The Dow Jones lost 561.98 points (1.18%) to 46,863.05, the S&P 500 lost 68.18 points (1.01%) to 6,646.83 and the Nasdaq lost 263.92 points (1.15,29%) to 46,863.43.
Concerns about stretched AI stock valuations have fueled several sell-offs in recent weeks, sending the Nasdaq on a losing streak for a second week in a row.
“People have seen the overvaluation story, it’s been around for a while, but they’re finally working on it… momentum trading is starting,” said Joe Saluzzi, partner and co-founder of Themis Trading.
“When it goes down like you’re seeing this morning, they’re going to take them all out. There’s no safety trade.”
Fed speakers on Thursday dampened expectations for policy easing. St. Louis president Alberto Musallam said caution was needed, while Cleveland’s chief, Beth Hammock, said restrictive policy would help tackle inflation. Neil Kashkari of Minneapolis told Bloomberg News that he was against the October rate cut.
Investors will sift through a fresh set of comments from Fed officials throughout the day.
Expectations for a 25 point rate cut in December fell to 53% from 67% last week, according to CME Group’s FedWatch tool.
The historic US government shutdown, which ended on Thursday, led to an economic data drought, blindsided the Fed and traders and reignited concerns about the health of the labor market and the outlook for inflation.
Despite the reopening, some data gaps are likely to persist, with the White House casting doubt on employment and the release of consumer price index reports for October.
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