US stock markets experienced a significant decline on Thursday, driven by investor pullback from technology-focused investments amid fresh worries over inflated AI valuations and disappointing job figures. The Nasdaq Composite fell 1.9%, the S&P 500 dropped by 1.1%, and the Dow Jones Industrial Average decreased by 0.8%. This downturn reversed Wednesday’s brief market rebound and added to the ongoing volatility observed during the 36th day of the government shutdown.
The sharp sell-off predominantly affected large-cap tech stocks. Notable declines included Palantir, which plunged 6.8%, Nvidia fell 3.7%, and Amazon saw a 2.9% decrease, collectively erasing billions from their market capitalization. Analysts suggested that the AI boom that had propelled markets for months appears to be losing steam as companies struggle to meet the high earnings expectations set by investors.
Market sentiment was further dampened by a report from Challenger, Gray & Christmas indicating that US employers announced 153,074 job cuts in October, marking the highest figure for that month since 2003. This raised concerns regarding the resilience of the labor market, once one of the key pillars of economic strength. In light of the limited economic data available due to the government shutdown, traders are focusing on every piece of private-sector information for hints about the economy’s trajectory.
Treasury yields eased, with the yield on 10-year Treasuries falling to 4.09% from 4.16%. Meanwhile, the US dollar index weakened by 0.5% to 99.69, reflecting a decline in confidence surrounding the currency. Bitcoin stabilized at $100,900 at 4 p.m. ET after reaching a high of $104,200 earlier in the day, lingering near the critical $100,000 threshold breached earlier this week. Gold prices held steady just below $4,000 per ounce, while West Texas Intermediate crude oil traded near $59.55 a barrel, remaining relatively unchanged.
Prior to a crucial shareholder vote, Tesla (TSLA) shares fell 3.5%. The meeting, which began at 4 p.m. ET, concerns CEO Elon Musk’s proposed multi-billion-dollar compensation package and other governance issues; results are expected shortly through an SEC filing. Investors showed signs of nervousness regarding Musk’s substantial influence over the company, coupled with Tesla’s recent delivery challenges.
On a more positive note, Datadog (DDOG) emerged as a standout performer, surging 23% after surpassing quarterly earnings expectations. The cloud monitoring company’s third-quarter earnings per share reached $0.55—significantly above projections—while revenue increased by 28% year-over-year to $885.7 million, largely driven by growth from AI-related clients. The company raised its full-year earnings guidance to a range of $2.00–$2.02 per share, and boosted its revenue outlook to $3.39 billion. This elevated Datadog’s status as a prominent player in the AI software sector, contributing to a remarkable 33% gain within the year.
Conversely, Bumble (BMBL) saw its stocks plummet 25% following a reported 16% decline in total paying users to 3.57 million and a 10% drop in revenue to $246.2 million. Despite an EPS of $0.33 narrowly beating forecasts, management projected weak figures for the fourth quarter. CFO Kevin Cook emphasized a commitment to long-term profitability, yet the company’s shares have now declined nearly 50% this year.
The current earnings season has proven harsh for underperformers. Data from FactSet indicated that companies failing to meet expectations have witnessed their stock prices plummet by an average of 5% around earnings announcements, nearly double the five-year average. Even firms that surpassed forecasts saw negligible stock gains of just 0.1%.
In political news, President Donald Trump announced a significant initiative allowing Medicare to cover GLP-1 weight-loss medications such as Wegovy and Ozempic for as little as $50 per month. The agreement struck with pharmaceutical companies Novo Nordisk (NVO) and Eli Lilly (LLY) sets community prices at $245 per month, with broader discounts available through a new online platform.
With rising inflation continuing to exert pressure on household budgets, a Federal Reserve survey revealed that 45% of US workers lack adequate emergency savings. Additionally, a report from PNC Bank highlighted that 67% of Americans live paycheck to paycheck—an increase from the previous year. The savings amassed during the pandemic have largely diminished due to rising costs, highlighting a concerning trend as disposable income savings have now fallen below pre-pandemic levels.
