US stocks opened lower on Thursday, with technology shares leading the decline. The S&P 500 fell for the third consecutive trading session. As investors adopted a risk-off stance, Alphabet, Bitcoin, and silver all dropped. Market participants are closely watching signs of a cooling labor market.
The Dow Jones Industrial Average fell 282.68 points, or 0.57%, to 49,218.62. The Nasdaq Composite dropped 322.40 points, or 1.41%, to 22,582.18. The S&P 500 declined 59.49 points, or 0.86%, to 6,823.23.
Alphabet, one of the so-called "Magnificent Seven" companies to recently report earnings, saw its shares drop more than 7% early Thursday. The company's forecast of a significant increase in artificial intelligence spending unsettled some investors, with projected capital expenditures potentially reaching $185 billion by 2026.
Beyond Alphabet, Qualcomm also faced pressure, with its shares falling sharply after issuing a weaker-than-expected outlook due to the global memory chip shortage.
Meanwhile, the sell-off in the cryptocurrency market intensified, with Bitcoin falling below the key support level of $70,000. In the precious metals sector, silver prices came under pressure again, ending a two-day rebound with a sharp decline of up to 16%. Silver prices had plunged nearly 30% the previous Friday.
A report from outplacement firm Challenger, Gray & Christmas added to the pessimistic market mood. Data showed US employers announced 108,435 job cuts in January, the highest number of January layoffs since the 2008 global financial crisis.
Wall Street had just experienced a volatile trading session, with a sell-off in chip and software stocks causing the S&P 500 to close lower for a second straight day. As the tech sell-off accelerated, the S&P 500 and Nasdaq Composite fell 0.5% and 1.5%, respectively.
However, driven by a sector rotation out of technology and into value and cyclical stocks, the Dow Jones Industrial Average bucked the trend on Wednesday, rising 260 points, or 0.5%. The equal-weight S&P 500 index gained 0.9%.
Software stocks were hit hard as concerns about the disruptive impact of artificial intelligence on the sector prompted investors to withdraw massively from the technology sector and move into other market areas with more attractive valuations.
Wall Street strategists also issued warnings that the era of tech giants dominating the market may be ending. The current market landscape has become clear, with a plunge in software stocks triggering a broad sell-off in tech shares, which hold the highest weightings in growth-oriented indices.
Nevertheless, by the end of the trading session, many investors believed the selling was overdone and suggested it might be a buying opportunity.
Sonali Basak, Chief Investment Strategist at iCapital, stated, "I think a lot of assets have already been sold off. Some software companies, particularly the established leaders in industries that will ultimately prevail, are worth watching closely, even if it's not the right time to buy immediately."
In central bank news overseas, the European Central Bank kept its three key interest rates unchanged on Thursday.
The European Central Bank decided at its monetary policy meeting to maintain the eurozone's three key interest rates, in line with market expectations. According to a press release, the deposit facility rate, main refinancing rate, and marginal lending rate were held at 2.00%, 2.15%, and 2.40%, respectively. The ECB indicated that its latest assessment suggests inflation is expected to stabilize near the 2% target over the medium term.
US January planned job cuts hit their highest level for the month since 2009, while last week's initial jobless claims rose more than anticipated.
Challenger, Gray & Christmas reported on Thursday that the number of US corporate job cut announcements in January reached the highest level for that month since the global financial crisis, while hiring intentions fell to their lowest point for January on record.
US employers announced 108,435 job cuts this month, a 118% increase from the same period last year and a 205% surge from December 2025. This total is the highest recorded for January since 2009, when the US economy was in the final stages of the most severe recession since the Great Depression.
Simultaneously, companies announced only 5,306 new hiring plans, also the lowest January figure since 2009, the year Challenger began tracking this data. The recession triggered by the crisis officially ended in March 2009.
Although recent commentary has focused on a labor market characterized by a "no hire, no fire" approach, Challenger's data suggests the layoff side may be intensifying.
Andy Challenger, Workplace Expert and Chief Revenue Officer at the firm, said, "The first quarter usually sees a significant number of layoffs, but the total for January this year is particularly notable. This implies that a large portion of these plans were finalized by the end of 2025, indicating employers are not optimistic about the outlook for 2026."
To be sure, even as employers accelerate layoff planning, this trend has not yet been reflected in official US government data.
Additionally, the US Labor Department reported on Thursday that initial jobless claims rose sharply last week, reaching the highest level since early December and reversing a recent downward trend.
Following a winter storm that affected large areas of the South and East, seasonally adjusted initial claims for the week ended January 31 totaled 231,000. This was an increase of 22,000 from the previous week's unrevised figure and higher than the 212,000 forecast in a Dow Jones survey.
Continuing claims, which lag by one week, also increased, rising by 25,000 to 1.84 million. However, the four-week moving average for continuing claims fell to its lowest level since October 5, 2024.
Based on unadjusted data, the rise in claims last week was primarily driven by significant increases in Pennsylvania and Wisconsin.
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