Stocks drop on weak labor market data and AI concerns
By John Towfighi, CNN
New York (CNN) — US stocks were lower Thursday, continuing a recent patch of volatility, as Wall Street grappled with persistent nerves about artificial intelligence and economic data showed the labor market weakened over the past two months.
The Dow was down 514 points, or 1.04%. The S&P 500 also fell 1.04%, and the tech-heavy Nasdaq Composite fell 1.26%.
The Nasdaq was set for its worst three-day slide since April as investors wrestle with the potential for AI to disrupt the software industry. An exchange-traded fund tracking the software industry was down 3.6% Thursday and has fallen eight trading sessions in a row.
“The near-term trigger was the Anthropic plug in release, but investors have been grappling with software for the past few months as AI reduces the need of coders and impacts the revenue stream of a number of companies,” Mohit Kumar, a strategist at Jefferies, said in a note.
“Currently the market is at a stage of shoot first and ask questions later,” Kumar said. “Concerns are also being raised around private equity and private credit companies given their exposure to the sector.”
Shares of Blue Owl (OWL), a private credit firm with some investments in software companies, sank 5% Thursday and has fallen 11 trading sessions in a row.
While AI’s impact on software is in focus, Wall Street is in the midst of corporate earnings season, and there are also lingering nerves about just how profitable big tech companies’ bets on the AI boom will be.
Microsoft shares (MSFT) were down 3.2% and have traded lower five out of the past six sessions after the tech giant reported earnings one week ago.
Alphabet (GOOG) shares fell 2.2% after the company reported earnings and outlined plans to ramp up spending on data centers and AI-related projects. The Nasdaq is down more than 5.5% from its last record high set in October.
Crypto was also hit by the risk-averse mood. Bitcoin slumped below $67,000 and hit its lowest level in 15 months.
Gold, usually considered a haven amid uncertainty, fell 1.3%. Silver plunged 10%, continuing a recent bout of extraordinary volatility.
Stocks extended their losses Thursday morning after two separate economic data reports painted a picture of a fragile labor market. US Treasury bonds rallied, pushing yields lower.
The monthly Job Openings and Labor Turnover Survey showed job openings in December fell to their lowest level since 2020, according to the Bureau of Labor Statistics.
That weaker-than-expected economic data came on the heels of data from Challenger, Gray & Christmas that showed last month was the worst January for job cut announcements since 2009.
Wall Street’s fear gauge, the VIX, surged 12% and rose above 20 points, a threshold that signals elevated volatility in markets. CNN’s Fear and Greed Index hovered in “fear.”
The data reports come as investors are awaiting the January jobs report, which has been delayed due to the partial government shutdown.
“With the jobs report delayed until next week, jitters around the labor backdrop is contributing to today’s cautious tone,” Seana Smith, senior investment strategist at Global X ETFs, told CNN.
The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.
CNN’s Matt Egan contributed reporting.
