US stocks continued their slide on Thursday, driven by a sharp decline in technology shares and concerning private jobs data that reignited fears of an economic slowdown.
Market Performance
The Nasdaq 100 Index dropped 1% by 1:40 p.m. in New York, after falling as much as 1.8% earlier in the session. The S&P 500 Index also fell 1%, while the Cboe Volatility Index hovered around 21.
Michael Kantrowitz, chief investment strategist at Piper Sandler, noted, "I think we’re seeing the unwind of a three-year economic and market bifurcation that’s beginning to broaden out."
Scott Wren of Wells Fargo Investment Institute pointed out that the S&P 500 is testing the 100-day moving average, with real support at 6,550 and the 200-day moving average at 6,460. "Near those are levels where we want to commit funds if you have time on your side," he added.
Tech Rout Deepens
The selloff in tech stocks intensified, with Alphabet Inc. falling 2.4% as investors reacted negatively to the company's ambitious capital spending plans for the year. The Google parent emphasized that massive investments in artificial intelligence—including new infrastructure, research, and talent—are crucial to compete against rivals like Amazon.com Inc., Microsoft Corp., and OpenAI.
Alphabet's results added to the growing unease around tech stocks, with a rotation out of the sector, particularly in software names, continuing for a third straight session.
Nancy Tengler, CEO and chief investment officer of Laffer Tengler Investments, compared the selloff to the "DeepSeek to Liberation Day rout in technology" that occurred in early 2025.
Investors are increasingly skeptical of Big Tech's swelling AI budgets. While some companies, like Meta Platforms Inc., have managed to win over investors with their spending plans, others—such as Tesla Inc. and Microsoft—are facing more resistance.
Bloomberg’s gauge for the Magnificent Seven tumbled 1.5% on Thursday, with Amazon set to report earnings after the bell.
Kantrowitz explained, "Everybody was pushed into the same stocks, now we’re seeing broader macro and earnings data, so investors have alternatives to put their money. There are more questions on the technology and AI trade earnings and valuations while parts of the economy and market that had been weak for three years are coming back to life."
Jobs and Earnings Impact
Labor market data further weighed on stocks. Job openings unexpectedly declined in December to the lowest level since 2020, and layoffs edged up, according to the Bureau of Labor Statistics.
New data from Challenger, Gray & Christmas Inc. showed that companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009.
Additionally, applications for unemployment benefits exceeded estimates last week as severe winter weather curtailed business activity. Initial claims increased by 22,000 to 231,000 in the final week of January.
Vishal Vivek, a strategist on Citigroup’s trading desk, commented, "All three missed, and while none are critical, it’ll incrementally weigh on the US growth story, which is the key driver of cyclicals, which have basically held up equities year to date."
Company-Specific News
- Qualcomm Inc., the largest smartphone processor maker, dropped 7.8% after providing a lackluster revenue forecast.
- Estée Lauder Cos. plunged 20% as its profit view failed to reassure investors about its turnaround pace.
- Elf Beauty Inc. advanced after boosting its adjusted Ebitda guidance for the full year, with analysts highlighting strong performance in the newly-acquired Rhode.
Crypto-linked stocks extended losses as Bitcoin slumped to its lowest level since 2024. An unwinding of leveraged bets and broader market turbulence has deepened a selloff that has hammered cryptocurrencies over the past three weeks.
Julian Emanuel, chief equity and quantitative strategist at Evercore ISI, noted, "Stocks are nervous in the wake of continued selling in assets that have already crashed—silver, gold, crypto. And hedge funds are actively degrossing."
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