Dropping technology stocks are dragging the U.S. market lower for the second consecutive day, as investors react to a combination of disappointing employment data and rising concerns about high spending in the tech sector. On Thursday, the S&P 500 fell by 0.8%, heading towards its sixth loss in seven trading sessions since reaching an all-time high. The Dow Jones Industrial Average declined by 326 points or 0.7%, while the Nasdaq composite also registered a 0.8% drop by mid-morning.
Alphabet Inc., the parent company of Google, played a significant role in the market’s downturn, with shares plummeting 5.4%. Despite reporting stronger-than-expected profits for the latest quarter, investors were more focused on the company’s projected spending on artificial intelligence technology, which could reach approximately $180 billion this year—more than double the initial expectations of less than $119 billion, according to FactSet.
In the bond market, Treasury yields fell sharply after a report revealed a larger-than-anticipated increase in the number of unemployment benefit claims in the previous week, an indicator that layoffs may be accelerating. While some economists believe the rise could be statistical noise given that the total number remains low historically, a concurrent report indicated that layoffs announced by U.S.-based employers surged to 108,435 last month—the highest count for any January since 2009.
The weakness observed in the job market could potentially prompt the Federal Reserve to consider cutting interest rates to boost the economy, despite the risk of exacerbating inflation. Following the employment data, the yield on the 10-year Treasury note declined to 4.23% from 4.29%.
In commodities markets, prices of silver and gold tumbled significantly. Silver plummeted 12.1% in a notable volatility shift after its recent record-breaking gains came to a halt. Gold saw its price drop by 1.9% to $4,855.00 per ounce, continuing its recent tumultuous fluctuations after nearly doubling in value over the past year. Gold’s price reached around $5,600 last week before dropping below $4,500 on Monday.
Bitcoin, often referred to as “digital gold,” also experienced a sharp decline, briefly falling below $70,000—down from its record high of over $124,000 reached in October.
On Wall Street, other technology stocks also suffered losses, with Qualcomm shares decreasing by 9.1% despite the company surpassing analysts’ expectations for profit and revenue in its latest quarter. However, its profit forecast for the current quarter fell short due to industry-wide memory shortages affecting handset manufacturer orders.
Elsewhere, in the cosmetics sector, Estee Lauder reported results that exceeded Wall Street targets, but warned that tariff-related challenges could erase around $100 million from its expected profits this fiscal year. This led to a sharp drop of 16.9% in the company’s shares.
Globally, stock markets mirrored the downturn, with indexes across much of Europe and Asia also falling. The London FTSE 100 index lost 0.9% following a steady interest rate decision by the Bank of England, while France’s CAC 40 and Germany’s DAX fell by 0.6% and 1.1%, respectively. South Korea’s Kospi index saw one of the most significant drops, tumbling 3.9% and dropping from its all-time high, with Samsung Electronics’ stock falling 6% just days after a notable surge of 11.4%.
