US stocks fell sharply Thursday as the market punished companies seen as potential losers from artificial-intelligence technology.
The S&P 500 sank 1.6% for its second-worst day since Thanksgiving, though it’s still near its all-time high set late last month. The Dow Jones Industrial Average dropped 669 points, or 1.3%, and the Nasdaq composite fell 2%.
Ongoing questions about AI profits
More broadly, questions are rising about whether businesses that are spending heavily on AI will end up seeing high-enough profits and productivity to make the investments worth it.
The AI worries have hit software stocks particularly hard, but they’re spreading to other industries and other markets. In the meantime, some of the companies serving customers with huge AI budgets are benefiting.
All told, the S&P 500 fell 108.71 points to 6,832.76. The Dow Jones Industrial Average dropped 669.42 to 49,451.98, and the Nasdaq composite sank 469.32 to 22,597.15.
US treasury yields fall again
In the bond market, Treasury yields fell as investors looked for safer places to park their cash. The yield on the 10-year Treasury fell to 4.10% from 4.18% late on Wednesday.
A report also said slightly more US workers filed for unemployment benefits last week than economists expected.
Still, the number was lower than the prior week’s, which is a signal that the pace of layoffs may be improving. It also followed a surprisingly strong report on the job market from Wednesday, which said the nation’s unemployment rate improved last month.
A strengthening job market could push the Federal Reserve to hold interest rates steady and keep its cuts on pause, even if President Donald Trump keeps loudly and aggressively calling for lower rates. While lower rates can give the economy a boost, they can also worsen inflation.
All eyes on US consumer inflation
It all raises the stakes for Friday’s upcoming report on inflation at the US consumer level. Economists expect it to show inflation slowed to 2.5% last month from 2.7% in December.
A separate report on Thursday said that sales of previously occupied homes slumped last month by more than economists expected, which also weighed on yields.
The Associated Press
