US indices fall due to sell-off in AI stocks and signs of a weakening labor market

Growth in the U.S. stock market paused after the opening of trading on November 11. Shares of large companies related to artificial intelligence declined amid concerns over inflated valuations, while traders analyzed new data indicating further weakening of the labor market, Bloomberg writes.

The S&P 500 Index opened trading down 0.2%, mainly due to a drop in stocks in the technology and communication services sectors. The biggest pressure on the index came from Nvidia, whose shares fell after the chipmaker's major investor SoftBank sold its $5.83 billion stake to fund other investments in AI. CoreWeave shares also fell in the technology sector after the company cut its full-year revenue forecast, prompting JPMorgan to downgrade the securities from "buy" to "hold." The Nasdaq 100 technology index was down 0.4 percent. The Dow Jones Industrial Average added 0.2%.

According to chief market strategist at Miller Tabak + Co. Matt Maley, the market could break a two-day streak of gains that turns out to be a "false reversal." "There is reason to believe that the stock market could soon show a short-term decline of more than 3%," he said. The last time such a decline was seen was in April.

"The market still looks expensive from a fundamental perspective, even given the maximum level of enthusiasm around AI," wrote Tom Essei, founder and president of research firm Sevens Report.

According to Citi Research, investors have increased their bets on tech stocks falling over the past week, with net new short positions on the Nasdaq totaling $3.75 billion. "New shorts dominate flows across U.S. equities," the bank's analysts said, adding that the trend "accelerated over the past week."

According to data from the ADP employment report released before the open of trading on Nov. 11, U.S. private sector employment in the four weeks ending Oct. 25 averaged a weekly decline of 11,250 jobs. The small business optimism index fell to a six-month low in October due to deteriorating profits and growing concerns about the economic outlook.

Nevertheless, analysts see potential for growth if the U.S. government shutdown ends. The JPMorgan Market Intelligence team noted that the reopening of the government could release additional liquidity in the market, Bloomberg writes.

This article was AI-translated and verified by a human editor