U.S. Equities continued their downward trajectory on , as investors increasingly adopted a risk-off stance. The sell-off extended to popular trades in technology and even cryptocurrencies, signaling a broader shift in market sentiment.
The Dow Jones Industrial Average closed down 488 points, a decline of 1%. The S&P 500 also fell by 1%, pushing it into negative territory for the year to date. The Nasdaq Composite experienced the steepest decline, dropping 1.2%. Earlier in the session, the Dow had fallen as much as 1.4%, with the S&P 500 and Nasdaq down 1.5% and 1.9% respectively.
The technology sector faced renewed pressure, particularly following earnings reports. Alphabet’s announcement of a potential increase in artificial intelligence spending to as much as $185 billion in capital expenditures for 2026 spooked some investors, contributing to a 2% decline in its share price. However, Broadcom bucked the trend, rising 2% on the expectation of benefiting from increased AI-related investment.
Stephen Tuckwood, director of investments at Modern Wealth Management, suggested that the market is becoming more discerning. “The fact that some of these companies do release and they announce just additional capex spending — and it is astronomical at this point — we’re actually viewing that as a positive sign for the market’s health in general, because … It’s more that the market is discerning at this point rather than just irrational exuberance,” he said.
Qualcomm also faced significant headwinds, with its shares sliding 7% after issuing a weaker-than-expected forecast, attributed to a global memory shortage.
Beyond equities, the cryptocurrency market continued its recent slide. Bitcoin fell below $67,000, having earlier breached the key support level of $70,000. The precious metals market also experienced volatility, with silver resuming its downward trend, dropping as much as 16% after a brief two-day rebound. Last Friday, silver had already plummeted nearly 30%.
Labor Market Concerns Add to Downbeat Sentiment
Adding to the negative market sentiment, concerns about the labor market intensified. Challenger, Gray & Christmas reported 108,435 layoffs announced in January, the highest January total since the global financial crisis. This figure suggests a potential weakening in the labor market.
Further supporting this view, initial jobless claims for the week ending rose more than anticipated, and job openings in December fell to their lowest level since . These indicators paint a picture of a cooling labor market.
The release of the Bureau of Labor Statistics’ January jobs report has been delayed due to the recent partial government shutdown, which ended on . Tuckwood believes the upcoming report “could likely confirm what we’re seeing here with the others, where the firing and layoffs pieces is starting to turn negative.”
He further suggested that a weakening labor market could prompt the Federal Reserve to consider an interest rate cut at either its March or April meeting.
Recent Market Turbulence and Sector Rotation
This latest sell-off follows a turbulent trading session on , marked by a sell-off in software and chip stocks that drove the S&P 500 to a second consecutive day of losses. Investors have been rotating out of technology stocks amid fears of disruption from artificial intelligence.
Tuckwood indicated that the sell-off in software stocks may be overdone, stating, “We’re not quite there yet in terms of wanting to avoid catching a falling knife, but at some point for that particular subsector, there’s going to be an opportunity once things do get a bit too overdone there on the sell side.”
