Stock market today: Dow, S&P 500, Nasdaq sink as valuation concerns mount amid bleak jobs data

US equities, led by the tech-heavy Nasdaq, fell sharply Thursday as concerns over AI sector valuations intensified and bearish private jobs data, showing the worst October for layoffs since 2003, spurred a flight to bonds. Major chipmakers like Nvidia and AMD declined following comments dismissing federal AI bailouts, while Tesla shares dropped ahead of a critical vote on Elon Musk's pay package. In contrast, Snap surged on strong earnings and an AI partnership, though Duolingo plummeted after missing forecasts, while Charles Schwab acquired Forge Global Holdings for $660 million to expand access to private markets.

Analysis

US equities experienced a steep slide, with the tech-heavy Nasdaq Composite falling nearly 2%, the S&P 500 losing 1.1%, and the Dow Jones Industrial Average sinking 0.8%. This market downturn was primarily driven by persistent concerns over AI sector valuations and bearish private jobs data, as October marked the worst month for layoff announcements since 2003, according to Challenger, Gray & Christmas. This labor market deterioration spurred a flight to bonds, with the benchmark 10-year yield dipping below 4.1%.

The tech sector's decline was exacerbated by comments from a Trump administration official dismissing federal bailouts for the AI industry, leading to drops in major chipmakers like Nvidia (NVDA) and AMD (AMD). Qualcomm (QCOM) also slid over 4% despite strong earnings and upbeat guidance, reflecting broader investor disappointment regarding AI valuations. Conversely, Snap (SNAP) surged nearly 20% on strong Q3 revenue, a positive forecast, and a $400 million AI partnership with Perplexity AI, while Duolingo (DUOL) plummeted over 25% after lowering its Q4 bookings forecast and missing user growth estimates.

In other corporate news, Tesla (TSLA) shares fell 3.5% ahead of a critical shareholder vote on Elon Musk's proposed pay package, amid worries about his potential departure if rejected. Charles Schwab (SCHW) rose 0.3% following its $660 million acquisition of Forge Global Holdings (FRGE), aiming to expand access to private markets for everyday investors. Saudi Aramco (2223.SR) cut oil prices for Asian buyers to an 11-month low, signaling a bearish outlook due to an expected global oil glut, despite recent OPEC+ production adjustments.

The ongoing government shutdown, now the longest in US history, impacted airline stocks, with Delta (DAL) and Southwest (LUV) paring gains after the Department of Transportation announced flight capacity cuts. Rare earth stocks, including MP Materials (MP), declined as trade worries eased following a tentative agreement between the US and China to delay export controls. The Supreme Court's skepticism regarding Trump's trade tariffs also introduced potential volatility for international trade policies.

Key Decisions for Investors

• Investors should re-evaluate tech sector exposure, particularly in AI-dependent companies, given valuation concerns and the explicit dismissal of federal support for the industry.
• Monitor labor market data and bond yields for further indications of economic slowdown, which could influence monetary policy and broader risk appetite.
• Consider opportunities in companies expanding access to private markets, such as Schwab's acquisition of Forge, for diversified growth avenues.
• Assess the impact of geopolitical developments, including oil price cuts and evolving trade policies, on commodity-related investments and global supply chains.