Market Downturn Amidst Tech Stock Decline
NEW YORK (AP) — U.S. markets are experiencing notable losses on Thursday, driven down by declining technology stocks. In a striking turn of events, Bitcoin has plunged nearly 50% from its peak in the previous fall.
Concurrently, yields in the bond market have also retreated, spurred by grim reports regarding the state of the U.S. job market.
The S&P 500 index has decreased by 1.1%, positioning itself for a potential sixth loss in seven days following an all-time high. At 2:45 p.m. Eastern time, the Dow Jones Industrial Average had shed 483 points, a decline of 1%, while the Nasdaq composite fell by 1.3%.
Alphabet Inc., the parent company of Google and YouTube, further exacerbated market woes with a 1.4% drop in share price.
Despite reporting stronger-than-expected quarterly profits, investors have fixated on Alphabet’s substantial investments in artificial intelligence, raising questions about the long-term viability of such expenditures.
The tech giant revealed plans to potentially double its investment spending this year to approximately $180 billion, outstripping analysts’ projections of under $119 billion, according to FactSet.
Meanwhile, in the bond arena, Treasury yields declined following reports that the number of unemployment benefit applications surged last week, exceeding economists’ expectations. This trend may indicate an uptick in the layoff rate.
- Some economists have posited that the recent spike could merely be statistical noise, maintaining that the overall figures remain low in the historical context.
- Conversely, a distinct report highlighted that layoffs announced by U.S. employers reached 108,435 last month—the highest figure for January since 2009, as reported by global outplacement firm Challenger, Gray & Christmas.
- A further government report indicated that job openings hit a five-year low in December.
Weakness in the job market may prompt the Federal Reserve to consider cutting interest rates to stimulate economic growth, despite the inherent risk of exacerbating inflation. Consequently, Treasury yields responded with declines across the board.
The yield on the 10-year Treasury note dropped to 4.20% from a previous 4.29%, a noteworthy shift in the bond landscape.
Commodities markets witnessed even steeper declines.
- The price of silver plummeted 9.1% following its recent volatility after a dramatic increase.
- Gold prices decreased by 1.2%, settling at $4,889.50 per ounce after experiencing erratic fluctuations.
Both gold and silver had previously soared as investors sought safe havens amid escalating political uncertainty, an overvalued U.S. stock market, and burgeoning government debt. However, such rampant growth was unsustainable, leading market critics to anticipate a correction.
Analogously, Bitcoin, marketed as “digital gold,” has also experienced a significant downturn. The cryptocurrency has slipped to around $65,000, down from its historic high of exceeding $124,000 in October.
This overall decline has adversely affected stocks associated with the crypto sector. Coinbase Global, a trading platform, experienced a 10.5% drop, while companies like Strategy saw their shares fall by 14.5%.
In addition to crypto companies, Qualcomm’s stock declined by 8%, despite the chip manufacturer surpassing profit and revenue forecasts for the latest quarter. Its projections for the current quarter disappointed analysts, attributed to a widespread memory shortage causing handset makers to reduce orders.
Despite exceeding expectations, Estee Lauder’s shares fell 21.3% following the company’s financial forecast revisions, potentially influenced by investor anticipation of more favorable results amid ongoing adaptation to tariffs.
On a more positive note, some firms poised to benefit from ongoing investments in AI technology by Alphabet and other companies experienced gains. Broadcom shares ascended by 1.8%, effectively mitigating some of the S&P 500’s losses.
McKesson witnessed remarkable growth, gaining 18.1% after reporting better-than-expected profit and revenue figures, along with an upward revision of its profit forecasts for the fiscal year.
Internationally, stock markets reflected a similar trend, with indices across Europe and Asia decreasing significantly.
- London’s FTSE 100 declined by 0.9% following the Bank of England’s decision to maintain interest rates.
- France’s CAC 40 fell by 0.3%, while Germany’s DAX reported a 0.5% loss as the European Central Bank also opted to hold rates steady.
- In South Korea, the Kospi index tumbled by 3.9%, marking a substantial shift from its historical highs; Samsung Electronics shares dropped by 5.8%, only two days after a significant surge.
Source link: Fox23.com.
