- Major Indices Plunge: The Nasdaq, S&P 500, and Dow Jones all experienced significant drops, driven by a sharp sell-off in the technology sector.
- Tech Under Pressure: Fears of an “AI bubble” and sky-high valuations are punishing Big Tech stocks, with the Nasdaq on track for its worst week since April.
- Worrying Economic Signs: Consumer sentiment has fallen to a three-year low, and recent data shows October job cuts were the highest in over two decades, adding to market jitters.
- Tesla Tumbles: Despite shareholders approving CEO Elon Musk’s massive $1 trillion pay package, Tesla’s stock fell nearly 4% as investors digested the news and future growth promises.
Tech-Led Sell-Off Batters Wall Street
US stocks took a nosedive on Friday, extending a brutal week for investors as a widespread technology sell-off rattled market confidence. The tech-heavy Nasdaq Composite led the charge downward, falling approximately 1.8%, while the S&P 500 shed about 1%, and the Dow Jones Industrial Average dropped around 0.6%. The sharp declines have put the major indices on pace for steep weekly losses, fueled by persistent worries that the artificial intelligence boom has created an unsustainable market bubble.
“Magnificent Seven” Falter Amid AI Skepticism
The so-called “Magnificent Seven” stocks, which have propelled much of the market’s gains, faced intense selling pressure. Chipmaking giant Nvidia (NVDA) saw its shares fall over 3%, contributing to a weekly loss of more than 9.5%. The growing skepticism stems from investors questioning whether the massive spending and sky-high valuations in the AI sector can be sustained. This unease was amplified by a Trump administration official stating there would be “no federal bailout for AI,” further unnerving the market.
Adding to the sector’s woes, Tesla (TSLA) shares dropped nearly 4% even after shareholders approved a landmark $1 trillion pay package for CEO Elon Musk. While the package signals a long-term bet on Musk’s vision for AI, robotics, and autonomous vehicles, investors reacted with caution in the short term.
Economic Headwinds Fuel Investor Anxiety
The market’s downturn was exacerbated by a string of negative economic data. A preliminary report from the University of Michigan revealed that consumer sentiment plunged to its lowest level since 2022. The report highlighted consumers’ worsening outlook on their personal finances and business conditions, signaling potential economic weakness ahead.
Job Market Cracks Appear
This bearish sentiment was compounded by troubling signs from the labor market. A private report indicated that October job cuts reached their highest level for that month in over 20 years. With the official Bureau of Labor Statistics jobs report delayed for a second consecutive month due to the ongoing government shutdown, Wall Street is placing greater weight on such private data, and the picture it paints is far from rosy.
Uncertainty Looms Over Markets
While investors are battered by the current downturn, they remain watchful for potential positive catalysts. An end to the government shutdown, a possible interest rate cut in December, or a strong earnings report from Nvidia could help restore confidence. However, significant uncertainty remains, particularly with the Supreme Court reviewing the legality of President Trump’s tariff policies, leaving the market in a precarious state as it closes out a turbulent week.
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