On Thursday, U.S. financial markets experienced pronounced downturns as technology sector stocks weakened and bitcoin plunged to nearly half its record valuation from last fall. The S&P 500 index declined by 1.2%, suffering its sixth drop in seven sessions following the recent peak. The Dow Jones Industrial Average fell 592 points, representing a 1.2% loss, while the Nasdaq Composite took a heavier blow, dropping 1.6%.
Among notable decliners, Qualcomm's share price dropped 8.5%, despite the chipmaker exceeding analysts' expectations for quarterly profit and revenue. The market's disappointment centered on Qualcomm's forward guidance, which fell short of consensus, a reflection of a memory chip shortage affecting handset manufacturers' order volumes.
Bond markets saw Treasury yields retreat after unemployment claims in the U.S. surged beyond economist forecasts, sparking concerns about an acceleration in layoffs. Although some economists attributed this jump to potential statistical anomalies and acknowledged that claims remain historically low, a separate report from Challenger, Gray & Christmas highlighted that employer-reported layoffs rose to 108,435 last month, the highest since October 2022.
Another government report added to the somber employment outlook by indicating the fewest advertised job openings in more than five years as of December. This data mix contributes to market expectations that the Federal Reserve might consider cutting interest rates to bolster economic activity, even with the risk of exacerbating inflationary pressures. Reflecting these concerns, yields on 10-year Treasury notes declined to 4.19% from 4.29% the previous day, a significant adjustment in bond investor sentiment.
Commodity markets were notably volatile, with silver's price tumbling 9.1% following a sharp surge last week, while gold fell 1.2% to $4,889.50 per ounce. Both metals have experienced wild oscillations after roughly doubling in price over the past year, spiking amid investor demand for perceived safe havens amid political unrest, expensive U.S. equities, and global government debt concerns. However, the recent correction aligns with calls for a price pullback after unsustainable rates of increase.
Bitcoin, often dubbed 'digital gold,' mirrored this downward trend, decreasing over 12% to below $64,000 from a peak exceeding $124,000 in October. The cryptocurrency's lack of intrinsic earnings or dividends aligns its valuation strictly with market demand, which fluctuates sharply. This price drop negatively impacted equities linked to the crypto industry; Coinbase Global shares dropped 13.3%, and Strategy, a significant bitcoin holder, fell 17.1%.
Outside the cryptocurrency realm, Alphabet, the parent of Google and YouTube, capped an earlier 8% intraday loss to close down 0.5%. Despite better-than-anticipated quarterly profits, investor focus remained on significant projected spending increases in artificial intelligence technology, with Alphabet signaling a potential doubling of investment to about $180 billion, surpassing analyst expectations of less than $119 billion.
Estee Lauder also exceeded earnings estimates and raised full-year projections, but the stock declined by 19.2%, possibly reflecting investor anticipation of even stronger performance amid ongoing company transitions and tariff challenges.
On the positive side, companies poised to benefit from AI technology investments notably outperformed. Broadcom shares gained 0.8%, while healthcare distributor McKesson surged 16.5% following encouraging quarterly results and an upward revision to fiscal year profit forecasts.
Summarizing market movements, the S&P 500 index closed down 84.32 points at 6,798.40, the Dow Jones Industrial Average dropped 592.58 points to 48,908.72, and the Nasdaq Composite ended at 22,540.59, down 363.99 points.
International equity markets faced similar pressures, with most European and Asian indices falling. London's FTSE 100 retreated 0.9% after the Bank of England maintained current interest rates, while France's CAC 40 and Germany's DAX declined 0.3% and 0.5% respectively, following European Central Bank decisions to hold steady on monetary policy. South Korea's Kospi suffered one of the largest global declines, tumbling 3.9% from recent highs, with Samsung Electronics dropping 5.8% shortly after a significant 11.4% rally.