markets. Bitcoin dipped below $67,000, reaching its lowest point in 15 months. Traditionally considered a safe investment, gold fell by 2.3%, while silver experienced a pronounced decline of 13%.
Investor sentiment remains cautious, as evidenced by CNN’s Fear and Greed Index, which continues to indicate “fear” in the market. As volatility persists, the financial landscape will likely fluctuate, reflecting ongoing economic uncertainties.
