The weeklong selloff engulfing technology stocks and cryptocurrencies showed no sign of slowing as weak jobs data exacerbated a rout spurred by concern over the impact of artificial intelligence on software valuations. Alphabet Inc. became the latest to drop after reporting earnings. Bitcoin took one of its biggest tumbles yet.
Equities extended their slide from the brink of a record, with the S&P 500 falling about 1% and the Nasdaq 100 set for its worst three-day rout since April. The world’s most-popular digital token sank below $70,000 in a plunge that cut its value nearly in half since October. Treasuries climbed, sending two-year yields to the lowest in almost a month. Silver plummeted as much as 18%.
The decline in software firms, chipmakers and all things related to AI coincided with persistent fears about whether massive investments on the technology will pay off. A clear example was the reaction to results from Google’s parent, which sank 4% after outlining an ambitious spending plan even as revenue beat estimates. Amazon.com Inc. reports earnings later Thursday.
Heavy selling is starting to put a visible dent in equity benchmarks whose ascent had pushed valuations to some of the highest levels since the 2000 dot-com peak. The Nasdaq 100 has seen more than $1 trillion wiped out since last Wednesday, the day Federal Reserve policymakers signaled reluctance to lower rates again anytime soon.
While losses in previous sessions were confined mostly to growth sectors, Thursday saw a broadening of selling pressure, with 10 of the 11 biggest industry groups in the S&P 500 falling and about two-thirds of the index’s members in the red. Its equally weighted version — one that strips out market value biases — dropped from an all-time high.
Bets on economic resilience have recently fueled gains in companies that tend to benefit from improving growth prospects, the latest data underscored the uneven labor market characterized by limited numbers of overall dismissals and lackluster hiring.
US job openings unexpectedly fell in December to the lowest level since 2020 and layoffs edged up. Companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009, according to data from Challenger, Gray & Christmas Inc. Menatime, jobless claims rose more than forecast last week.
“This week’s data has been discouraging,” said Bret Kenwell at eToro. “The latest labor figures reiterate that the US jobs market is not firing on all cylinders, a risk the Fed and investors will have to take seriously should further deterioration occur. Volatility could persist, particularly if near-term uncertainty increases.”
On the other side on the Atlantic, the European Central Bank kept interest rates unchanged as officials assess the economic toll of a rally in the euro and renewed trade unpredictability. The Bank of England came within a vote of cutting interest rates and predicted inflation will fall below its target, a closer-than-expected decision that revived hopes of a move next month.