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US stocks slid on Thursday as weak private-sector jobs data prompted a new bout of volatility on Wall Street after a record rally fed by AI optimism.
The tech-heavy Nasdaq Composite was down 2 per cent by midday in New York and the blue-chip S&P 500 index dropped 1.2 per cent.
Some investors pointed to private-sector jobs data from Challenger, Gray & Christmas showing that October job cuts were the worst figure for the month in any year since 2003.
US employers had announced more than 1mn job cuts since the start of the year, the firm said, up about two-thirds from the same period in 2024.
Investors have become more sensitive to private-sector economic data after a government shutdown suspended many official releases that are scrutinised both by traders and policymakers. Signs that the labour market is cooling have been a key fact in prompting the Federal Reserve to cut rates twice in recent months.
“It feels more like sentiment more than real fundamentals,” said Marija Veitmane, head of equity research at State Street Markets, adding that “nothing’s really changed” following Thursday’s labour market data release.
“Things are very crowded in tech stocks, and they are very expensive,” Veitmane added. “People were looking for excuses to sell tech stocks.”
Equity markets have been hit by turbulence this week as investors grow nervous about elevated valuations in the tech stocks that have powered this year’s rally.
“There’s a fear that we are flying blind with valuations stretched and no room for error for either growth or inflation scares,” said Arun Sai, senior multi-asset strategist at Pictet Asset Management.
European stocks also fell. The Stoxx Europe 600 closed 0.7 per cent lower, with tech stocks suffering the heaviest losses, and the Dax in Germany fell 1.3 per cent.
“It goes to show how fragile the market is, how everyone’s in the same trade,” said Neil Birrell, chief investment officer at Premier Miton.
US Treasuries gained as investors fled to safe assets. The US 10-year yield dropped 0.07 percentage points to 4.09 per cent. Bond yields move inversely to prices. The dollar fell, slipping 0.4 per cent against a basket of other currencies.
Some fund managers said a retrenchment in stock prices was inevitable after such a stellar run had pushed valuations, especially for tech groups, sharply higher. The Nasdaq was trading on Thursday with a forward earnings ratio — a measure of share prices against companies’ expected profits — of about 29, compared with an average of 25 over the past decade, according to FactSet data.
“After such a strong move higher, I see this . . . as a gentle pullback towards the bottom of a well established uptrend,” said Guy Miller, chief market strategist at insurer Zurich.
“Investors should remember that, even in bull markets, 10 per cent corrections are the norm and often seen as the pause that refreshes.”
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