Stocks continued to struggle on Thursday, experiencing one of the biggest declines in the past several months. The sweeping victory by Democrats in the midterm elections has raised concerns over regulations on data centers, one of the major campaign issues for the challengers. By market close, a major semiconductor index had lost more than 12% of its value.
What initially started as a chip stock selloff later extended to the entire market. The Dow Jones Industrial Average dropped 1,833 points to 51,523. The NASDAQ tanked 5.52% to 24,315. The S&P 500 retreated 4.36% to 7,354. No sector was spared today.
As investors fled to safety, the bond market rallied. The US 5-year Treasury yield declined by 8 basis points to 4.61%, while the 10-year yield declined by 5 basis points to 4.84%. Gold continued its rally and breached the 4,100 mark.
Economic data released today showed a continued stable job market and considerably high productivity costs, implying that investments in AI might finally be starting to pay off.
Yesterday’s earnings reports revealed a general trend of software companies providing positive commentary, mixed results among consumer companies, and a more negative outlook from chipmakers. With the market already questioning whether semiconductor stocks had gotten ahead of themselves, this latest wave of earnings only exacerbated the selling pressure in the sector.
Adams Wealth Advisors would like to remind you that market volatility is generally expected. While short-term jitters may result in outsized movements, economic fundamentals ultimately matter the most. We will be back tomorrow to cover the employment report.