AI Selloff Deepens as Weak Jobs Data Sparks Broad Market Rout – US Market Wrap
A renewed wave of heavy selling hit software shares and cryptocurrencies, with disappointing labor-market data intensifying a sharp equity downturn fueled by growing concern over artificial-intelligence-driven valuations. Bitcoin suffered one of its steepest declines, and Amazon slid in late trading following its earnings report.
US stocks extended their retreat from near-record highs. The S&P 500 fell 1.2%, while the Nasdaq 100 recorded its worst three-day slide since April’s market turmoil. Bitcoin dropped to around $63,500, nearly halving in value since October. Treasuries rallied, pushing two-year yields to their lowest level in almost a month. Silver plunged 16%.
The pullback in AI-related assets has coincided with persistent doubts over whether massive investments in the technology will ultimately generate sufficient returns. A recent example was Alphabet’s decline after the company outlined aggressive spending plans despite posting revenue above expectations.
The latest downturn has begun to leave a noticeable mark on equity benchmarks that had climbed to valuation levels not seen since the dot-com era. The Nasdaq 100 has erased more than $1 trillion in market value since Federal Reserve officials signaled last week that further rate cuts may not come anytime soon.
Selling pressure also broadened beyond growth stocks. Nine of the 11 major S&P 500 sectors declined, and the equal-weighted version of the index pulled back from a record high, highlighting the widening scope of the move.
While optimism around economic resilience has supported a rotation into companies more exposed to growth, the latest figures underscored vulnerabilities in the labor market. US job openings unexpectedly fell in December to their lowest level since 2020, layoffs ticked higher, and announced job cuts reached their highest January total since 2009. Weekly jobless claims also rose more than anticipated.
