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US stocks fell sharply on Thursday morning as a sell-off in the technology sector reignited, extending a volatile run for equity markets buffeted by concerns that AI could disrupt entire industries.
The S&P 500 lost 1.2 per cent as markets abruptly dropped after opening higher. The tech-heavy Nasdaq Composite lost 1.7 per cent.
Big Tech companies led the declines, with Apple down 3.9 per cent, and Amazon and Meta both losing more than 2 per cent.
Adding to worries in the tech sector, Cisco’s share price tumbled more than 11 per cent after its margin targets missed investors’ expectations.
US stocks have been volatile in recent weeks as investors worry the release of ever more sophisticated AI tools has threatened to upend industries from finance to tech and potentially lead to large-scale lay-offs.
Jason Borbora-Sheen, a portfolio manager at asset manager Ninety One, said the drops reflected a market that was “trigger-happy”, and reacting to every fresh “threat from AI”. “Investors could be de-risking ahead of tomorrow’s inflation data,” he added.
Gold dropped along with stocks, losing 2.5 per cent to trade at $4,952 a troy ounce while silver fell nearly 10 per cent. Treasuries rallied as investors sought safe assets. The 10-year Treasury yield fell 0.06 percentage points to 4.12 per cent, its lowest level this year. Yields move inversely to prices.
“The equity market decline has triggered gold liquidation to raise cash,” said James Steel, chief precious metals analyst at HSBC. Steel added that a lessening of Chinese demand for gold in the run-up to the lunar new year had “removed quite a bit of support from the market.”