U.S. Stocks Decline Amid AI Concerns

U.S. stock markets experienced a downturn on Thursday, largely impacted by the artificial intelligence sector facing renewed scrutiny over high valuations.

The S&P 500 slipped by 0.5%, while the Nasdaq Composite decreased by 0.7%. The Dow Jones Industrial Average wasn’t spared either, dropping by 268 points, or 0.6%.

This decline was worsened by worries surrounding the labor market, especially after several notable layoffs were announced in October. Challenger, Gray & Christmas reported that layoffs this month totaled 153,074, reflecting a staggering increase of 183% from September and 175% compared to the same month last year. This marks the highest October tally in 22 years, and projections suggest that 2025 might see the highest layoff numbers since 2009.

Throughout the day, traders remained laser-focused on AI stocks. Qualcomm reported better-than-expected quarterly numbers, yet its sales dipped by 2%. Advanced Micro Devices, which had a bright day previously, saw a 5% drop. Palantir Technologies and Oracle followed suit, slipping by 2% and 3%, respectively. Nvidia, a notable name in the AI sector, along with other members of the “Magnificent Seven,” including Meta Platforms, also faced declines.

On a different note, shares of Marvel Technology appreciated by over 1%, notably following news of a victorious acquisition bid. This development added some interest to the market.

Earlier in the week, stocks associated with AI had begun to rebound, alleviating some of the valuation worries and offering a potential boost to major indexes.

AMD, in particular, saw its shares rise more than 2% after reporting impressive third-quarter results, which in turn benefited other AI stocks. Broadcom and Micron Technology climbed by 2% and 9%, respectively. Oracle also managed to recover a portion of its recent losses during the trading session.

Having started the week on shaky ground with all major U.S. indexes down, the rebound in AI stocks gave the market a lift on Wednesday.

Shirl Penny from Dynasty Financial Partners remarked on CNBC’s “Closing Bell” that “we are in the early stages of the AI supercycle.” He anticipates ongoing significant capital investments not just from the major AI players, but also from major financial institutions like Schwab and JPMorgan.

Meanwhile, investors were closely watching Washington as the Supreme Court debated the Trump administration’s tariffs. There are growing expectations that the Supreme Court may challenge the legality of these aggressive trade policies, potentially leading to a rollback of tariffs—a move that could positively influence stock prices.