US stocks fall amid growing worries over jobs and AI bubble

All three major indices of the U.S. stock market ended trading on November 6 in the negative. The largest decline was shown by the Nasdaq Composite index focused on technology companies - it lost 1.9%. The broad market index S&P 500 fell by 1.1%, the index of blue chips Dow Jones Industrial Average - by 0.8%.

AI-related companies were among the most depreciated stocks, with Nvidia shares down 3.7%, Palantir Technologies down 6.8%, Meta Platforms and Amazon down nearly 3%, and Microsoft down 2%.

Investor sentiment was worsened by data on a sharp rise in layoffs in the private sector. A report from consulting firm Challenger, Gray & Christmas showed that U.S. companies reported 153,074 job cuts in October, nearly three times as many as in the same month last year. In addition, this is the highest October figure since 2003, when the advent of cell phones caused similar upheavals in the labor market, said Andy Challenger, a senior executive at the consulting firm. The authors of the report explained this figure by the growth of automation, including AI, and the desire of businesses to optimize costs.

Investors have become more sensitive to private sector data after many official statistics were suspended due to the shutdown. Signs of a cooling labor market were the key factor that prompted the Fed to cut rates twice in recent months.

The sell-off in equities is driven more by pessimism than real fundamentals, Maria Veitmane, head of equity research at State Street Markets, told the Financial Times. "After the release of labor market data on Thursday, "nothing much has changed," she noted. Amid overbought tech stocks, investors were "looking for an excuse to sell them", she said.

A correction in share prices was inevitable after a torrid rally that sent valuations of companies, especially technology companies, sharply higher, some of the managers interviewed told the FT. "Investors should remember that even in a bull market, corrections of 10% are the norm," said Guy Miller, chief market strategist at Zurich insurance company.

Some investors see the selloff in tech stocks as a buying opportunity. Key Advisors Wealth Management co-founder Eddie Gabur told the WSJ that his firm has increased positions in Nvidia, Palantir and Apple, expecting tech stocks to continue to rise.

"The sale doesn't bother us yet," Gabur said. - We want to ride this bull as far as it will take us."

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