NEW YORK: US stock indexes fell on Thursday on a renewed selloff in software and technology shares, while strong labor market data tempered expectations for a central bank rate cut.
Fears of AI disruption have roiled Wall Street this month, slamming sectors including software, legal services and wealth management, with transport being the latest casualty.
“The broader narrative within the market is what sectors and industries can increase productivity from AI investments, and on the flip side, what industries are going to be disrupted by AI,” said Jack Herr, primary investment analyst at GuideStone Funds. “We see this as a ‘prove it’ year for AI. We need to start seeing some return on investments.”
Software and brokerage stocks fell sharply, with the S&P 500 software index down 2.7 percent, giving up almost all its gains since bouncing back from last week’s drubbing.
Atlassian and Adobe were down more than 2 percent each. Intuit, Crowdstrike and Datadog fell between 1 percent and 3 percent.
The Dow Jones Transport Average lost 5.4 percent, with CH Robinson falling 12 percent. Old Dominion and J.B. Hunt Transport lost 4.3 percent and 8.6 percent, respectively.
The Philadelphia SE Semiconductor index was down 1.7 percent, with Intel and Advanced Micro Devices slipping around 2.5 percent each. Marvell Technology, Broadcom and Oracle lost between 2.5 percent and 4 percent. All “Magnificent 7” stocks posted declines, with Apple and Amazon falling 3.7 percent and 3 percent, respectively.
Recent Big Tech results have revived investor worries about ambitious capex this year, with Amazon, Google , Meta and Microsoft collectively expected to spend around USD650 billion in the race for AI dominance.
At 11:45 a.m. the Dow Jones Industrial Average fell 520.09 points, or 1.04 percent, to 49,601.31, the S&P 500 lost 72.75 points, or 1.05 percent, to 6,870.44, and the Nasdaq Composite lost 357.35 points, or 1.55 percent, to 22,709.12.
Corporate results stayed front and center. AppLovin shares fell 18 percent after its fourth-quarter results. The marketing platform has lost nearly a third of its value in the first six weeks of the year due to intense competition.
Equinix jumped 11 percent after the largest data-center operator forecast annual revenue above estimates on Wednesday, betting on strong AI-linked demand. It boosted the S&P 500 real estate index 1.1 percent.
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