On Thursday, the S&P 500 declined by 1%, with the Nasdaq falling 1.1%, as the technology sector continued its retreat, marking the third consecutive session of declines. Similarly, the Dow Jones Industrial Average decreased by 1%, as consumer discretionary and communication services sectors underperformed, reflecting a reduced appetite among investors for large-cap stocks.
Alphabet saw a 0.6% decline, contributing to the negative market sentiment, after it announced a substantial rise in capital expenditures related to artificial intelligence. The company projected its capital spending for 2026 to be at the upper range of $175 to $185 billion, which reignited investor concerns about the timeline for transforming heavy investments in AI into profitable returns.
The semiconductor sector faced additional pressure, with Qualcomm's shares plummeting 8.4% due to a cautious forecast resulting from weaker memory demand and inventory challenges. This contributed to broader losses across the chip industry.
The overall risk-averse attitude among investors was further reinforced by macroeconomic data. Weekly initial jobless claims increased to 231,000 for the week ending January 31, while corporate layoffs surged to 108,000 in January, marking the highest level for January since 2009. These indicators suggest a potential cooling in labor market conditions.
