The U.S. stock market experienced a significant decline on Thursday, marking one of its worst days since April. The S&P 500 dropped by 1.7%, distancing itself further from the record high reached late last month. This represented the index’s worst day in a month and the second-worst since April’s sharp downturn following President Donald Trump’s announcement of new tariffs.
The Dow Jones Industrial Average fell by 797 points, or 1.7%, after reaching a record high the previous day. The Nasdaq composite decreased by 2.3%.
A major factor behind the sell-off was continued weakness in artificial intelligence-related stocks, particularly Nvidia, which lost 3.6%. Other companies that have benefited from enthusiasm for AI also saw declines: Super Micro Computer fell by 7.4%, Palantir Technologies dropped by 6.5%, and Broadcom declined by 4.3%. These stocks had previously seen substantial gains this year; for example, Palantir had risen nearly 174% at the start of November.
Concerns are mounting about whether these AI-focused stocks can continue their rapid ascent after such large increases in value, with some analysts drawing parallels to the dot-com bubble of 2000 that led to a steep drop in the S&P 500.
Stocks outside of AI were also affected as investors grew uncertain about whether the Federal Reserve would implement another interest rate cut in December as previously anticipated. Lower interest rates tend to boost economic activity and investment prices but can contribute to inflation.
Recently, expectations for an additional rate cut have diminished sharply, with traders now seeing only about a 52% chance—down from nearly 70% a week earlier—according to CME Group data.
Comments from Federal Reserve officials contributed to this uncertainty. Susan Collins, president of the Federal Reserve Bank of Boston, stated late Wednesday that it is likely appropriate to keep interest rates steady “for some time.” This marks a shift from her position last month when she supported another rate cut.
The Fed faces added challenges due to delays in economic data releases caused by the recent U.S. government shutdown, making it harder to assess whether slowing job growth or persistent inflation poses a greater risk.
Doug Beath, global equity strategist at Wells Fargo Investment Institute, commented on potential market volatility: “The looming data deluge may spur additional volatility in the coming weeks.”
Among individual companies, The Walt Disney Co.’s shares fell by 7.7% despite reporting profits above analyst estimates because its revenue did not meet expectations. In contrast, Cisco Systems’ shares rose by 4.6% after surpassing profit and revenue forecasts.
Berkshire Hathaway was one of few gainers during Thursday’s session; its shares increased by 2.1%. Warren Buffett’s company is known for seeking undervalued investments and typically avoids buying overpriced stocks.
At market close:
– The S&P 500 was down by 113.43 points at 6,737.49.
– The Dow Jones Industrial Average declined by 797.60 points to finish at 47,457.22.
– The Nasdaq composite lost 536.10 points to end at 22,870.36.
In bond markets, Treasury yields climbed higher—the yield on the benchmark ten-year Treasury note rose from Wednesday’s level of 4.08% up to 4.12%. Higher yields generally exert downward pressure on stock prices and other assets.
Internationally, European stock indexes declined while Asian markets posted modest gains; Tokyo’s Nikkei index rose slightly even as SoftBank Group continued its decline after announcing it had sold its entire $5.8 billion stake in Nvidia.
